SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
NEWPORT NEWS SHIPBUILDING INC.
(Name of Issuer)
COMMON STOCK PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
652228107
(CUSIP Number)
Thomas M. Kitchen
Avondale Industries, Inc.
5100 River Road
Avondale, LA 70094
(504) 436-2121
with a copy to:
Curtis R. Hearn
Jones, Walker, Waechter,
Poitevent, Carrere & Denegre, L.L.P.
201 St. Charles Avenue, Floor 51
New Orleans, LA 70170
(504) 582-8308
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
JANUARY 19, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of sections 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box ________.
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See <section>240.13d-
7(b) for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
CUSIP No. 652228107
1) Names of Reporting Persons I.R.S. Identification Nos. of Above
Persons (entities only)
Avondale Industries, Inc. IRS #39-1097012
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
(a) _____
(b) _____
3) SEC Use Only
4) Source of Funds (See Instructions) WC, OO
5) Check if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e) _____
6) Citizenship or Place of Organization - Louisiana
Number of (7) Sole Voting Power 3,392,000(1)
Shares
Bene-
ficially
Owned by (8) Shared Voting Power 0
Each
Reporting
Person
With (9) Sole Dispositive Power 3,392,000(1)
(10) Shared Dispositive Power 0
11) Aggregate Amount Beneficially Owned by Each
Reporting Person 3,392,000(1)
12) Check if the Aggregate Amount in Row (11)
Excludes Certain Shares (See Instructions) _____
13) Percent of Class Represented by Amount
in Row 11 9.0%(1)(2)
14) Type of Reporting Person (See Instructions) CO
(1) Beneficial Ownership of 3,392,000 shares of Common Stock reported
hereunder is so being reported solely as a result of the Parent Stock
Option Agreement described in Item 4. The Option (as defined in Item 3)
granted pursuant to the Parent Stock Option Agreement is not currently
exercisable. Because the Option will not become exercisable unless and
until certain specified events occur, Avondale Industries Inc. expressly
disclaims beneficial ownership of all such shares.
(2) The 3,392,000 shares indicated represent 9.0% of the sum of (a)
the outstanding shares of common stock of the Issuer as of December 31,
1998, as represented by the Issuer in the Merger Agreement described in
Item 5, and (b) the 3,392,000 shares of common stock subject to the Option.
Item 1. Security and Issuer.
This statement relates to the common stock, par value $0.01 per share
(the "Common Stock") of Newport News Shipbuilding Inc., a Delaware
corporation (the "Issuer" or "Parent"). The Issuer's principal executive
office is 4101 Washington Avenue, Newport News, Virginia, 23607.
Item 2. Identity and Background.
This Schedule 13D is being filed by Avondale Industries Inc., a
Louisiana corporation ("Avondale" or the "Company"). The address of its
principal business and of its principal office is 5100 River Road,
Avondale, Louisiana, 70094. Avondale's principal business is the
construction of surface ships for the U.S. Navy.
The names of the directors and executive officers of Avondale and
their respective business addresses, citizenship and present principal
occupations or employment, as well as the names, principal businesses and
addresses of any corporations and other organizations in which such
employment is conducted, are set forth on Schedule I, which Schedule is
incorporated herein by reference.
Other than executive officers and directors, to the best of Avondale's
knowledge, there are no persons controlling or ultimately in control of
Avondale.
Neither Avondale nor, to the best of its knowledge, any of the persons
listed in Schedule I has, during the last five years, been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
Neither Avondale nor, to the best of its knowledge, any of the persons
listed in Schedule I has, during the last five years, been 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 future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
As more fully described in Item 4, the Issuer has pursuant to the
Parent Stock Option Agreement granted to Avondale an irrevocable option
pursuant to which Avondale has the right, upon the occurrence of certain
events (none of which has occurred), to purchase up to 3,392,000 shares of
Common Stock (subject to certain anti-dilution adjustments) at a price per
share of $29.875 (the "Option"). Certain terms of the Option are
summarized in Item 4.
If the Option were exercisable and Avondale were to exercise the
Option on the date of this Schedule 13D, the funds required to purchase the
shares of Common Stock issuable upon exercise would be $101,336,000. It is
currently anticipated that funds to finance such purchase would be derived
from a combination of working capital and borrowings, although no
definitive determination has been made at this time as to the source of
such borrowings. The Parent Stock Option Agreement provides Avondale with
a "cash-out right," which would allow Avondale to obtain the benefits of
the Option but would require no expenditure of funds.
Item 4. Purpose of Transaction.
On January 19, 1999, Issuer, Ares Acquisition Corporation, a Louisiana
corporation and a wholly-owned subsidiary of Issuer ("Sub"), and Avondale
entered into an Agreement and Plan of Merger (the "Merger Agreement").
Pursuant to the terms of the Merger Agreement, Sub will be merged with and
into Avondale (the "Merger") and Avondale will continue as the surviving
corporation (the "Surviving Corporation") and as a wholly-owned subsidiary
of Issuer. The Articles of Incorporation of Avondale will be amended and
restated at the effective time of the Merger (the "Effective Time") in such
form as set forth in Exhibit A to the Merger Agreement and such articles
shall be the articles of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law. At the Effective
Time, the By-laws of Sub will become the By-laws of the Surviving
Corporation, the initial directors of the Surviving Corporation will be as
provided for in the Merger Agreement, and the officers of Avondale will be
the officers of the Surviving Corporation. At the Effective Time,
shareholders of Avondale will receive shares of the Issuer's Common Stock
in exchange for each share of Avondale's common stock as follows: Each
issued share of Avondale's common stock will be converted into the right to
receive the number (the "Conversion Number") of shares of the Issuer's
Common Stock that is equal to the quotient obtained by dividing (i) $35.50
by (ii) the "Average Parent Stock Price" (as defined in Section 2.01(c) of
the Merger Agreement); PROVIDED, HOWEVER, that in no event will the
Conversion Number be greater than 1.2500 or less than 1.1500. Using this
formula, the value of the voting securities to be acquired in the Merger is
approximately $470 million, based on the closing price of the Issuer's
Common Stock on January 19, 1999. Following the Merger, Issuer's corporate
name will be changed to Newport News Avondale Industries Inc. Upon
consummation of the Merger, Avondale's common stock will be delisted from
trading on The Nasdaq National Market, where it currently trades under the
symbol "AVDL."
Concurrently with and as an inducement and condition to the Issuer's
entering into the Merger Agreement, the Issuer and Avondale (i) entered
into a stock option agreement (the "Company Stock Option Agreement")
pursuant to which Avondale granted the Issuer the option to purchase up to
1,312,000 shares of Avondale's common stock (or such greater number as
equals 9.9% of the then outstanding shares of Avondale's common stock) at a
purchase price of $35.50 per share and (ii) entered into a stock option
agreement (the "Parent Stock Option Agreement") pursuant to which the
Issuer granted Avondale the option to purchase up to 3,392,000 shares of
the Issuer's Common Stock (or such greater number as equals 9.9% of the
then outstanding shares of the Issuer's Common Stock) at a price of $29.875
per share. Both the Parent Stock Option Agreement and the Company Stock
Option Agreement provide that the option of either of the grantees under
either of the agreements is execisable only after a termination of the
Merger Agreement in connection with which a grantee is or may be entitled
to a termination fee pursuant to the terms of the Merger Agreement. Both
the Parent Stock Option Agreement and the Company Stock Option Agreement
provide that the Notional Total Option Profit (as defined in each such
agreement) that either party may realize from the option granted pursuant
thereto may not exceed $14 million. All references to the Parent Stock
Option Agreement and the Company Stock Option Agreement are qualified in
their entirety by the full text of such agreements, filed herewith as
Exhibits 2 and 3 and incorporated by reference herein.
The parties intend to consummate the Merger as soon as practicable
following the satisfaction or waiver of the conditions to closing set forth
in the Merger Agreement. The closing of the Merger is conditioned upon,
among other things, (i) approval by stockholders of Avondale and the
Issuer, (ii) obtaining certain regulatory approvals and (iii) other
customary closing conditions. The consummation of the Merger is expected
to occur in the second quarter of 1999.
Item 5. Interest in Securities of the Issuer.
(a) Avondale may be deemed to be the beneficial owner of the shares
of Common Stock issuable upon the exercise of the Option. As provided in
the Parent Stock Option Agreement, Avondale may exercise the Option only
upon the happening of one or more events, none of which has occurred. (See
Item 4.) If the Option were exercised, the shares of Common Stock issuable
to Avondale would represent 9.9% of the Issuer's issued and outstanding
shares of Common Stock (without giving effect to the issuance of such
shares of Common Stock and based on the number of shares outstanding as of
December 31, 1998 as set forth in the Merger Agreement). Avondale has no
right to vote or dispose of the shares of Common Stock subject to the
Option and expressly disclaims beneficial ownership of all such shares.
Except as set forth above, neither Avondale nor, to the best of
its knowledge, any of the persons listed in Schedule I beneficially owns
any shares of Common Stock.
(b) If the Option were to become exercisable, and Avondale were to
thereafter exercise the Option, it would have sole power to vote and sole
power to direct the disposition of the shares of Common Stock issuable
pursuant to the Option.
(c) Avondale acquired the Option in connection with the Merger
Agreement. (See Item 4.) Neither Avondale nor, to the best of its
knowledge, any of the persons listed in Schedule I has effected any
transactions in the Common Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Except as described in Item 4 and Item 5 of this Schedule 13D, neither
Avondale nor, to the best of its knowledge, any of the persons listed on
Schedule I has any contract, arrangement, understanding or relationship
(legal or otherwise) with any person with respect to any securities of the
Issuer, including, but not limited to, the transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option arrangements,
puts or calls, guarantees of profits, division of profits or losses, or the
giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
1. Agreement and Plan of Merger dated as of January 19, 1999, among
Issuer, Ares Acquisition Corporation and Avondale
(incorporated by reference to Exhibit 2.1 to Issuer's Form
8-K dated January 22, 1999 (Commission File No. 1-12385)).
2. Parent Stock Option Agreement dated as of January 19, 1999,
between Issuer and Avondale (incorporated by reference to
Exhibit 2.2 of Issuer's Form 8-K dated January 22, 1999
(Commission File No. 1-12385)).
3. Company Stock Option Agreement dated as of January 19, 1999,
between Avondale and Issuer (incorporated by reference to
Exhibit 2.3 of Issuer's Form 8-K dated January 22, 1999
(Commission File No. 1-12385)).
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Date: January 29, 1999 AVONDALE INDUSTRIES, INC.
By: /S/ THOMAS M. KITCHEN
Name: Thomas M. Kitchen
Title: Vice President and Chief Financial
Officer
<PAGE>
SCHEDULE I
Directors and Executive Officers of
Avondale Industries, Inc.
The names, business addresses and present principal occupations of the
directors and executive officers of Avondale Industries, Inc. are set forth
below. If no business address is given, the director's or executive
officer's business address is Avondale Industries, Inc., 5100 River Road,
Avondale, Louisiana, 70094. All of Avondale's directors and executive
officers are citizens of the United States.
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION
<S> <C>
I. Directors:
Albert L. Bossier, Jr. Avondale's Chairman, Chief Executive Officer and
President
Anthony J. Correro, III Partner, Correro Fishman Haygood Phelps Weiss
201 St. Charles Avenue Walmsley & Casteix, L.L.P. (law firm)
New Orleans, LA 70170
Francis R. Donovan President, Designers and Planners, Inc. (marine
9216 Dellwood Drive engineering, naval architecture and
Vienna, VA 22180 environmental planning firm); Vice Admiral, U.S.
Navy (retired)
Kenneth B. Dupont Avondale's Vice President Commercial and
Offshore Programs
Thomas M. Kitchen Avondale's Vice President, Chief Financial
Officer and Secretary
Hugh A. Thompson Retired. Formerly Professor of Engineering and
12437 Highway 157 Dean of the School of Engineering at Tulane
Rising Fawn, GA 30738 University
II. Executive Officers
(who are not directors):
R. Dean Church Avondale's Vice President and Chief
Administrative Officer
Thomas H. Doussan Avondale's Vice President and Chief Operating
Officer
Ronald J. McAlear Avondale's Vice President, Advanced Programs
and Marketing
Edmund C. Mortimer Avondale's Vice President, Government Programs
</TABLE>
