UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
AVONDALE INDUSTRIES, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
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(Title of Class of Securities)
054350103
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(CUSIP Number)
Stephen B. Clarkson, Esq.
Vice President, General Counsel and Secretary
Newport News Shipbuilding Inc.
4101 Washington Avenue
Newport News, VA 23607
(757) 380-3600
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
January 19, 1999
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(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 which is the subject of this Schedule 13D,
and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or
13(d)-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 Rule
13d-7 for other parties to whom copies are to be sent.
<PAGE>
CUSIP NO........................................................054350103
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Newport News Shipbuilding Inc.
IRS # 74-1541566
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a).........................................................[ ]
(b).........................................................[ ]
3. SEC USE ONLY...................................................
4. SOURCE OF FUNDS......................................WC, BK, OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)..............................[ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION..................Delaware
Number of 7. SOLE VOTING POWER
Shares 1,312,000 shares of common stock<F1>
Beneficially
Owned by 8. SHARED VOTING POWER
each -0-
Reporting
Person 9. SOLE DISPOSITIVE POWER
With: 1,312,000 shares of common stock<F1>
10. SHARED DISPOSITIVE POWER
-0-
11. AGGREGATE AMOUNT BENEFICIALLY
OWNED BY EACH REPORTING PERSON
1,312,000 shares of common stock<F1>
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES.............................................[ ]
13. PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
9.0% of number of shares of common stock<F2>
14. TYPE OF REPORTING PERSON....................................CO
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<F1> Represents the total number of shares of common stock that
may be purchased pursuant to an option granted by the Issuer as
reported in this statement. Such option is not currently exercisable
and the Reporting Person does not have the right to vote or dispose of
the shares of common stock subject to the option. The Reporting Person
disclaims beneficial ownership of all such shares.
<F2> Calculated as follows: 1,312,000 (the number of shares
issuable upon exercise of the option covered by this statement)
divided by the sum of 1,312,000 plus 13,254,066 (the number of shares
of Issuer common stock reported as outstanding on December 31, 1998).
<PAGE>
Item 1. Security and Issuer.
This statement relates to the common stock, par value $1.00
per share ("Company Common Stock"), of Avondale Industries, Inc., a
Louisiana corporation (the "Company"). The principal executive offices
of the Company are located at 5100 River Road, Avondale, Louisiana
70094.
Item 2. Identity and Background.
This statement is being filed by Newport News Shipbuilding
Inc., a Delaware corporation ("Parent"). The address of the principal
business and principal offices of Parent is 4101 Washington Avenue,
Newport News, Virginia 23607. Parent designs and constructs nuclear
powered aircraft carriers and submarines for the U.S. Navy and
provides refueling and overhauling services for ships in the Navy
fleet.
The names of the directors and executive officers of Parent,
their citizenship and present principal occupations or employment are
set forth on Schedule I hereto, which Schedule is incorporated herein
by reference. Other than executive officers and directors, to the best
of Parent's knowledge, there are no persons controlling or ultimately
in control of Parent. Neither Parent, nor, to the best of Parent's
knowledge, any of the persons named on Schedule I has, during the last
five years: (i) been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) 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.
If the Option (as defined below) were exercisable and Parent
were to exercise the Option on the date of this Schedule 13D, the
funds required to purchase the shares of Company Common Stock issuable
upon exercise of the Option would be $46,576,000. If Parent were to
exercise the Option in full, it currently anticipates that the funds
necessary to pay the exercise price would be provided, in part, from
Parent's working capital and the balance would be borrowed from a bank
or other lender, which has not been identified. The Option is also
exercisable under a "cash-out right" which would allow Parent to
obtain the financial value of the Option without the expenditure of
funds.
Item 4. Purpose of Transaction.
On January 19, 1999, Parent, Ares Acquisition Corporation, a
Louisiana corporation and a wholly owned subsidiary of Parent ("Sub"),
and the Company, 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 the Company (the "Merger") and the
Company will continue as the surviving corporation (the "Surviving
Corporation") and as a wholly owned subsidiary of Parent. The Articles
of Incorporation of the Company shall 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 shall 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 the
Company shall be the officers of the Surviving Corporation. At the
Effective Time, shareholders of the Company will receive shares of
Parent common stock, par value $0.01 per share ("Parent Common
Stock"), in exchange for each share of Company Common Stock as
follows: Each issued share of Company Common Stock will be converted
into the right to receive the number (the "Conversion Number") of
shares of Parent 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 shall 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 Parent Common Stock on January
19, 1999. Following the Merger, Parent's corporate name will be
changed to Newport News Avondale Industries Inc. Upon consummation of
the Merger, Company 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
Parent's entering into the Merger Agreement, Parent and the Company
(i) entered into a stock option agreement (the "Company Stock Option
Agreement") pursuant to which the Company granted Parent the option
(the "Option") to purchase up to 1,312,000 shares of Company Common
Stock (or such greater number as equals 9.9% of the then-outstanding
shares of Company 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 Parent granted the Company
the option to purchase up to
<PAGE>
3,392,000 shares of Parent Common Stock (or such greater number as
equals 9.9% of the then-outstanding shares of Parent 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 exercisable
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 the Company and Parent, (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 total of 1,312,000 shares of Company Common Stock may be
purchased by Parent upon the exercise of the Option, which would
represent approximately 9.9% of the shares of Company Common Stock
outstanding upon exercise of the Option (based on the number of shares
of Company Common Stock reported as outstanding on December 31, 1998).
The Option is not currently exercisable and Parent has no right to
vote or dispose of the shares of Company Common Stock subject to the
Option. Accordingly, Parent expressly disclaims beneficial ownership
of all such shares.
Except as described herein, neither Parent nor, to the best of
Parent's knowledge, any other person referred to in Schedule I,
beneficially owns or has acquired or disposed of any shares of Company
Common Stock during the past 60 days. If Parent were to exercise the
Option, it would have sole power to vote and, subject to the terms of
the Company Stock Option Agreement, sole power to direct the
disposition of the shares of Company Common Stock issuable pursuant to
the Option.
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 Parent 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 Company, 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. Materials to be Filed as Exhibits.
1. Agreement and Plan of Merger among Parent, Sub and the
Company, dated as of January 19, 1999 (Reference is made to
Exhibit 2.1 to Newport News Shipbuilding Inc.'s Report on Form
8-K filed January 22, 1999, which Exhibit is incorporated
herein by reference).
2. Parent Stock Option Agreement among Parent and the Company,
dated as of January 19, 1999 (Reference is made to Exhibit 2.2
to Newport News Shipbuilding Inc.'s Report on Form 8-K filed
January 22, 1999, which Exhibit is incorporated herein by
reference).
3. Company Stock Option Agreement among the Company and Parent,
dated as of January 19, 1999 (Reference is made to Exhibit 2.3
to Newport News Shipbuilding Inc.'s Report on Form 8-K filed
January 22, 1999, which Exhibit is incorporated herein by
reference).
<PAGE>
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.
Dated: January 29, 1999 NEWPORT NEWS SHIPBUILDING INC.
By: /s/ Peter A. V. Huegel
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Name: Peter A. V. Huegel
Title: Assistant Secretary
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
Exhibit 1 Agreement and Plan of Merger among Newport News
Shipbuilding Inc., Ares Acquisition Corporation
and Avondale Industries, Inc., dated as of
January 19, 1999.
Exhibit 2 Parent Stock Option Agreement among Newport News
Shipbuilding Inc. and Avondale Industries, Inc.,
dated as of January 19, 1999.
Exhibit 3 Company Stock Option Agreement among Avondale
Industries, Inc. and Newport News Shipbuilding Inc.,
dated as of January 19, 1999.
<PAGE>
SCHEDULE I
Directors and Executive Officers of Newport News Shipbuilding Inc.
The names and present principal occupations of the directors
and executive officers of Newport News Shipbuilding Inc. are set forth
below. Unless otherwise indicated, all directors and officers listed
below are citizens of the United States.
I. Directors
Hon. Gerald L. Baliles Partner of Hunton &
Williams, Chairman of the
Richmond Regional
Transportation Advocacy
Board, Member of the
Council on Foreign
Relations, Director of
Norfolk Southern Company,
The Atlantic Council of
the United States and the
United States Council for
International Business
Leon A. Edney, Admiral (Ret.) Director of Armed Forces
Benefit Services Inc. and
the Retired Officers
Association, Vice
Chairman of the Board of
the Naval Aviation Museum
Foundation, Senior Fellow
at the Center for Naval
Analysis, Trustee of the
Naval Academy Foundation,
Distinguished Leadership
Chair of United States
Naval Academy
William P. Fricks Chairman of the Board,
President and Chief
Executive Officer of
Newport News Shipbuilding
Inc.
Dr. William R. Harvey President of Hampton
University, Owner of the
Pepsi-Cola Bottling
Company of Houghton,
Michigan, Director of the
First Union National Bank
of Virginia and Trigon
Blue Cross Blue Shield of
Virginia
Dana G. Mead Executive Officer of
Tenneco, Director of
Unisource Worldwide Inc.,
Pfizer Inc., the Zurich
Insurance Group and
Textron Inc.
Dr. Joseph J. Sisco Partner of Sisco
Associates, Director of
Braun AG
Stephen R. Wilson Group Finance Director of
Reckitt & Colman plc
II. Executive Officers
David J. Anderson Senior Vice President and
Chief Financial Officer
Stephen B. Clarkson Vice President - General
Counsel and Secretary
William G. Cridlin, Jr. Vice President and General
Manager - Submarines
Roger Eshelman Vice President - Nuclear
Engineering
William P. Fricks Chairman of the Board
and Chief Executive Officer
Robert L. Gunter, Jr. Vice President - Engineering
T. Michael Hatfield Vice President - Corporate
Communications
Alfred Little, Jr. Vice President - Human
Resources and EH&S
<PAGE>
Marc Y. E. Pelaez Vice President - Business and
Technology Development
C. Michael Petters Vice President and General
Manager - Aircraft Carriers
Thomas C. Schievelbein Executive Vice President -
Operations
John E. Shephard, Jr. Vice President -
Manufacturing and Materials
Patrick A. Tucker Vice President -
Government Relations
George A. Wade Vice President - Assembly,
Test and Trades
William Weaver, Jr. Vice President - Planning and
Facilities
Charles Wingfield, Jr. Vice President and Controller
D. R. Wyatt Treasurer
