<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
---------------
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
------------------------
STOLT-NIELSEN S.A.
(Name of the Issuer and Person Filing Statement)
------------------------------
COMMON SHARES, NO PAR VALUE
OPTIONS TO PURCHASE COMMON SHARES
(Title of Class of Securities)
L88742108
(CUSIP Number of Class of Securities)
------------------------------
ALAN B. WINSOR, ESQ.
STOLT-NIELSEN INC.
EIGHT SOUND SHORE DRIVE
GREENWICH, CT 06836
(203) 625-3667
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
------------------------------
COPY TO:
GREGORY PRYOR, ESQ.
WHITE & CASE LLP
1155 AVENUE OF THE AMERICAS
NEW YORK, NY 10036
(212) 819-8200
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JANUARY 21, 2000
(Date Tender Offer First Published, Sent or Given to Security Holders)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
<S> <C>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<CAPTION>
$512,955,571.78 $107,367.51
<S> <C>
</TABLE>
* Estimated solely for the purpose of determining the filing fee. The
transaction valuation is equal to 29,364,183 Common Shares, no par value,
and 1,367,125 options to purchase Common Shares (the maximum number of
Common Shares and options to purchase Common Shares for which the offer is
made), multiplied by the average ($17.46875) of the high and low prices of
the Common Shares on the Nasdaq National Market on January 18, 2000.
** The amount of the filing fee, calculated in accordance with Rule 0-11 under
the Securities Exchange Act of 1934, as amended, equals 1/50 of one percent
of the transaction valuation.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
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<S> <C> <C> <C>
Amount previously paid: Filing party:
Form or registration no.: Date filed:
</TABLE>
Instruction: Ten copies of this statement, including all exhibits, should be
filed with the Commission.
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<PAGE>
INTRODUCTION
This Rule 13e-4 Issuer Tender Offer Statement (the "Schedule 13E-4") relates
to an offer by Stolt-Nielsen S.A., a company organized under the laws of
Luxembourg (the "Company"), to exchange one Class B Share, no par value
(together, the "Class B Shares"), for each outstanding Common Share, no par
value (together, the "Common Shares"), and one option to purchase one Class B
Share (together, the "Class B Options") for each outstanding option to purchase
one Common Share (together, the "Common Options"). This offer is being made on
the terms and conditions set forth in the Offering Circular dated January 21,
2000 (the Offering Circular") and the related Letter of Transmittal (which, as
they may be amended or supplemented from time to time, together constitute the
"Exchange Offer"), copies of which are filed as Exhibits (a)(1) and (a)(2)
hereto, respectively.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Stolt-Nielsen S.A., a company organized under
the laws of Luxembourg (the "Company"). The principal executive offices of the
Company are located at c/o Stolt-Nielsen Limited, Aldwych House, 71-91 Aldwych,
London WC2B 4HN, England.
(b) The information set forth in the Offering Circular on the front cover
thereof and under "Special Factors Related to the Exchange Offer--Certain Common
Shares Expected to Be Exchanged" is incorporated herein by reference.
(c) The information set forth in the Offering Circular under "Market and
Price Ranges of Securities; Dividends--Price Range of Securities" is
incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth on the cover page to the Offering Circular and
under "The Exchange Offer--Fees and Expenses" is incorporated herein by
reference.
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The information set forth in the Offering Circular under "Special Factors
Related to the Exchange Offer--Background and Purpose of the Exchange Offer" and
"Special Factors Related to the Exchange Offer--Certain Effects of the Exchange
Offer" is incorporated herein by reference.
(a)-(f) The information set forth in the Offering Circular under "Special
Factors Related to the Exchange Offer--Plans for the Company after the Exchange
Offer" is incorporated herein by reference.
(g) The information set forth in the Offering Circular under "The Exchange
Offer--Luxembourg Law Requirements; Amendment to Articles of Incorporation;
Mandatory Conversion--Amendment to Articles of Incorporation" is incorporated
herein by reference.
(h-j) The information set forth in the Offering Circular under "Special
Factors Related to the Exchange Offer--Certain Effects of the Exchange Offer"
and "Special Factors Related to the Exchange Offer--Plans for the Company after
the Exchange Offer" is incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in the Offering Circular under "Special Factors
Related to the Exchange Offer--Interest of Certain Persons in Securities of the
Company; Contracts, Arrangements or Understandings With Respect to Securities of
the Company" is incorporated herein by reference.
<PAGE>
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The information set forth in the Offering Circular under "Special Factors
Related to the Exchange Offer--Interest of Certain Persons in Securities of the
Company; Contracts, Arrangements or Understandings With Respect to Securities of
the Company" is incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Offering Circular under "The Exchange
Offer--Fees and Expenses" is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)(1), (a)(2), (a)(4) The information set forth in the Offering Circular
under "Selected Historical Consolidated Financial Data," the information set
forth in the Company's Annual Report on Form 20-F for the fiscal year ended
November 30, 1998, filed as Exhibit (g)(1) hereto, and the Company's Report on
Form 6-K dated October 13, 1999, filed as Exhibit (g)(2) hereto, are
incorporated herein by reference.
<TABLE>
<CAPTION>
FOR THE FOR THE NINE
YEARS ENDED MONTHS ENDED
NOVEMBER 30, AUGUST 31,
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1998 1997 1999 1998
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<S> <C> <C> <C> <C>
(a)(3) The ratio of earnings to fixed charges.......... 2.4 4.3 1.4 2.8
</TABLE>
(b) The information set forth in the Offering Circular under
"Capitalization" is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in the Offering Circular under "The Exchange
Offer--Luxembourg Law Requirements; Amendment to Articles of Incorporation;
Mandatory Conversion" and "The Exchange Offer--Certain Legal Matters; Regulatory
and Foreign Approvals" is incorporated herein by reference.
(c) The information set forth in the Offering Circular under "Special
Factors Related to the Exchange Offer--Certain Effects of the Exchange
Offer--Margin Regulations" is incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in the Offering Circular and the related
Letter of Transmittal are incorporated herein by reference in their entirety.
2
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
Exhibit (a)(1) Offering Circular.
Exhibit (a)(2) Letter of Transmittal.
Exhibit (a)(3) Form of letter to brokers, dealers, commercial banks, trust
companies and other nominees.
Exhibit (a)(4) Form of letter to clients of brokers, dealers, commercial
banks, trust companies and other nominees.
Exhibit (a)(5) Press release, dated January 14, 2000.
Exhibit (a)(6) Notice of Guaranteed Delivery.
Exhibit (a)(7) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
Exhibit (a)(8) Notice of Election to Exchange Options.
Exhibit (a)(9) Form of letter to holders of Common Shares and Class B
Shares.
Exhibit (a)(10) Form of letter to holders of options to purchase Common
Shares.
Exhibit (b) Not applicable.
Exhibit (c) Not applicable.
Exhibit (d) Not applicable.
Exhibit (e) Not applicable.
Exhibit (f) Not applicable.
Exhibit (g)(1) Pages 24 through 43 of Stolt-Nielsen S.A.'s Annual Report on
Form 20-F for the fiscal year ended November 30, 1998.
Exhibit (g)(2) Pages 5 through 7 of Stolt-Nielsen S.A.'s Report on Form 6-K
dated October 13, 1999.
</TABLE>
3
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
<TABLE>
<S> <C>
Dated: January 21, 2000 STOLT-NIELSEN S.A.
By: /s/ JAN CHR. ENGELHARDTSEN
-------------------------------------------
Name: Jan Chr. Engelhardtsen
Title: Chief Financial Officer
</TABLE>
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
Exhibit (a)(1) Offering Circular.
Exhibit (a)(2) Letter of Transmittal.
Exhibit (a)(3) Form of letter to brokers, dealers, commercial banks, trust
companies and other nominees.
Exhibit (a)(4) Form of letter to clients of brokers, dealers, commercial
banks, trust companies and other nominees.
Exhibit (a)(5) Press release, dated January 14, 2000.
Exhibit (a)(6) Notice of Guaranteed Delivery.
Exhibit (a)(7) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
Exhibit (a)(8) Notice of Election to Exchange Options.
Exhibit (a)(9) Form of letter to holders of Common Shares and Class B
Shares.
Exhibit (a)(10) Form of letter to holders of options to purchase Common
Shares.
Exhibit (b) Not applicable.
Exhibit (c) Not applicable.
Exhibit (d) Not applicable.
Exhibit (e) Not applicable.
Exhibit (f) Not applicable.
Exhibit (g)(1) Pages 24 through 43 of Stolt-Nielsen S.A.'s Annual Report on
Form 20-F for the fiscal year ended November 30, 1998.
Exhibit (g)(2) Pages 5 through 7 of Stolt-Nielsen S.A.'s Report on Form 6-K
dated October 13, 1999.
</TABLE>
5
<PAGE>
OFFERING CIRCULAR
STOLT-NIELSEN S.A.
OFFER TO EXCHANGE CLASS B SHARES
AND CLASS B OPTIONS
FOR ANY AND ALL COMMON SHARES
AND COMMON OPTIONS
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON FRIDAY, FEBRUARY 18, 2000, UNLESS THE EXCHANGE OFFER IS EXTENDED.
Stolt-Nielsen S.A., a company organized under the laws of Luxembourg (the
"Company"), hereby offers, on the terms and subject to the conditions set forth
in this Offering Circular and the related Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange one Class B Share, no par value
(together, the "Class B Shares"), for each outstanding Common Share, no par
value (together, the "Common Shares"), and one option to purchase one Class B
Share (together, the "Class B Options") for each outstanding option to purchase
one Common Share (together, the "Common Options"). As of January 14, 2000, there
were 29,364,183 Common Shares outstanding and 25,211,919 Class B Shares
outstanding, and 1,367,125 Common Options outstanding and 1,424,532 Class B
Options outstanding.
THE EXCHANGE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF COMMON SHARES
OR COMMON OPTIONS BEING TENDERED. THE EXCHANGE OFFER IS, HOWEVER, SUBJECT TO
CERTAIN OTHER CONDITIONS AS SET FORTH HEREIN. SEE "THE EXCHANGE OFFER--CERTAIN
CONDITIONS OF THE EXCHANGE OFFER."
The Common Shares are listed on the Nasdaq National Market ("Nasdaq") under
the symbol "STLTF." The Class B Shares are listed on Nasdaq in the form of
American Depositary Shares, each representing one Class B Share ("ADSs"), under
the symbol "STLBY" and are listed on the Oslo Stock Exchange ("OSE") under the
symbol "SNIB." Application has been made to list the additional ADSs to be
issued to tendering holders of Common Shares pursuant to the Exchange Offer on
Nasdaq, and the Class B Shares to be issued to tendering holders will be listed
on the OSE upon confirmation to the OSE from the Company's counsel that the
Exchange Offer has been consummated. Outstanding Common Options and Class B
Options have been granted to employees and directors of the Company under the
Company's 1987 Stock Option Plan and 1997 Stock Option Plan (collectively, the
"Option Plans").
SEE "SPECIAL FACTORS RELATED TO THE EXCHANGE OFFER" FOR A DISCUSSION OF
CERTAIN MATTERS THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER.
On January 13, 2000, the last full trading day before the announcement of
the Exchange Offer, the reported closing sale price of the Common Shares on
Nasdaq was $16.50 per share. Also on such date, the reported closing sale price
of the ADSs on Nasdaq was $18.25 per ADS and the closing sale price of the
Class B Shares on the OSE was NOK 146 per share. HOLDERS ARE URGED TO OBTAIN A
CURRENT MARKET QUOTATION FOR THE COMMON SHARES, THE CLASS B SHARES AND THE ADSS.
The Exchange Offer will expire at 5:00 p.m., New York City time, on Friday,
February 18, 2000, unless extended (the "Expiration Date"). Subject to the terms
and conditions of the Exchange Offer, the Company will accept for exchange any
and all Common Shares and Common Options which are properly tendered in the
Exchange Offer and not withdrawn prior to the Expiration Date. Tenders of Common
Shares or Common Options may be withdrawn at any time prior to the Expiration
Date or, unless previously accepted for exchange, after 12:00 midnight, New York
City time, on Monday, March 20, 2000.
Subject to the applicable securities laws and the terms set forth in this
Offering Circular, the Company reserves the right to waive any and all
conditions to the Exchange Offer, to extend the Exchange Offer and otherwise to
amend the Exchange Offer in any respect.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS OFFERING CIRCULAR. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS OFFERING CIRCULAR IS JANUARY 21, 2000.
<PAGE>
Holders who participate in the Exchange Offer may elect to receive Class B
Shares in the form of ADSs (each representing one Class B Share) or
uncertificated Class B Shares registered in the Verdipapirsentralen ("VPS")
system in Norway. Tendering holders of Common Shares will receive ADSs
representing Class B Shares in the Exchange Offer unless they elect to receive
Class B Shares by so indicating on the Letter of Transmittal. In the absence of
such election, the Class B Shares will be deposited with Citibank, N.A., as
Depositary (the "Depositary"), under a Deposit Agreement dated as of
December 22, 1995 (the "Deposit Agreement") and the tendering holder will
receive one ADS for each Common Share tendered. See "The Exchange
Offer--Election to Receive Class B Shares Instead of ADSs" and "Description of
American Depositary Shares."
------------------------
NONE OF THE COMPANY, THE BOARD OF DIRECTORS OF THE COMPANY, THE EXECUTIVE
OFFICERS OF THE COMPANY, THE FINANCIAL ADVISOR (AS DEFINED HEREIN), THE
INFORMATION AGENT (AS DEFINED HEREIN) OR THE EXCHANGE AGENT (AS DEFINED HEREIN)
MAKES ANY RECOMMENDATION AS TO WHETHER OR NOT ANY HOLDER OF COMMON SHARES OR
COMMON OPTIONS SHOULD EXCHANGE ANY OR ALL OF SUCH HOLDER'S COMMON SHARES OR
COMMON OPTIONS PURSUANT TO THE EXCHANGE OFFER. ADDITIONALLY, NO PERSON HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. EACH OF SNTG (AS DEFINED HEREIN),
NYK (AS DEFINED HEREIN) AND FIDUCIA LTD. (AN ENTITY AFFILIATED WITH THE
STOLT-NIELSEN FAMILY) HAS INFORMED THE COMPANY THAT IT DOES NOT INTEND TO TENDER
ANY COMMON SHARES PURSUANT TO THE OFFER. THE COMPANY HAS BEEN ADVISED THAT THE
DIRECTORS AND OFFICERS OF THE COMPANY WHO ARE MEMBERS OF THE STOLT-NIELSEN
FAMILY INTEND TO EXCHANGE THEIR COMMON SHARES HELD OUTSIDE OF FIDUCIA LTD. AND
THEIR COMMON OPTIONS, AND THAT THE OTHER DIRECTORS AND EXECUTIVE OFFICERS INTEND
TO EXCHANGE ALL OF THEIR COMMON SHARES AND COMMON OPTIONS PURSUANT TO THE OFFER.
EACH HOLDER OF COMMON SHARES OR COMMON OPTIONS MUST MAKE SUCH HOLDER'S OWN
DECISION WHETHER OR NOT TO EXCHANGE COMMON SHARES OR COMMON OPTIONS AND, IF SO,
HOW MANY COMMON SHARES OR COMMON OPTIONS TO EXCHANGE.
------------------------
THE INFORMATION AGENT FOR THE EXCHANGE OFFER IS:
D.F. KING & CO., INC.
ii
<PAGE>
IMPORTANT
The Class B Shares have generally traded at a premium over the Common Shares
since the Class B Shares were first offered to the public in 1996. The Company
believes that this disparity primarily relates to the greater liquidity of the
Class B Shares: the Class B Shares are listed for trading in both the United
States and Norway, and a greater percentage, as well as a greater absolute
number, of Class B Shares are held by investors who are not affiliated with the
Company. If successful, the Exchange Offer should result in improved market
liquidity of the Class B Shares, to the extent it results in a greater number of
publicly held Class B Shares outstanding following the Exchange Offer. This, in
turn, could result in a higher level of investor interest and a lower cost of
equity for the Company.
The Exchange Offer is being made by the Company in reliance on the exemption
from the registration requirements of the Securities Act of 1933, as amended
(the "Securities Act"), afforded by Section 3(a)(9) thereof. The Company
therefore will not pay any commission or other remuneration to any broker,
dealer, salesman or other person for soliciting tenders of Common Shares or
Common Options. The Company has retained D.F. King & Co., Inc. as information
agent (the "Information Agent") to assist the Company in administering the
Exchange Offer and to provide information to holders of Common Shares and Common
Options. The Company has agreed to pay the Information Agent a reasonable and
customary fee plus disbursements for these services, regardless of how many
Common Shares or Common Options are tendered. The Information Agent has not made
and will not make any recommendation to holders of Common Shares or Common
Options with respect to whether or not they should tender their Common Shares or
Common Options in the Exchange Offer. Officers, directors and employees of the
Company may solicit exchanges from holders of Common Shares or Common Options so
long as they do not receive additional compensation therefor.
The Company has made no arrangements for and has no understanding with any
dealer or other person regarding the solicitation of tenders hereunder, and no
person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Offering Circular. If given or made, such information or representations
should not be relied upon as having been authorized by the Company. Neither the
delivery of this Offering Circular and the accompanying Letter of Transmittal,
nor the distribution of securities hereunder shall under any circumstances
create an implication that the information contained herein is correct as of any
time subsequent to the date hereof or that there has been no change in the
information set forth herein or in the affairs of the Company or its
subsidiaries since the date hereof.
EXCEPT AS OTHERWISE DESCRIBED BELOW, THE EXCHANGE OFFER IS NOT BEING MADE
TO, NOR WILL THE COMPANY ACCEPT TENDERS FROM OR ON BEHALF OF, OWNERS OF COMMON
SHARES OR COMMON OPTIONS IN ANY JURISDICTION IN WHICH THE MAKING OF THE EXCHANGE
OFFER OR ITS ACCEPTANCE WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. EXCEPT AS OTHERWISE DESCRIBED BELOW, THE COMPANY IS NOT AWARE OF
ANY JURISDICTION WHERE THE MAKING OF THE EXCHANGE OFFER OR THE TENDER OF COMMON
SHARES OR COMMON OPTIONS WOULD NOT BE IN COMPLIANCE WITH APPLICABLE LAW. IF THE
COMPANY BECOMES AWARE OF ANY JURISDICTION WHERE THE MAKING OF THE EXCHANGE OFFER
OR THE TENDER OF COMMON SHARES OR COMMON OPTIONS IS NOT IN COMPLIANCE WITH ANY
APPLICABLE LAW, THE COMPANY WILL MAKE A GOOD FAITH EFFORT TO COMPLY WITH SUCH
LAW. IF, AFTER SUCH GOOD FAITH EFFORT, THE COMPANY CANNOT COMPLY WITH SUCH LAW,
THE EXCHANGE OFFER WILL NOT BE MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON
BEHALF OF) THE HOLDERS OF COMMON SHARES OR COMMON OPTIONS RESIDING IN SUCH
JURISDICTION.
iii
<PAGE>
NOTICE TO NORWEGIAN RESIDENTS
THE EXCHANGE OFFER WILL NOT BE MADE TO HOLDERS OF COMMON SHARES DOMICILED
IN, OR WITH REGISTERED ADDRESSES IN, NORWAY UNTIL SUCH TIME AS SUPPLEMENTAL
OFFERING MATERIALS HAVE BEEN REVIEWED AND APPROVED BY THE OSE. BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR OTHER NOMINEES WHO HOLD COMMON SHARES IN
THEIR NAME FOR THE ACCOUNT OF CLIENTS DOMICILED IN, OR WITH REGISTERED ADDRESSES
IN, NORWAY MUST NOT FORWARD COPIES OF THE OFFERING CIRCULAR AND LETTER OF
TRANSMITTAL TO SUCH CLIENTS WITHOUT SIMULTANEOUSLY FORWARDING THE SUPPLEMENTAL
OFFERING MATERIALS TO SUCH CLIENTS. SUCH SUPPLEMENTAL OFFERING MATERIALS WILL BE
AVAILABLE FROM DEN NORSKE BANK VERDIPAPIRSERVICE ASA, STRANDEN 21, 0250 OSLO,
NORWAY, TEL. 22-48-10-50, FAX. 22-48-11-71, ATTN: GRETHE NES OR KETIL GIIL BERG.
------------------------
Any holder of Common Shares desiring to exchange all or any portion of such
holder's Common Shares should either (1) complete and sign the Letter of
Transmittal in accordance with the instructions in the Letter of Transmittal,
mail or deliver it and any other documents required by the Letter of Transmittal
to First Chicago Trust Company of New York, the exchange agent for the Exchange
Offer (the "Exchange Agent"), and either mail or deliver the certificates for
such Common Shares to the Exchange Agent along with the Letter of Transmittal or
Agent's Message (as defined herein) or follow the procedure for book-entry
transfer set forth in "The Exchange Offer--Procedure for Exchanging Common
Shares," or (2) request such holder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such holder. A HOLDER
HAVING COMMON SHARES 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 HOLDER DESIRES TO
EXCHANGE SUCH COMMON SHARES IN THE EXCHANGE OFFER.
TO PARTICIPATE IN THE EXCHANGE OFFER, HOLDERS OF COMMON OPTIONS MUST
EXCHANGE ALL OF THEIR COMMON OPTIONS FOR CLASS B OPTIONS. PARTIAL EXCHANGES OF
COMMON OPTIONS WILL NOT BE PERMITTED. Any holder of Common Options desiring to
exchange all of such holder's Common Options should complete and sign the Notice
of Election to Exchange Options (the "Notice of Election") or a copy thereof and
either mail or deliver such executed Notice of Election (or a facsimile
thereof), and, if available, the letters or other instruments representing such
Common Options to (i) in the case of land-based personnel, Mindy Miles,
Stolt-Nielsen Transportation Group Ltd., 8 Sound Shore Drive, P.O. Box 2300,
Greenwich, Connecticut 06836, USA (telephone number 1-203-625-3675 and facsimile
number 1-203-625-3917) and (ii) in the case of sea personnel, Hogne von der
Fehr, Stolt-Nielsen Transportation Group Ltd., Shipowning Division, 15635
Jacintoport Blvd., Houston, Texas 77015-6534, USA (telephone number
1-281-860-5138 and facsimile number 1-281-860-5176) on or prior to the
Expiration Date. If a Common Option holder who delivers a properly executed
Notice of Election to exchange Common Options for Class B Options cannot deliver
the letters or other instruments representing such Common Options prior to the
Expiration Date, the Company will make an appropriate notation in the Company's
records so that such Common Options will thereafter, without any further action
on the part of the holder, be deemed to represent only options to purchase Class
B Shares. The option exercise price, exercise period and terms and conditions of
exercise and all other terms of the new Class B Options will be identical to
such terms of the Common Options exchanged, except that all such Class B Options
will be non-qualified stock options for U.S. Federal income tax purposes.
HOLDERS OF COMMON SHARES MUST PROPERLY COMPLETE THE LETTER OF TRANSMITTAL
(OR AN AGENT'S MESSAGE IN CONNECTION WITH A BOOK-ENTRY DELIVERY) IN ORDER TO
EFFECT A VALID TENDER OF THEIR COMMON SHARES. HOLDERS OF
iv
<PAGE>
COMMON OPTIONS MUST PROPERLY COMPLETE THE NOTICE OF ELECTION IN ORDER TO EFFECT
A VALID TENDER OF THEIR COMMON OPTIONS.
A holder who desires to exchange Common Shares and whose certificates for
such Common Shares are not immediately available (or who cannot follow the
procedure for book-entry transfer on a timely basis) or who cannot transmit the
Letter of Transmittal and all other required documents to the Exchange Agent
before the Expiration Date should tender such Common Shares by following the
procedure for guaranteed delivery set forth in "The Exchange Offer--Procedure
for Exchanging Common Shares."
Any questions or requests for assistance or for additional copies of this
Offering Circular, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at its address and telephone
numbers set forth on the back cover of this Offering Circular. Holders of Common
Shares may also contact their broker, dealer, commercial bank, trust company or
other nominee for assistance concerning the Exchange Offer.
v
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary of the Exchange Offer............................... 1
Forward-Looking Statements.................................. 6
Enforceability of Civil Liabilities......................... 6
Available Information....................................... 6
Information for Holders of Common Shares Resident in
Norway.................................................... 7
Incorporation of Certain Documents By Reference............. 7
The Company................................................. 8
Selected Historical Consolidated Financial Data............. 9
Capitalization.............................................. 10
Market And Price Ranges of Securities; Dividends............ 11
Special Factors Related to the Exchange Offer............... 13
The Exchange Offer.......................................... 19
Certain U.S. Federal and Non-U.S. Income Tax
Considerations............................................ 30
Description of Capital Stock................................ 32
Description of American Depositary Shares................... 35
Description of the Option Plans............................. 43
</TABLE>
vi
<PAGE>
SUMMARY OF THE EXCHANGE OFFER
This summary is provided solely for the convenience of the holders of Common
Shares and Common Options and is qualified in its entirety by the detailed
information appearing elsewhere in this Offering Circular or incorporated by
reference herein. Holders are urged to read this Offering Circular in its
entirety prior to tendering any of their Common Shares or Common Options. Terms
used in this summary and not defined herein shall have the meanings given to
them elsewhere in this Offering Circular.
<TABLE>
<S> <C>
Exchange Ratio................ One Class B Share for each Common Share. One Class B Option
for each Common Option. Holders who participate in the
Exchange Offer may elect to receive Class B Shares in the
form of ADSs (each representing one Class B Share) or
uncertificated Class B Shares registered in the VPS system
in Norway.
Expiration Date............... 5:00 p.m., New York City time, on Friday, February 18, 2000,
unless extended by the Company. See "The Exchange
Offer--Terms of the Exchange Offer."
Background and Purposes of the
Exchange Offer.............. The Exchange Offer provides holders of the Common Shares the
opportunity to exchange Common Shares for Class B Shares
having recent market prices in excess of the recent market
prices of the Common Shares prior to the initial public
announcement of the Exchange Offer. Holders of Common
Options will have a similar opportunity in that they may
exchange their Common Options for Class B Options to
purchase such Class B Shares. The Company believes that a
single class of publicly held shares with increased
liquidity could result in a lower cost of equity for the
Company. Moreover, the Company believes that the Class B
Shares, rather than the Common Shares, should be the
publicly traded class because of the greater liquidity that
the Class B Shares currently enjoy (evidenced, in part, by
the generally higher trading prices for the Class B Shares
based on historical trading activity). The price
differential of the Common Shares and Class B Shares (in ADS
form) on Nasdaq recently has been as great as $3.69 (or
25%). The Company believes that the Exchange Offer should
provide greater market liquidity for the Class B Shares.
This, in turn, should enhance investor interest in the Class
B Shares, particularly to the extent it results in a greater
number of publicly held Class B Shares outstanding following
the consummation of the Exchange Offer. See "Special Factors
Related to the Exchange Offer."
Procedures for Exchanging
Common Shares............... Each holder of Common Shares who wishes to exchange his or
her Common Shares must deliver the following documents prior
to the Expiration Date to the Exchange Agent at one of its
addresses set forth herein: (i) certificates representing
such Common Shares together with the Letter of Transmittal,
properly completed and duly executed by such holder, and all
other documents required by such Letter of Transmittal, (ii)
if such holder wishes to deliver his or her Common Shares
through book-entry transfer, confirmation of such transfer
together with an Agent's Message, or an applicable Letter of
Transmittal, properly completed and duly executed by such
holder,
</TABLE>
1
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<TABLE>
<S> <C>
and all other documents required by such Letter of
Transmittal, or (iii) if such holder wishes to tender by
guaranteed delivery, a properly completed and duly executed
Notice of Guaranteed Delivery. A holder having Common Shares
registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such registered
holder promptly if such holder wishes to exchange such
Common Shares in the Exchange Offer. LETTERS OF TRANSMITTAL,
NOTICES OF GUARANTEED DELIVERY AND COMMON SHARE CERTIFICATES
SHOULD BE SENT TO THE EXCHANGE AGENT AND NOT TO THE COMPANY.
See "The Exchange Offer--Procedure for Exchanging Common
Shares."
Procedures for Exchanging
Common Options.............. Each holder of Common Options who wishes to exchange his or
her Common Options must deliver prior to the Expiration Date
a Notice of Election, properly completed and duly executed
by such holder, and, if available, the letters or other
instruments representing such Common Options. Such documents
should be delivered to (i) in the case of land-based
personnel, Mindy Miles, Stolt-Nielsen Transportation Group
Ltd., 8 Sound Shore Drive, P.O. Box 2300, Greenwich,
Connecticut 06836, USA (telephone number 1-203-625-3675 and
facsimile number 1-203-625-3917) and (ii) in the case of sea
personnel, Hogne von der Fehr, Stolt-Nielsen Transportation
Group Ltd., Shipowning Division, 15635 Jacintoport Blvd.,
Houston, Texas 77015-6534, USA (telephone number
1-281-860-5138 and facsimile number 1-281-860-5176). If a
Common Option holder who delivers a duly executed Notice of
Election to exchange Common Options for Class B Options
cannot deliver the letters or other instruments representing
such Common Options prior to the Expiration Date, the
Company will make an appropriate notation in the Company's
records so that such Common Options will thereafter, without
any further action on the part of the holder, be deemed to
represent only options to purchase Class B Shares. The
option exercise price, exercise period and terms and
conditions of exercise and all other terms of the new Class
B Options received will be the same as those of the Common
Options exchanged, except that all such Class B Options will
be non-qualified stock options for U.S. Federal income tax
purposes.
Holders of Common Options must exchange all of their Common
Options for Class B Options. Partial exchanges of Common
Options will not be permitted. See "The Exchange
Offer--Procedure for Exchanging Common Options."
Acceptance of Common Shares or
Common Options and Delivery
of Class B Shares or Class B
Options..................... Subject to the terms and conditions of the Exchange Offer,
the Company will accept for exchange any and all Common
Shares or Common Options which are properly tendered in the
Exchange Offer and not withdrawn prior to the Expiration
Date. The Company
</TABLE>
2
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<TABLE>
<S> <C>
will deliver Class B Shares (at the election of the holder,
in either ADS or registered form) or Class B Options to
tendering holders of Common Shares or Common Options
promptly following the Expiration Date. See "The Exchange
Offer--Acceptance of Common Shares for Exchange; Delivery of
Class B Shares," "--Election to Receive Class B Shares
Instead of ADSs" and "--Acceptance of Common Options for
Exchange; Delivery of Class B Options."
Withdrawal of Tenders......... Tenders may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date or, unless previously
accepted for exchange, after 12:00 midnight, New York City
time, on Monday, March 20, 2000. See "The Exchange
Offer--Withdrawal Rights."
Conditions of the Exchange
Offer....................... The Exchange Offer is not conditioned on any minimum number
of Common Shares or Common Options being tendered for
exchange. The Exchange Offer is, however, subject to certain
other conditions as set forth herein, any or all of which
may be waived by the Company. See "The Exchange
Offer--Certain Conditions of the Exchange Offer."
Amendment to Articles of
Incorporation............... The Company intends to convene an Extraordinary General
Meeting on February 16, 2000 to amend the Company's Articles
of Incorporation (the "Company's Articles") to provide for
the conversion of tendered Common Shares into Class B
Shares. Shareholder approval of such amendment is assured
because Jacob Stolt-Nielsen and Fiducia Ltd. control an
aggregate of approximately 70% of the shares entitled to
vote on the amendment (Fiducia Ltd. is a Bermuda company
owned by trusts, the beneficiaries of which are members of
the Stolt-Nielsen family). See "The Exchange Offer--
Luxembourg Law Requirements; Amendment to Articles of
Incorporation; Mandatory Conversion."
Mandatory Conversion.......... Luxembourg Company Law requires that there not be more
issued Class B Shares than there are issued Common Shares.
When Common Shares are exchanged for Class B Shares pursuant
to the Exchange Offer, this requirement will not be
satisfied unless additional Common Shares are issued. To
satisfy this requirement, the Board of Directors of the
Company, consistent with authority granted to it in the
Company's Articles, has resolved to require that the Class B
Shares of, first, (i) Stolt-Nielsen Transportation Group
Ltd., a subsidiary of the Company ("SNTG"), and then, to the
extent necessary, (ii) Fiducia Ltd., be converted into
Common Shares on a share-for-share basis (the "Mandatory
Conversion"). It is expected that the Mandatory Conversion
will occur promptly upon expiration of the Exchange Offer
once the Company has determined the amount of Class B Shares
to be exchanged for Common Shares as a result of the
Exchange Offer. See "The Exchange Offer--Luxembourg Law
Requirements; Amendment to Articles of Incorporation;
Mandatory Conversion."
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
The Company has been informed that SNTG, Fiducia Ltd. and
Nippon Yusen Kaisha Ltd., a significant shareholder of the
Company ("NYK"), do not intend to exchange their Common
Shares for Class B Shares in the Exchange Offer.
Voting Control................ If all outstanding Common Shares, other than Common Shares
owned by SNTG, Fiducia Ltd. and NYK, are exchanged for Class
B Shares, and assuming that the Mandatory Conversion occurs,
the Stolt-Nielsen family, directly and indirectly through
Fiducia Ltd., will increase its ownership of outstanding
Common Shares from approximately 62% to approximately 88%.
Additionally, assuming the foregoing circumstances, as a
result of Jacob Stolt-Nielsen's ownership of all of the
Company's Founder's Shares (as defined herein), the
Stolt-Nielsen family would, directly and indirectly through
Fiducia Ltd., increase its ownership of outstanding shares
generally entitled to vote on all matters submitted to a
shareholder vote from approximately 70% to approximately
91%. Common Shares held by SNTG are treated as treasury
shares and are not entitled to vote pursuant to Luxembourg
law. See "The Exchange Offer--Luxembourg Law Requirements;
Amendment to Articles of Incorporation; Mandatory
Conversion."
Description of Capital
Stock....................... As of January 14, 2000, there were 29,364,183 Common Shares
outstanding and 25,211,919 Class B Shares outstanding. The
Company also has a class of Founder's Shares, no par value
(the "Founder's Shares"), owned entirely by Jacob
Stolt-Nielsen. The Founder's Shares, at all times,
constitute 20% of the Company's voting shares.
VOTING. The Common Shares and the Founder's Shares are each
entitled to one vote at all meetings of shareholders, except
as otherwise provided in the Company's Articles or by
Luxembourg law. Class B Shares generally have voting rights
to the limited extent required by the Luxembourg Company
Law. See "Description of Capital Stock--Voting Rights."
DIVIDENDS. Common Shares, Class B Shares and Founder's
Shares participate in annual dividends, if any, in the
following order of priority:
(i) 10% of the stated value thereof (I.E., $0.10 per share)
to Class B Shares as a preferred dividend;
(ii) US$0.005 per share to Founder's Shares and Common
Shares equally;
(iii) US$0.095 per share to Common Shares; and
(iv) thereafter, Common Shares and Class B Shares equally in
all further amounts. See "Description of Capital
Stock--Dividends."
DISSOLUTION, LIQUIDATION. In the event of dissolution or
liquidation of the Company, Class B Shares have priority
over Common Shares. See "Description of Capital
Stock--Liquidation Preference."
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
EQUAL TREATMENT. If the Company merges or consolidates with
another entity where such other entity will remain the
surviving entity, the holders of Class B Shares are entitled
to receive consideration which is not less than the per
share consideration received by any holder of Common Shares
in such transaction. See "Description of Capital
Stock--Equal Treatment Provision."
Certain U.S. Federal and
Non-U.S. Income Tax
Considerations.............. The exchange of the Class B Shares for Common Shares and the
Class B Options for Common Options should be treated as a
tax-free transaction for U.S. Federal income tax and
Luxembourg tax purposes. However, an exchange of Common
Shares or Common Options may be a taxable event for
residents of Norway. See "Certain U.S. Federal and Non-U.S.
Income Tax Considerations."
For Shareholders Residing in
Norway...................... The Exchange Offer will not be made to holders of Common
Shares domiciled in, or with registered addresses in, Norway
until such time as Norwegian offering materials have been
reviewed and approved by the OSE. Brokers, dealers,
commercial banks and trust companies who hold Common Shares
in their name for the account of clients domiciled in, or
with registered addresses in, Norway must not forward copies
of the Offering Circular and Letter of Transmittal to such
clients without simultaneously forwarding the Norwegian
offering materials to such clients. Such Norwegian offering
materials will be available from Den Norske Bank
Verdipapirservice ASA, Stranden 21, 0250 Oslo, Norway,
Tel. 22-48-10-50, Fax. 22-48-11-71, Attn: Grethe Nes or
Ketil Giil Berg. See "The Exchange Offer--Certain Legal
Matters; Regulatory and Foreign Approvals."
Exchange Agent................ First Chicago Trust Company of New York.
Information Agent............. D.F. King & Co., Inc.
</TABLE>
5
<PAGE>
FORWARD-LOOKING STATEMENTS
All forward-looking statements made by the Company (including those
incorporated by reference herein) involve material risks and uncertainties and
are subject to change based on various important factors which may be beyond the
Company's control. Accordingly, the Company's future performance and financial
results may differ materially from those expressed or implied in any
forward-looking statements. Although the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 do not apply to forward-looking
statements made in connection with tender offers, the Company believes that you
should be aware that factors which may affect future performance and financial
results include, but are not limited to: general economic and business
conditions; industry capacity; industry trends; competition; asset operational
performance; raw material costs and availability; currency fluctuations; disease
and other natural causes; immaturity of aquaculture technology; the loss of any
significant customers; changes in business strategy or development plans;
availability, terms and deployment of capital; availability of qualified
personnel; changes in, or the failure or inability to comply with, government
regulations; adverse weather conditions; and other factors referenced in the
Company's 1998 Annual Report (as defined herein).
ENFORCEABILITY OF CIVIL LIABILITIES
The Company is a corporation organized under the laws of Luxembourg. Several
of the Company's directors and officers reside and maintain most of their assets
outside the United States and it may not be possible to effect service of
process within the United States upon the Company or upon such persons, or to
enforce against them in U.S. courts judgments obtained in such courts predicated
upon the civil liability provisions of the U.S. Federal securities laws. The
Company has been advised by Elvinger, Hoss & Prussen, its Luxembourg counsel,
that there is substantial doubt as to whether the courts of Luxembourg would
(i) enforce judgments of U.S. courts obtained in actions against the Company or
such directors and officers predicated upon the civil liability provisions of
the U.S. Federal securities laws or (ii) entertain original actions brought in
Luxembourg against the Company or such directors and officers predicated solely
upon the civil liability provisions of the U.S. Federal securities laws. There
is no treaty in effect between the United States and Luxembourg providing for
such enforcement, and there are grounds upon which Luxembourg courts may choose
not to enforce judgments of United States courts. Certain remedies available
under the U.S. Federal securities laws would not be enforced by Luxembourg
courts as contrary to that nation's public policy.
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith the Company files reports and other information with the
U.S. Securities and Exchange Commission (the "SEC") as a foreign private issuer.
The reports and other information filed by the Company with the SEC can be
inspected and copied at the public reference facilities maintained by the SEC at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the regional offices of the SEC 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 such material also can be obtained at
prescribed rates from the Public Reference Section of the SEC, 450 Fifth Street,
N.W., Washington, D.C. 20549. In addition, the SEC maintains a home page on the
Internet (http://www.sec.gov) that contains certain reports and other
information filed by the Company. As a foreign private issuer, the Company is
exempt from certain provisions of the Exchange Act prescribing the furnishing
and content of proxy statements.
The Company furnishes to Citibank, N.A., as Depositary under the Deposit
Agreement, copies of all reports required to be filed by the Company with the
SEC under the Exchange Act, including its annual reports in English containing a
brief description of its operations and its audited annual consolidated
financial statements prepared in accordance with U.S. generally accepted
accounting principles and
6
<PAGE>
Regulation S-X of the SEC. In addition, the Company is required under the
Deposit Agreement to furnish the Depositary with copies of all notices of
meetings of holders of Class B Shares and other reports and communications that
are generally made available to such holders. Under certain circumstances, the
Depositary will arrange for the mailing, at the Company's expense, of such
notices, other reports and communications to all holders of ADSs.
INFORMATION FOR HOLDERS OF COMMON SHARES RESIDENT IN NORWAY
Pursuant to the Norwegian Securities Trading Act of 1997 (the "NSTA"),
holders of Common Shares residing in, or with registered addresses in, Norway
("Norwegian Shareholders") cannot accept the Exchange Offer until the OSE has
reviewed and approved this Offering Circular pursuant to the NSTA, chapter 5. To
satisfy the NSTA requirements the offering material made available to Norwegian
Shareholders will consist of this Offering Circular and the Letter of
Transmittal, plus supplemental offering materials that include the Company's
Form 20-F (including the 1998 Annual Report), filed in May 1999, and Form 6-K,
filed October 13, 1999. Norwegian Shareholders should contact Den norske Bank
Verdipapirservice ASA, Stranden 21, 0250 Oslo, telephone 22-48-10-50, fax no:
22-48-11-71 attention Grethe Nes or Ketil Giil Berg to receive the Norwegian
offering materials, as reviewed and approved by the OSE.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC by the Company are incorporated
by reference in this Offering Circular:
(a) Annual Report on Form 20-F for the fiscal year ended November 30,
1998 (the "1998 Annual Report"); and
(b) Report on Form 6-K, filed with the SEC on October 13, 1999,
containing the Interim Financial Statements (as defined herein).
Pursuant to Rule 13e-3 and Rule 13e-4 under the Exchange Act, the Company
has filed a Rule 13e-3 Transaction Statement on Schedule 13E-3 (the
"Schedule 13E-3") and an Issuer Tender Offer Statement on Schedule 13E-4 (the
"Schedule 13E-4") with the SEC with respect to the Exchange Offer. The
Schedule 13E-3 and the Schedule 13E-4, including exhibits, may be inspected or
copied as described under "Available Information."
All reports subsequently filed by the Company pursuant to Sections 13(a) and
(c) of the Exchange Act, including its reports on Form 6-K filed after the date
hereof and prior to the termination of the Exchange Offer (if the Company
identifies in such reports on Form 6-K that they are being incorporated by
reference in this Offering Circular), shall be deemed to be incorporated by
reference herein. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Offering Circular to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Offering Circular.
This Offering Circular incorporates by reference documents which are not
present herein or delivered herewith. The Company will provide without charge to
each person to whom this Offering Circular is delivered, on the request of any
such person, a copy of any or all of the foregoing documents incorporated herein
by reference (other than exhibits to such documents). Written or telephone
requests for such documents should be directed to the Information Agent at D.F.
King & Co., Inc., 77 Water Street, 20th Floor, New York, New York 10005,
(800) 347-4750 (toll free) or (212) 269-5550 (call collect).
As used herein, the term "Financial Statements" refers to (1) the Company's
audited consolidated balance sheets as of November 30, 1998 and 1997, and the
related consolidated statements of income,
7
<PAGE>
shareholders' equity and cash flows for each of the two years ended
November 30, 1998 and 1997 and the notes thereto (the "Company Financial
Statements") and (2) the Company's interim unaudited consolidated financial
statements as of August 31, 1999 and 1998 and for the nine month periods ended
August 31, 1999 and 1998 and the notes thereto (the "Interim Financial
Statements").
THE COMPANY
GENERAL
Stolt-Nielsen S.A. is a holding company which, through its subsidiaries, is
engaged in the worldwide transportation, storage and distribution of bulk liquid
chemicals, edible oils, acids and other specialty liquids; subsea services
covering all phases of offshore oil and gas operations from exploration to
decommissioning; and aquaculture, the production, marketing, and distribution of
farmed fish.
The Company was incorporated in Luxembourg in 1974. The Company's registered
office is located at 23, Avenue Monterey, L-2086 Luxembourg and it is registered
at the Companies' Registrar of the Luxembourg District Court under the
designation "R.C. Luxembourg B.12.179." The Company's principal executive
offices are c/o Stolt-Nielsen Limited, Aldwych House, 71-91 Aldwych, London WC2B
4HN, England; telephone number 44-171-611-8960. The Company's internet address
is www.stoltnielsen.com.
RECENT DEVELOPMENTS
The Company recently announced two joint ventures. In November 1999, SNTG
agreed to form a joint venture with Transportacion Maritima Mexicana, S.A. de
C.V. to develop parcel tanker services in the Gulf of Mexico and the Caribbean
Sea. In October 1999, SNTG and Marine Transport Corporation Inc. announced the
formation of a joint venture company, Stolt Marine Tankers Inc., which completed
the purchase of two chemical parcel tankers from Occidental Chemical Corporation
Inc.
On December 16, 1999, Stolt Comex Seaway S.A. ("Stolt Comex"), a subsidiary
of the Company, announced the acquisition of ETPM S.A., a French offshore
construction and engineering company and wholly owned subsidiary of Groupe GTM
S.A. ("GTM") for a total of $130 million in cash and 6.1 million Class A Shares
of Stolt Comex with guaranteed minimum net proceeds of $18.50 per share after
two years, if GTM holds such shares. In connection with the acquisition, Stolt
Comex agreed to assume net debt of $62 million and to enter into a hire bareboat
agreement for two ships owned by GTM, with an early purchase option. To
facilitate the financing of the ETPM S.A. acquisition, the Company will convert
$100 million of debt owed by Stolt Comex to the Company into approximately
10.3 million Class A Shares of Stolt Comex.
Stolt Comex also announced in December 1999 the completion of a transaction
with NKT Holding
A/S ("NKT") in which the two parties became joint owners of NKT Flexibles I/S, a
manufacturer of flexible flow lines and dynamic flexible risers for the offshore
oil and gas industry. NKT Flexibles is owned 51% by NKT and 49% by Stolt Comex.
NKT Flexibles was initially established in July 1999 by transferring the
flexible flow line business and assets of NKT Cables A/S into the new company.
Stolt Comex issued 1,758,242 Class A Shares with an average guaranteed value of
$14.475 per share and paid $10.5 million in cash for its 49% interest.
8
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data for the fiscal years ended
November 30, 1998 and 1997 are derived from the Company's audited consolidated
financial statements. The selected consolidated financial data for the nine
months ended August 31, 1999 and 1998 are unaudited and, in the opinion of
management, include all adjustments, all of which are of a normal recurring
nature, necessary for a fair presentation. This information should be read in
conjunction with the Company Financial Statements and the Interim Financial
Statements. Results of operations for the nine months ended August 31, 1999 and
1998 are not necessarily indicative of the results for the full year.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE NINE MONTHS ENDED
NOVEMBER 30, AUGUST 31,
------------------------- ---------------------------
1998 1997 1999 1998
--------- --------- --------- ---------
(IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net operating revenue................... $1,796.6 $1,526.1 $1,334.8 $1,294.4
Income from operations.................. 190.3 165.6 93.0 148.1
Non-recurring items, net................ 3.1 124.0 -- 2.3
Net recurring income.................... 93.2 113.1 31.5 80.3
Net income(a)........................... 96.3 237.1 31.5 82.6
Net income per share
Basic................................. 1.76 4.34 0.58 1.51
Diluted............................... 1.75 4.28 0.57 1.50
Net recurring income per share
Basic................................. 1.70 2.07 0.58 1.47
Diluted............................... 1.69 2.04 0.57 1.46
Weighted average number of Common and
Class B Shares and equivalents
outstanding
Basic................................. 54.7 54.7 54.5 54.7
Diluted............................... 55.0 55.4 54.9 55.1
Cash dividends per share................ $ 0.50 $ 0.50 $ 0.375 $ 0.50
</TABLE>
<TABLE>
<CAPTION>
AS OF NOVEMBER 30, AS OF AUGUST 31,
------------------------- -----------------------
1998 1997 1999 1998
--------- --------- -------- --------
(IN MILLIONS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets less current liabilities
(including current portion of long-term
debt)................................... $ 132.4 $ 112.0 $ 140.5 $ 133.4
Total assets.............................. 3,008.1 2,402.8 3,026.9 2,934.1
Long-term debt (including current
portion)................................ 1,128.9 776.6 1,164.4 1,071.6
Shareholders' equity...................... 1,132.4 1,062.6 1,126.3 1,105.0
Book value per share...................... 20.78 19.35 20.65 20.27
Total number of Common and Class B shares
outstanding............................. 54.5 54.9 54.6 54.5
</TABLE>
- ------------------------
(a) Includes the extraordinary benefit on early repayment of debt of
$7.4 million or $0.13 per share in 1997; and the gain on sale of common
stock of a subsidiary of $139.5 million or $2.52 per share in 1997.
9
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company and its consolidated subsidiaries which should be read in conjunction
with the Company Financial Statements and the Interim Financial Statements. The
capitalization of the Company has been adjusted on a pro forma basis to reflect
(i) the Exchange Offer for the Common Shares being accepted on a 100% basis
(other than with respect to Common Shares held by SNTG, Fiducia Ltd. and NYK,
which are not expected to be exchanged) and (ii) the Mandatory Conversion
assuming the related exchange level.
<TABLE>
<CAPTION>
AUGUST 31, 1999
------------------------------
ACTUAL AS ADJUSTED(1)(3)
---------- -----------------
(IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
Short-term bank loans....................................... $ 8,860 $ 8,860
Current maturities long-term debt........................... 75,280 75,280
---------- ----------
Total short-term debt..................................... $ 84,140 $ 84,140
========== ==========
Long-term debt.............................................. $1,089,151 $1,089,151
========== ==========
Shareholder's equity
Founder's Shares, no par value, 15,000,000 Shares
authorized, 7,818,059 outstanding, 7,967,889 as
adjusted(2)............................................. -- --
Common Shares, no par value, 60,000,000 shares authorized,
31,272,238 outstanding, 31,871,556 outstanding, as
adjusted................................................ 31,272 31,872
Class B Shares, no par value, 60,000,000 shares
authorized, 30,970,874 outstanding, 30,371,556
outstanding, as adjusted................................ 30,971 30,372
Paid-in surplus............................................. $ 347,531 $ 347,531
Retained earnings(1)........................................ $ 895,629 $ 894,834
Cumulative translation adjustment........................... $ (45,038) $ (45,038)
Less--Treasury stock, 1,921,905 Common Shares and 5,766,905
Class B Shares, 7,688,810 Common Shares, as adjusted, 0
Class B Shares, as adjusted............................... $ (134,024) $ (134,024)
---------- ----------
Total shareholders' equity................................ $1,126,341 $1,125,546
---------- ----------
Total capitalization...................................... $2,215,492 $2,214,697
========== ==========
</TABLE>
- ------------------------
(1) As adjusted to reflect estimated offering expenses of $795,000.
(2) To maintain the Founder's Shares ratio of one Founder's Share to every four
Common Shares.
(3) As adjusted assumes that at the date of consummation of the Exchange Offer
the Common Shares and Class B Shares are trading at equal value.
10
<PAGE>
MARKET AND PRICE RANGES OF SECURITIES; DIVIDENDS
PRICE RANGE OF SECURITIES
The Class B Shares are traded on Nasdaq in the form of ADSs under the symbol
"STLBY" and on the OSE under the symbol "SNIB". The Common Shares are traded on
Nasdaq under the symbol "STLTF." The table that follows sets forth, for the
calendar quarters indicated, the reported high and low closing sales prices of
the Class B Shares and the Common Shares as reported by Nasdaq and the OSE.
<TABLE>
<CAPTION>
NASDAQ
ADSS
NASDAQ CLASS B SHARES OSLO STOCK EXCHANGE
COMMON SHARES EQUIVALENT CLASS B SHARES
------------------- ------------------- -------------------------
2000 HIGH LOW HIGH LOW HIGH LOW
- ---- -------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1st Quarter
(to January 20, 2000)......... $18.250 $11.750 $18.750 $14.625 NOK 155.00 NOK 120.00
<CAPTION>
1999
- ----
4th Quarter. 15.875 11.875 18.063 14.375 145.00 122.00
<S> <C> <C> <C> <C> <C> <C>
3rd Quarter................... 16.750 12.750 19.250 14.750 148.00 118.00
2nd Quarter................... 14.500 10.500 15.938 11.750 127.50 96.00
1st Quarter................... 12.750 9.000 12.250 9.875 95.00 73.00
<CAPTION>
1998
- ----
4th Quarter. 14.625 10.375 13.500 9.500 97.50 75.00
<S> <C> <C> <C> <C> <C> <C>
3rd Quarter................... 18.750 10.500 19.000 10.000 147.00 90.00
2nd Quarter................... 20.625 17.250 20.375 17.750 152.00 137.00
1st Quarter................... 22.375 17.125 23.500 17.625 170.00 138.00
</TABLE>
On January 13, 2000, the last full trading day before the announcement of
the Exchange Offer, the reported closing sale price of the Common Shares on
Nasdaq was $16.50 per share. On such date, the reported closing sale price of
the ADSs on Nasdaq was $18.25 and of the Class B Shares on the OSE was NOK 146.
On the last full trading day before the commencement of the Exchange Offer, the
reported closing sales price of the Common Shares on Nasdaq was 18.25 per share.
On such date, the reported closing sales price of the ADSs on Nasdaq was 18.75
and on the OSE was NOK 155. Holders are urged to obtain a current market
quotation for the Common Shares, the Class B Shares and the ADSs.
As of January 14, 2000, there were 29,364,183 Common Shares outstanding and
1,367,125 Common Options. The Common Shares were held by approximately 360
shareholders of record, and the Common Options were held by approximately 251
persons.
DIVIDENDS
The following table sets forth the total dividend payments per Common Share,
Class B Share and Founder's Share made during the fiscal years indicated:
<TABLE>
<CAPTION>
CLASS OF STOCK 1997 1998 1999
- -------------- -------- -------- -----------------------
<S> <C> <C> <C>
Common Shares...................................... $0.500 $0.500 $0.375
Class B Shares..................................... $0.500 $0.500 $0.375
Founder's Shares................................... $0.005 $0.005 $0.005
</TABLE>
Cash dividends are normally paid twice a year in U.S. dollars. On
December 15, 1999, the Company paid an interim cash dividend for the 1999 fiscal
year of $0.125 per Common Share and per Class B Share to shareholders of record
as of December 1, 1999.
11
<PAGE>
The Company is party to certain loan agreements which include provisions
that limit the payment of dividends, the most restrictive of which are contained
in certain private placement agreements executed in 1996, 1997 and 1998. These
agreements provide for a cumulative limitation of dividends, share repurchases
and investments and advances to nonconsolidated companies and joint ventures.
The cumulative amount available is calculated by adding the sum of
(i) $56 million, (ii) 75 percent of consolidated net earnings (as defined in
such agreements) since November 30, 1995 and (iii) 100 percent of proceeds from
the sale of stock of the Company less dividends, share repurchases and
investments in and advances to nonconsolidated companies and joint ventures
since November 30, 1995. Most of the Company's loan agreements also contain
financial covenants that would prohibit the payment of dividends if the
covenants were breached as a result of such dividend payment or otherwise.
The Company has been advised by Elvinger, Hoss & Prussen that at the present
time there are no exchange controls in existence in Luxembourg which would
(i) restrict the export or import of capital, including, but not limited to,
foreign exchange controls, or (ii) affect the Company's ability to make payments
of dividends, interest or other amounts to nonresident shareholders.
12
<PAGE>
SPECIAL FACTORS RELATED TO THE EXCHANGE OFFER
BACKGROUND AND PURPOSE OF THE EXCHANGE OFFER
In 1996, when the Company first offered its Class B Shares to the public and
listed them on Nasdaq and the OSE, the Company announced that the Class B Shares
would be the Company's principal equity instrument. Since that time, the
Class B Shares have generally traded at a premium over the Common Shares. See
"Market and Price Ranges of Securities; Dividends." The Company believes that
this disparity primarily relates to the greater liquidity of the Class B Shares:
the Class B Shares are listed for trading in both the United States (Nasdaq) and
in Norway (OSE), and a greater percentage, as well as a greater absolute number,
of Class B Shares are held by investors who are not affiliated with the Company.
As of January 14, 2000, there were 8,360,746 publicly held Common Shares
(I.E., held by persons other than Fiducia Ltd., SNTG or NYK) while there were
13,710,110 publicly traded Class B Shares (including Class B Shares represented
by ADSs). Upon the completion of the Exchange Offer, assuming all Common Shares
are exchanged for Class B Shares (other than Common Shares owned by
Fiducia Ltd., SNTG or NYK, which are not expected to be exchanged in the
Exchange Offer), there will be 22,070,856 publicly traded Class B Shares.
The Company believes that the Exchange Offer will result in improved market
liquidity of the Class B Shares, to the extent it results in a greater number of
publicly held Class B Shares outstanding following the Exchange Offer. This, in
turn, could result in a higher level of institutional investor interest in the
Class B Shares, because a larger public float should allow larger purchase and
sale transactions in the Class B Shares without materially affecting the market
price thereof. Additionally, the Company anticipates that investor interest in
the Company in Norway could increase because the Class B Shares are already
listed on the OSE.
The Company believes that a single class of publicly held shares with
increased liquidity could result in a lower cost of equity for the Company.
From time to time in 1999, the Company reviewed alternative methods of
focusing the public trading markets on the Class B Shares. The Company examined
the possibility of undertaking a Common Share purchase program in accordance
with the safe harbor provided by Rule 10b-18 under the Exchange Act. The Company
considered financing the Common Share purchases with the proceeds of sales by
SNTG of Class B Shares held by SNTG. The Company, however, concluded that this
alternative was not desirable because the trading volume of Common Shares is
insufficient to support a Common Share purchase program that would result in
meaningful Common Share repurchases except over a very lengthy time frame. The
Exchange Offer was determined to be preferable because it could achieve the
desired result in a short time frame. Additionally, the Company concluded that,
unlike a Common Share repurchase program, an exchange offer would treat all
holders of Common Shares equally and would have the further advantage of
permitting such holders to participate on a basis that would be free of U.S. and
Luxembourg taxes.
FAIRNESS OF THE EXCHANGE OFFER
The Board of Directors of the Company, a majority of whom are not officers
or employees of the Company or any of its subsidiaries, believes that the
Exchange Offer is fair to the unaffiliated holders of Common Shares and is
preferable to the other alternative considered.
In reaching its conclusion, the Board of Directors considered the factors
described below. The discussion of these factors is not intended to be
exhaustive, but identifies the material factors considered by the Board of
Directors.
- Each holder of Common Shares or Common Options who elects to participate
in the Exchange Offer will receive a continuing equity interest in the
Company represented by registered Class B
13
<PAGE>
Shares or ADSs. The Board considered that the rights of the Class B Shares
with respect to dividends and distributions on liquidation or winding up,
as well as the provisions in the Company's Articles requiring equal
treatment of the Class B Shares and the Common Shares in a merger or
similar transaction, ensure that the Class B Shares economically are at
least equivalent to the Common Shares.
- The historical trading patterns and the recent market prices of the Common
Shares and the Class B Shares indicate that the Exchange Offer would
enable holders of Common Shares to receive Class B Shares that generally
have traded at a premium over the prices at which Common Shares have
traded. The closing price of the Class B Shares on Nasdaq on January 13,
2000 (the last day before public announcement of the Exchange Offer)
represented an 11% premium over the closing price of the Common Shares on
Nasdaq on such date.
- Acceptance of the Exchange Offer is wholly voluntary on the part of the
holders of Common Shares and Common Options and treats all such holders
equally.
- The Exchange Offer, if successfully completed, should provide greater
market liquidity for the Class B Shares, increase investor interest in the
Company and, thereby, lower the Company's cost of equity capital.
- It is advantageous to the Company to focus public investor interest on a
single class of shares. In light of the greater liquidity of the Class B
Shares, compared to the Common Shares, and the existing listing of the
Class B Shares in Norway on the OSE, the Board believed that it was
preferable to offer to exchange Class B Shares for Common Shares as a
means of achieving this goal.
- The Class B Shares offered in the Exchange Offer have limited voting
rights, as compared to the Common Shares, which have full voting rights on
all matters submitted to a shareholder vote. The Board of Directors
determined, however, that this factor was outweighed by the other factors
considered by the Board of Directors, particularly since the Stolt-Nielsen
family, directly and indirectly through Fiducia Ltd., already owns
approximately 70% of the shares generally entitled to vote on all matters
submitted to a shareholder vote. If all publicly held Common Shares are
exchanged for Class B Shares, and assuming that a Mandatory Conversion
occurs, the percentage ownership of voting shares held by the
Stolt-Nielsen family would increase to approximately 91%, but such
increase would not meaningfully affect the control of the Company.
- The Exchange Offer is structured as a tax-free transaction for both the
Company and the holders of Common Shares or Common Options for U.S.
Federal income tax and Luxembourg tax purposes, although an exchange of
Common Shares or Common Options may be a taxable event for residents of
Norway.
In view of the variety of factors considered in connection with its
evaluation of the terms of the Exchange Offer, the Board of Directors did not
find it practicable to, and did not, quantify or otherwise attempt to assign
relative weights to the specific factors considered in reaching its conclusions,
nor did it evaluate whether or not these factors were of equal importance. The
Board of Directors also understood that the Exchange Offer is not conditioned on
the favorable vote of a majority of unaffiliated stockholders and that the Board
of Directors did not retain an unaffiliated representative to act solely on
behalf of unaffiliated holders of Common Shares to negotiate the terms of the
Exchange Offer. The Board of Directors unanimously determined that the Exchange
Offer, nevertheless, was procedurally fair because, among other things, the
Board of Directors consists of a majority of directors who are neither officers
nor employees of the Company or any of its subsidiaries and those directors
unanimously approved the Exchange Offer and the Exchange Offer is wholly
voluntary and treats all holders of Common Shares equally. The Board of
Directors did not consider net book value, going concern value, or the purchase
price paid in previous purchases by the Company of the Common Shares because the
Board did not
14
<PAGE>
believe such factors to be relevant in a transaction pursuant to which
shareholders would receive a continuing equity interest in the Company.
The Board of Directors has not requested a fairness opinion, appraisal or
similar report relating to the Exchange Offer from any investment banker or
financial adviser because it did not believe that such a report would be
relevant to the Exchange Offer. A fairness opinion, appraisal or similar report
is sometimes requested by a company to obtain an opinion on whether a
transaction is fair from a financial perspective to a particular group of
persons. The Board of Directors believes that, in light of the continuing equity
interest in the Company being offered in the Exchange Offer, and the other
factors described above, it is not necessary to seek a fairness opinion,
appraisal or similar report relating to the Exchange Offer. Holders of Common
Shares will not have appraisal rights as a result of the Exchange Offer.
CERTAIN COMMON SHARES EXPECTED TO BE EXCHANGED
Based on an inquiry made by representatives of the Company, the Company
believes that each person listed in Schedule I hereto who owns Common Shares or
Common Options will exchange his Common Shares or Common Options in the Exchange
Offer. The fact that such persons exchange or do not exchange their Common
Shares or Common Options does not in any manner constitute a recommendation by
such persons for other holders of Common Shares or Common Options to tender or
not to tender, and no director or executive officer of the Company makes any
recommendation that any holder of Common Shares or Common Options tender or not
tender in response to the Exchange Offer. Holders of Common Shares or Common
Options must make their own decisions whether or not to tender. The Company,
however, expects that Fiducia Ltd., SNTG and NYK will not exchange their Common
Shares for Class B Shares in the Exchange Offer.
CERTAIN EFFECTS OF THE EXCHANGE OFFER
MARKET FOR SHARES. Common Shares exchanged for Class B Shares will be
canceled. The exchange of Class B Shares for Common Shares pursuant to the
Exchange Offer will reduce the number of outstanding Common Shares held by
shareholders who are not affiliates of the Company and the number of holders of
Common Shares and could adversely affect the liquidity and market value of the
remaining Common Shares held by non-affiliates. See "--Exchange Act
Registration" and "--Stock Quotation."
VOTING CONTROL. If all outstanding Common Shares, other than Common Shares
owned by SNTG, Fiducia Ltd. and NYK are exchanged for Class B Shares, and
assuming that a Mandatory Conversion occurs, the Stolt-Nielsen family,
indirectly through Fiducia Ltd., will increase its ownership of outstanding
Common Shares from approximately 62% to approximately 88%. Additionally,
assuming the foregoing circumstances, as a result of Jacob Stolt-Nielsen's
ownership of all of the Company's Founder's Shares, the Stolt-Nielsen family
will, directly and indirectly through Fiducia Ltd., increase its ownership of
outstanding shares generally entitled to vote on all matters submitted to a
shareholder vote from approximately 70% to approximately 91%. See "The Exchange
Offer--Luxembourg Law Requirements; Amendment to Articles of Incorporation;
Mandatory Conversion."
EXCHANGE ACT REGISTRATION. The Common Shares are currently registered under
the Exchange Act. Such registration may be terminated upon application of the
Company to the SEC if the Common Shares are neither listed on a national
securities exchange or Nasdaq, nor held by 300 or more holders of record. If
registration of the Common Shares under the Exchange Act were terminated,
(i) the Common Shares would no longer be eligible for Nasdaq reporting and
(ii) the information required to be furnished by the Company to holders of
Common Shares and, with respect only to the Common Shares, to the SEC would be
substantially reduced. The Company intends to apply for termination of
registration of the Common Shares under the Exchange Act as soon after the
completion of the Exchange Offer as the requirements for such termination are
met.
15
<PAGE>
STOCK QUOTATION. Depending upon the number of Common Shares tendered
pursuant to the Exchange Offer, the Common Shares may no longer meet the
requirements of the National Association of Securities Dealers, Inc. (the
"NASD") for continued inclusion in Nasdaq. The NASD requires that to have a
class of securities included in Nasdaq an issuer must either (i) have at least
750,000 publicly held shares of such class, held by at least 400 round lot
shareholders, with a market value of at least $5,000,000, have at least two
market makers, have net tangible assets of at least $4,000,000 and have a
minimum bid price per share of such class of $1.00, or (ii) have at least
1,100,000 publicly held shares of such class, held by at least 400 round lot
shareholders, with a market value of at least $15,000,000, have a minimum bid
price per share of such class of $5.00, have at least four market makers and
have either (A) a market capitalization of at least $50,000,000 or (B) total
assets and revenues of at least $50,000,000. Shares held directly or indirectly
by directors, officers or beneficial owners of more than 10 percent of the
Common Shares are not considered as being publicly held for this purpose.
The Company intends to apply for the cessation of quotation of the Common
Shares on Nasdaq as soon as the eligibility requirements set forth above are no
longer met. If the Common Shares cease to be quoted on Nasdaq, the market for
the Common Shares could be adversely affected. It is possible that the Common
Shares would be traded or quoted on other securities exchanges or in the
over-the-counter market, and that price quotations would be reported by such
exchanges or through other sources. The extent of the public market for the
Common Shares and the availability of such quotations would, however, depend
upon the number of shareholders and/or the aggregate market value of the Common
Shares remaining at such time, the interest in maintaining a market in the
Common Shares on the part of securities firms, the possible termination of
registration of the shares under the Exchange Act and other factors.
MARGIN REGULATIONS. The Common Shares are currently "margin securities"
under the regulations of the Federal Reserve Board. This has the effect, among
other things, of allowing brokers to extend credit on the collateral of the
Common Shares. Depending on the number of Common Shares outstanding after the
Exchange Offer and certain other factors, Common Shares might not constitute
"margin securities" for the purposes of the margin regulations and, in such
event, could not be used as collateral for margin loans. In any event, the
Common Shares will cease to be "margin securities" if registration of the Common
Shares under the Exchange Act is terminated.
Rule 13e-4 under the Exchange Act generally prohibits the Company and its
affiliates from purchasing any Common Shares, other than pursuant to the
Exchange Offer, or any Class B Shares for at least ten business days after the
Expiration Date; provided, that the Company has been informed by the SEC that
the Company may effect the Mandatory Conversion during such ten-day period.
INTEREST OF CERTAIN PERSONS IN SECURITIES OF THE COMPANY; CONTRACTS,
ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO SECURITIES OF THE COMPANY
Except as described elsewhere in this Offering Circular or incorporated by
reference herein, (i) neither the Company nor any of the persons listed in
Schedule I hereto has any contract, arrangement, understanding or relationship
with any person with respect to the securities of the Company or has effected
any transaction in securities of the Company during the past 60 days, and (ii)
neither the Company nor any associate or affiliate of the Company has effected
any transaction in securities of the Company during the past 40 business days.
16
<PAGE>
The table below sets forth the number of Common Shares and Class B Shares
beneficially owned (including securities for which there is a right to acquire)
as of January 14, 2000, by each of the persons listed below.
<TABLE>
<CAPTION>
COMMON SHARES CLASS B SHARES
----------------------- ----------------------
NAME OWNED OPTIONS(A) OWNED OPTIONS(A)
- ------------------------------------------------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Jacob Stolt-Nielsen.............................. 61,647 64,250 64,323 35,875
Carroll N. Bjornson.............................. 179,658 1,000 53,399 500
Philip W. Darwin................................. 1,000 1,000 2,580 500
Erling C. Hjort.................................. -- -- -- --
Tadatoshi Mamiya................................. -- -- -- --
Christer Olsson.................................. -- 1,000 -- 500
Jacob B. Stolt-Nielsen........................... 26,400 30,275 3,120 16,825
Niels G. Stolt-Nielsen........................... -- 7,000 14,820 3,500
Christopher J. Wright............................ 75,000 60,000 42,787 31,500
Jan Chr. Engelhardtsen........................... 11,000 62,725 -- 33,425
Samuel Cooperman................................. -- 38,000 -- 22,000
Bernard Vossier.................................. -- 3,000 13,000 1,500
Fiducia Ltd.(b).................................. 18,003,437 -- 9,001,809 --
Clarendon House
2 Church Street
P.O. Box HM 666
Hamilton
HM CX Bermuda
Stolt-Nielsen.................................... 1,921,905 -- 5,766,905 --
Transportation Group Ltd.
8 Sound Shore Drive
P.O. Box 2300
Greenwich, CT 06836
Nippon Yusen Kaisha, Ltd......................... 2,500,000 -- 3,000,000 --
Yusen Building
2-3-2 Marunouchi
Chiyoda-ku
Tokyo 100
Japan
Stolt-Nielsen Inc................................ 44,910(c) -- -- --
Section 401(K) Plan Unitized Stock Fund
8 Sound Shore Drive
P.O. Box 2300
Greenwich, CT 06836
</TABLE>
- ------------------------
(a) Includes options exercisable within 60 days of January 14, 2000.
(b) Fiducia Ltd. is owned by trusts of which members of the Stolt-Nielsen family
are beneficiaries.
(c) Represents the number of Common Shares in the Plan on December 31, 1999.
Since December 1, 1997, SNTG has purchased a total of 335,000 Common Shares
in open market purchases. Of these, (i) 222,500 Common Shares were purchased
during the first quarter of 1998 at prices ranging from a high of $22.92 per
share to a low of $18.88 per share, with an average purchase price of $20.51 per
share, and (ii) 112,500 Common Shares were purchased during the third fiscal
quarter of 1998 at prices ranging from a high of $18.63 per share to a low of
$17.13 per share, with an average purchase price of $18.05 per share. Other than
as described in the preceding sentence or as incorporated by reference herein,
there have not been any purchases of Common Shares by the Company or its
affiliates since December 1, 1997.
17
<PAGE>
PLANS FOR THE COMPANY AFTER THE EXCHANGE OFFER
Assuming the Exchange Offer is successful, the Company intends to apply to
the NASD for cessation of quotation of the Common Shares and to the SEC for
termination of registration of the Common Shares under the Exchange Act.
Following the Exchange Offer, the Company or one or more of its affiliates
may from time to time seek to acquire additional outstanding Common Shares, if
any, held by unaffiliated holders. Such acquisitions, if any, could be effected
by means of one or more tender offers, exchange offers, open market purchases or
negotiated transactions.
Except as set forth above and elsewhere in this Offering Circular, the
Company has no present plan or proposal that relates to or would result in
(i) an extraordinary corporate transaction such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries, (ii) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries, (iii) any change in the present Board of Directors or management
of the Company including, but not limited to, any plan or proposal to change the
number or term of directors, to fill any existing vacancy on the Board or to
change any material term of the employment contract of any executive officer,
(iv) any material change in the present dividend rate or policy or indebtedness
or capitalization of the Company, (v) any other material change in the Company's
corporate structure or business, (vi) a class of the Company's equity securities
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Exchange Act, or (vii) the suspension of the Company's obligation to file
reports pursuant to Section 15(d) of the Exchange Act.
PAST CONTACTS, NEGOTIATIONS AND TRANSACTIONS
Other than as described herein or as incorporated by reference herein, since
December 1, 1997, there have not been any contacts, negotiations or transactions
which have been entered into or which have occurred (i) between any affiliates
of the Company or (ii) between the Company or any of its affiliates and any
person who is not affiliated with the Company concerning a merger, consolidation
or acquisition; a tender offer for or other acquisition of securities of any
class of the Company; an election of directors of the Company; or a sale or
other transfer of a material amount of assets of the Company or of any of its
subsidiaries.
18
<PAGE>
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, on the terms and subject to the conditions set
forth herein and in the related Letter of Transmittal, to exchange one Class B
Share for each Common Share outstanding, and on the terms and subject to the
conditions set forth herein and in the Notice of Election, to exchange one
Class B Option for each Common Option outstanding. On the terms and subject to
the conditions of the Exchange Offer, the Company will accept for exchange (and
will thereby exchange for Class B Shares or Class B Options, respectively)
(i) any and all Common Shares and (ii) all, but not less than all, Common
Options held by any holder that are properly tendered (and not withdrawn) before
the Expiration Date.
The term "Expiration Date" means 5:00 p.m., New York City time, on Friday,
February 18, 2000, unless and until the Company shall have extended the period
of time for which the Exchange Offer is open, in which event the term
"Expiration Date" shall refer to the latest time and date at which the Exchange
Offer, as so extended by the Company, shall expire. For a description of the
Company's rights to extend the period of time during which the Exchange Offer is
open and to delay, terminate or amend the Exchange Offer, see "--Extension of
Tender Period; Termination; Amendments."
The Company reserves the right, in its sole discretion, at any time or from
time to time, to extend the period of time during which the Exchange Offer is
open by giving oral or written notice of such extension to the Exchange Agent
and making a public announcement thereof. See "--Extension of Tender Period;
Termination; Amendments." There can be no assurance, however, that the Company
will exercise its right to extend the Exchange Offer.
In the event that the Company modifies the consideration offered for Common
Shares or Common Options in the Exchange Offer, such modified consideration
would be given for all Common Shares or Common Options, as the case may be,
tendered and accepted in the Exchange Offer.
If (a) the Company (i) increases or decreases the consideration to be given
for Common Shares or Common Options or (ii) decreases the number of Common
Shares or Common Options being sought, and (b) the Exchange Offer is scheduled
to expire at any time earlier than the expiration of a period ending on the
tenth business day from and including the date that notice of such increase or
decrease is first published, sent or given in the manner specified in
"--Extension of Tender Period; Termination; Amendments," the Exchange Offer will
be extended until the expiration of such ten business day period. For the
purposes of the Exchange Offer, a "business day" means any day other than a
Saturday, Sunday or Federal holiday and consists of the time period from
12:01 a.m. through 12:00 midnight, New York City time.
As of January 14, 2000, 29,364,183 Common Shares and 25,211,919 Class B
Shares (including Class B Shares represented by ADSs) were outstanding, and
1,367,125 Common Options and 1,424,532 Class B Options were outstanding. This
Offering Circular, together with the Letter of Transmittal, is first being sent
to holders of record of Common Shares or Common Options on January 21, 2000.
Although the Company currently has no plan or intention to do so, subject to
applicable laws and regulations, it reserves the right in its sole discretion to
purchase or make offers for any Common Shares or Common Options that remain
outstanding subsequent to the consummation of the Exchange Offer. The terms of
any such purchases or offers could differ from the terms of the Exchange Offer.
Tendering holders of Common Shares will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Common Shares
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"--Fees and Expenses."
THE EXCHANGE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF COMMON SHARES
OR COMMON OPTIONS BEING TENDERED. THE EXCHANGE OFFER IS, HOWEVER, SUBJECT TO
CERTAIN OTHER CONDITIONS. SEE "--CERTAIN CONDITIONS OF THE EXCHANGE OFFER."
19
<PAGE>
PROCEDURE FOR EXCHANGING COMMON SHARES
PROPER TENDER OF COMMON SHARES. For Common Shares to be properly exchanged
pursuant to the Exchange Offer:
(a) the certificates for such Common Shares (or confirmation of receipt
of such Common Shares pursuant to the procedure for book-entry transfer set
forth below), together with a properly completed and duly executed Letter of
Transmittal (or a facsimile copy thereof) with any required signature
guarantees, or an Agent's Message (as defined below) in connection with a
book-entry delivery of Common Shares, and any other documents required by
the Letter of Transmittal, must be received before the Expiration Date by
the Exchange Agent at one of its addresses set forth on the back cover of
this Offering Circular; or
(b) the tendering holder must comply with the guaranteed delivery
procedures set forth below.
It is a violation of Section 14(e) of the Exchange Act, and the rules and
regulations thereunder, and Rule 13e-4 promulgated thereunder, for a person to
tender Common Shares for such person's own account unless the person so
tendering:
(a) owns such Common Shares; or
(b) owns an option, warrant or right to purchase such Common Shares and
intends to acquire Common Shares for tender by exercise of such option,
warrant or right.
A tender of Common Shares made pursuant to any method of delivery set forth
herein will constitute a binding agreement between the tendering holder and the
Company upon the terms and subject to the conditions of the Exchange Offer,
including the tendering holder's representation that (i) such holder owns the
Common Shares being tendered within the meaning of Rule 13e-4 promulgated under
the Exchange Act and (ii) the tender of such Common Shares complies with
Rule 13e-4.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Exchange Agent and forming a part of
a Book-Entry Confirmation (as defined herein), which states that the Book-Entry
Transfer Facility has received an express acknowledgment from the participant in
the Book-Entry Transfer Facility tendering the Common Shares which are the
subject of such Book-Entry Confirmation, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Company may enforce such agreement against the participant.
SIGNATURE GUARANTEES AND METHODS OF DELIVERY. No signature guarantee is
required on the Letter of Transmittal if the Letter of Transmittal is signed by
the registered owner of the Common Shares (which term for purposes of this
Section, includes any participant in The Depository Trust Company (the
"Book-Entry Transfer Facility") whose name appears on a security position
listing as the owner of the Common Shares) tendered therewith, and delivery is
to be made directly to such registered owner at such owner's address shown on
the records of the Company, or if Common Shares are tendered for the account of
a financial institution (including most 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 Program or
the Stock Exchange Medallion Program (an "Eligible Institution"). In all other
cases, all signatures on the Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a
certificate representing Common Shares is registered in the name of a person
other than the person signing a Letter of Transmittal, or if Class B Shares are
to be issued, or certificates for Common Shares not purchased or tendered are to
be issued, to a person other than the registered owner, the certificate must be
endorsed or accompanied by an appropriate stock power, in either case signed
exactly as the name of the registered owner appears on the certificate, with the
signature on the certificate or stock power guaranteed by an Eligible
Institution. In all cases, Class B Shares to be issued in exchange for Common
Shares tendered and accepted for exchange pursuant to the Exchange Offer will be
issued only after timely receipt by the Exchange Agent of certificates for such
Common Shares (or a Book-Entry Confirmation of the delivery of such Common
Shares), a properly
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completed and duly executed Letter of Transmittal (or a facsimile thereof) (or,
in the case of a book-entry transfer, an Agent's Message) and any other
documents required by the Letter of Transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING STOCK CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
BOOK-ENTRY DELIVERY. The Exchange Agent will establish an account with
respect to the Common Shares at the Book-Entry Transfer Facility for purposes of
the Exchange Offer within two business days after the date of this Offering
Circular. Any financial institution that is a participant in the Book-Entry
Transfer Facility's system may make book-entry delivery of the Common Shares by
causing the Book-Entry Transfer Facility to transfer such Common Shares into the
Exchange Agent's account in accordance with the Book-Entry Transfer Facility's
procedure for such transfer. Even though delivery of Common Shares may be
effected through book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), with any required signature guarantees, or
an Agent's Message, and other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at one of its addresses set
forth on the back cover of this Offering Circular before the Expiration Date, or
the guaranteed delivery procedures set forth below must be followed. DELIVERY OF
REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE EXCHANGE AGENT.
GUARANTEED DELIVERY. If a holder desires to tender Common Shares pursuant
to the Exchange Offer and such holder's certificates for Common Shares are not
immediately available (or the procedure for book-entry transfer cannot be
followed on a timely basis) or time will not permit the Letter of Transmittal
and all other required documents to reach the Exchange Agent before the
Expiration Date, such Common Shares may nevertheless be tendered provided that
all the following conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Exchange Agent receives (by hand, mail or facsimile
transmission), before the Expiration Date, a properly completed and duly
executed Notice of Guaranteed Delivery substantially in the form the Company
has provided with this Offering Circular; and
(c) the certificates for all tendered Common Shares in proper form for
transfer (or confirmation of book-entry transfer (a "Book-Entry
Confirmation") of such Common Shares into the Exchange Agent's account at
the Book-Entry Transfer Facility), together with a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof) 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 Exchange Agent
within three Nasdaq trading days after the date of execution of such Notice
of Guaranteed Delivery.
DETERMINATION OF VALIDITY; REJECTION OF COMMON SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of Common
Shares to be accepted and the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Common Shares will be
determined by the Company, in its sole discretion, which determination shall be
final and binding on all parties. The Company reserves the right to reject any
or all tenders determined by it not to be in proper form or the acceptance for
exchange of which may, in the opinion of the Company's counsel, be unlawful. The
Company also reserves the right to waive any of the conditions of the Exchange
Offer and/or any defect or irregularity in any tender of Common Shares. No
tender of Common Shares will be deemed properly made until all defects or
irregularities have been cured or waived. None of the Company, the Exchange
Agent, the Information Agent or any other person is or will be obligated to give
notice of any defects or irregularities in tenders, and none of them will incur
any liability for failure to give any such notice.
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PROCEDURE FOR EXCHANGING COMMON OPTIONS
PROPER TENDER OF COMMON OPTIONS. For Common Options to be properly tendered
pursuant to the Exchange Offer, the letters or other instruments representing
such Common Options together with a properly completed and duly executed Notice
of Election (or a facsimile copy thereof) must be delivered before the
Expiration Date to (i) in the case of land-based personnel, Mindy Miles,
Stolt-Nielsen Transportation Group Ltd., 8 Sound Shore Drive, P.O. Box 2300,
Greenwich, Connecticut 06836, USA (telephone number 1-203-625-3675 and facsimile
number 1-203-625-3917) and (ii) in the case of sea personnel, Hogne von der
Fehr, Stolt-Nielsen Transportation Group Ltd., Shipowning Division, 15635
Jacintoport Blvd., Houston, Texas 77015-6534, USA (telephone number
1-281-860-5138 and facsimile number 1-281-860-5176). If a Common Option holder
who delivers a properly executed Notice of Election to exchange Common Options
for Class B Options cannot deliver the letters or other instruments representing
such Common Options prior to the Expiration Date, the Company will make an
appropriate notation in the Company's records so that such Common Options will
thereafter, without any further action on the part of the holder, be deemed to
represent only options to purchase Class B Shares. The option exercise price,
exercise period and terms and conditions of exercise and all other terms of the
new Class B Options received will be the same as those of the Common Options
exchanged, except that all such Class B Options will be non-qualified stock
options for U.S. Federal income tax purposes.
A tender of Common Options made pursuant to the method of delivery set forth
herein will constitute a binding agreement between the tendering holder and the
Company upon the terms and subject to the conditions of the Exchange Offer,
including the tendering holder's representation that each Common Option being
tendered has not previously terminated or expired or been canceled or exercised
and that such holder is the duly authorized holder of such Common Option.
HOLDERS OF COMMON OPTIONS MUST EXCHANGE ALL OF THEIR COMMON OPTIONS FOR CLASS B
OPTIONS. PARTIAL EXCHANGES OF COMMON OPTIONS WILL NOT BE PERMITTED.
DETERMINATION OF VALIDITY; REJECTION OF COMMON OPTIONS; WAIVER OF DEFECTS;
NO OBLIGATION TO GIVE NOTICE TO DEFECTS. All questions as to the number of
Common Options to be accepted and the validity, form, eligibility (including
time of receipt) and acceptance for exchange of any tender of Common Options
will be determined by the Company, in its sole discretion, which determination
shall be final and binding on all parties. The Company reserves the right to
reject any or all tendered Common Options determined by it not to be in proper
form or the acceptance for exchange of which may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the right to waive any
of the conditions of the Exchange Offer and/or any defect or irregularity in any
tender of Common Options. No tender of Common Options will be deemed properly
made until all defects or irregularities have been cured or waived. None of the
Company, the Exchange Agent, the Information Agent or any other person is or
will be obligated to give notice of any defects or irregularities in tenders,
and none of them will incur any liability for failure to give any such notice.
ELECTION TO RECEIVE CLASS B SHARES INSTEAD OF ADSS
Holders who participate in the Exchange Offer may elect to receive Class B
Shares in the form of ADSs (each representing one Class B Share) or
uncertificated Class B Shares registered in the VPS system in Norway. Tendering
holders of Common Shares will receive ADSs representing Class B Shares in the
Exchange Offer unless they elect to receive uncertificated Class B Shares
registered in the VPS system by so indicating in the Letter of Transmittal. In
the absence of such election, the Class B Shares will be deposited with the
Depositary under the Deposit Agreement and the tendering holder will receive one
ADS for each Common Share tendered.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, a tender of Common Shares or Common
Options pursuant to the Exchange Offer is irrevocable. Common Shares or Common
Options tendered pursuant to the
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Exchange Offer may be withdrawn at any time before the Expiration Date and,
unless theretofore accepted for payment by the Company, after 12:00 midnight,
New York City time, on Monday, March 20, 2000.
For a withdrawal to be effective, the Exchange Agent must timely receive (at
one of its addresses set forth on the back cover of this Offering Circular) a
written or facsimile transmission notice of withdrawal. For a withdrawal of
Common Options to be effective, the Company must timely receive (at its address
set forth in this Offering Circular) a written or facsimile transmission notice
of withdrawal. Any notice of withdrawal must specify the name of the person
having tendered the Common Shares or Common Options, as the case may be, to be
withdrawn, the number of Common Shares or Common Options to be withdrawn and, if
different from the name of the person who tendered the Common Shares, the name
of the registered owner of such Common Shares. If the certificates have been
delivered or otherwise identified to the Exchange Agent, then, prior to the
release of such certificates, the tendering holder must also submit the serial
numbers shown on the particular certificates evidencing such Common Shares and
the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution (except in the case of Common Shares tendered by an Eligible
Institution). If Common Shares have been delivered pursuant to the procedure for
book-entry transfer set forth under "--Procedure For Tendering Common Shares,"
the notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Common Shares and
otherwise comply with the procedures of such facility.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Company, in its sole discretion,
which determination shall be final and binding on all parties. None of the
Company, the Exchange Agent, the Information Agent or any other person is or
will be obligated to give any notice of any defects or irregularities in any
notice of withdrawal, and none of them will incur any liability for failure to
give any such notice. A withdrawal of a tender may not be rescinded and Common
Shares or Common Options properly withdrawn shall thereafter be deemed not to be
validly tendered for purposes of the Exchange Offer. Withdrawn Common Shares or
Common Options, however, may be retendered before the Expiration Date by again
following one of the procedures described under "--Procedure For Exchanging
Common Shares" or "--Procedure for Exchanging Common Options."
ACCEPTANCE OF COMMON SHARES FOR EXCHANGE; DELIVERY OF CLASS B SHARES
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance of Common Shares validly tendered under the Exchange Offer and not
withdrawn, and delivery of the Class B Shares in exchange therefor will be made
promptly after the Expiration Date.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Common Shares when, as and if the Company has given
oral or written notice thereof to the Exchange Agent. The Exchange Agent will
act as agent for the tendering holders of Common Shares for the purposes of
receiving the Class B Shares from the Company. All Common Shares so accepted
shall be deemed to have been exchanged for Class B Shares, and the tendering
holder thereby shall be entitled to all of the rights, privileges and
obligations that attach to the Class B Shares so exchanged.
If any tendered Common Shares are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Common Shares will be returned,
without expense, to the tendering holder thereof (or, in the case of Common
Shares tendered by book-entry transfer, to an account maintained at such
Book-Entry Transfer Facility), promptly after the expiration or termination of
the Exchange Offer.
ACCEPTANCE OF COMMON OPTIONS FOR EXCHANGE; DELIVERY OF CLASS B OPTIONS
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance of Common Options validly tendered under the Exchange Offer and not
withdrawn, and, if the tendering holder
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delivered to the Company the letter or instrument evidencing the Common Options
so tendered, delivery of a new letter or instrument evidencing the Class B
Options in exchange therefor, or, if the tendering holder did not deliver to the
Company the letter or instrument evidencing the Common Options so tendered, an
appropriate notation in the records of the Company will be made so that such
Common Options will, without any further action on the part of the holder, be
deemed to represent only options to purchase Class B Shares after the Expiration
Date. The option exercise price, exercise period, terms and conditions of
exercise and all other terms of the new Class B Options received will be the
same as the Common Options surrendered in exchange therefor, except that all
such Class B Options will be non-qualified stock options.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Common Options when, as and if the Company has given
oral or written notice thereof to the tendering holders of Common Options.
Holders of Common Options must exchange all of their Common Options for
Class B Options. Partial exchanges of Common Options will not be permitted.
If any tendered Common Options are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the letter or other instrument evidencing any such unaccepted Common
Options, if any, delivered to the Company will be returned, without expense, to
the tendering holder thereof, promptly after the expiration or termination of
the Exchange Offer.
CERTAIN CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, and in addition
to (and not in limitation of) the Company's right to extend, amend or terminate
the Exchange Offer as set forth under "--Extension of Tender Period;
Termination; Amendments," the Company shall not be required to accept for
exchange, or exchange Class B Shares or Class B Options for, any Common Shares
or Common Options tendered, and may terminate or amend the Exchange Offer,
subject to Rule 13e-4(f) under the Exchange Act, if before acceptance for
exchange of or exchange for any such Common Shares or Common Options, any of the
following shall have occurred (or shall have been determined by the Company to
have occurred) that, in the Company's reasonable judgment in any such case and
regardless of the circumstances (including any action or omission to act by the
Company) giving rise thereto, makes it inadvisable to proceed with the Exchange
Offer or with such acceptance of the Common Shares and Common Options:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, before any court, authority, agency or tribunal, domestic or
foreign, which directly or indirectly: (i) challenges the making of the
Exchange Offer, the acquisition of some or all of the Common Shares pursuant
to the Exchange Offer, or otherwise relates in any manner to the Exchange
Offer; or (ii) in the reasonable judgment of the Company, could materially
and adversely affect the business, condition (financial or otherwise),
income, operations, assets, liabilities or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of the Company or any of its
subsidiaries or materially impair the Exchange Offer's contemplated benefits
to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Exchange Offer or the
Company or any of its subsidiaries, by any court or any government or
governmental, regulatory or administrative authority, agency or tribunal,
domestic or foreign, which, in the reasonable judgment of the Company, would
or might directly or indirectly: (i) make the acceptance for exchange, or
exchange of Class B Shares or Class B Options for, some or all the Common
Shares or Common Options, as the case may be, illegal or otherwise restrict
or prohibit consummation of the Exchange
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Offer; (ii) delay or restrict the ability of the Company, or render the
Company unable, to accept for exchange, or exchange Class B Shares or
Class B Options for, some or all the Common Shares or Common Options;
(iii) materially impair the contemplated benefits of the Exchange Offer to
the Company; or (iv) materially and adversely affect the business, condition
(financial or otherwise), income, operations, assets, liabilities or
prospects of the Company and its subsidiaries, taken as a whole, or
otherwise materially impair in any way the contemplated future conduct of
the business of the Company or any of its subsidiaries;
(c) there shall have occurred: (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; (ii) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, Norway or Luxembourg; (iii) the commencement of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States, Norway or Luxembourg; (iv) any
limitation (whether or not mandatory) by any governmental, regulatory or
administrative agency or authority on, or any event which, in the reasonable
judgment of the Company, might affect the extension of credit by banks or
other lending institutions in the United States, Norway or Luxembourg;
(v) any significant decrease in the market price of the Common Shares or the
Class B Shares; (vi) any change in the general political, market, economic
or financial conditions in the United States or abroad that could, in the
reasonable judgment of the Company, have a material adverse effect on the
business, condition (financial or otherwise), income, operations, assets,
liabilities or prospects of the Company and its subsidiaries, taken as a
whole, or the trading in the Common Shares or the Class B Shares; (vii) in
the case of any of the foregoing existing at the time of the commencement of
the Exchange Offer, in the reasonable judgment of the Company, a material
escalation, acceleration or worsening thereof; or (viii) any decline in
either the Dow Jones Industrial Average or the Standard & Poor's Index of
500 Industrial Companies by an amount in excess of 10% measured from the
close of business on January 20, 2000;
(d) any tender or exchange offer with respect to any or all of the
Common Shares or the Class B Shares (other than the Exchange Offer), or any
merger, acquisition, business combination or other similar transaction with
or involving the Company or any subsidiary, shall have been proposed,
announced or made by any person or entity;
(e) any change shall occur or be threatened in the business, condition
(financial or otherwise), income, operations, stock ownership, assets,
liabilities or prospects of the Company and its subsidiaries, taken as a
whole, which, in the reasonable judgment of the Company, is or may be
material to the Company or affects the anticipated benefits to the Company
of acquiring Common Shares pursuant to the Exchange Offer; or
(f) (i) any person, entity or "group" (as that term is used in
Section 13(d)(3) of the Exchange Act) shall have acquired, or proposed to
acquire, beneficial ownership of more than 5% of the outstanding Common
Shares or the Class B Shares (other than a person, entity or group which had
publicly disclosed such ownership in a Schedule 13D or 13G (or an amendment
thereto) on file with the SEC prior to January 20, 2000; (ii) any such
person, entity or group that has filed a Schedule 13D or 13G with the SEC
prior to January 20, 2000 shall have acquired or proposed to acquire
beneficial ownership of an additional 2% or more of the outstanding Common
Shares or Class B Shares; (iii) any new group shall have been formed which
beneficially owns more than 5% of the outstanding Common Shares; or
(iv) any person, entity or group shall have filed a Notification and Report
Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or made
a public announcement reflecting an intent to acquire the Company or any of
its subsidiaries or any of their respective assets or securities, except
that any such acquisition or filing made by any member of the Stolt-Nielsen
family or an affiliated entity or any subsidiary of the Company shall not be
subject to this paragraph (f).
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to
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any such condition and any such condition may be waived by the Company, in whole
or in part. The Company's failure at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Company concerning the events described above and
any related judgment or decision by the Company concerning the inadvisability of
proceeding with the acceptance of or exchange of Class B Shares or Class B
Options for, Common Shares or Common Options tendered will be final and binding
on all parties. In certain cases, waiver of a condition to the Exchange Offer
would require an extension of the Expiration Date. See "--Extension of Tender
Period; Termination; Amendments."
LUXEMBOURG LAW REQUIREMENTS; AMENDMENT TO ARTICLES OF INCORPORATION; MANDATORY
CONVERSION
MANDATORY CONVERSION. Pursuant to Article 44 of the Luxembourg Company Law,
the number of issued non-voting shares may not exceed the number of issued
voting shares (excluding Founder's Shares). As a consequence of this provision,
Article Thirty-Six of the Articles of Incorporation of the Company provides
that, if the issuance of further Class B Shares would result in the number of
issued Class B Shares exceeding the number of issued Common Shares, the Board of
Directors of the Company can effect a Mandatory Conversion. The Board of
Directors intends to effect a Mandatory Conversion to be conditional on, and
effective simultaneously with, the consummation of the Exchange Offer. The
Mandatory Conversion does not require the approval of the shareholders of the
Company and will not be submitted to a vote at the Extraordinary General
Meeting.
If all outstanding Common Shares, other than Common Shares owned by
Fiducia Ltd., SNTG and NYK, are exchanged for Class B Shares, and assuming that
a Mandatory Conversion occurs, the Stolt-Nielsen family, directly and indirectly
through Fiducia Ltd., will increase its ownership of outstanding Common Shares
from approximately 62% to approximately 88%. Additionally, assuming the
foregoing circumstances, as a result of Jacob Stolt-Nielsen's ownership of all
of the Company's Founder's Shares, the Stolt-Nielsen family will, directly and
indirectly through Fiducia Ltd., increase its ownership of outstanding shares
generally entitled to vote on all matters submitted to a shareholder vote from
approximately 70% to approximately 91%. See "The Exchange Offer--Luxembourg Law
Requirements; Amendment to Articles of Incorporation; Mandatory Conversion."
AMENDMENT TO ARTICLES OF INCORPORATION. The Company is delivering a Notice
of Extraordinary General Meeting to the shareholders entitled to vote on this
matter (I.E., holders of Common Shares and Founder's Shares). At the
Extraordinary General Meeting, the shareholders will vote on an amendment to the
Company's Articles providing for the conversion of tendered Common Shares into
Class B Shares (the "Articles Amendment"). The Articles Amendment will require
the approval of a two-thirds vote of the Common Shares and Founder's Shares
present or represented and, when the meeting is first convened, a quorum of 50%
of the outstanding shares entitled to vote. Shareholder approval of the Articles
Amendment is assured because members of the Stolt-Nielsen family, directly or
through Fiducia Ltd., control approximately 70% of the shares entitled to vote
on such matter.
CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS
Pursuant to the NSTA, Norwegian Shareholders cannot accept the Exchange
Offer until the OSE has reviewed and approved this Offering Circular pursuant to
the NSTA, chapter 5. To satisfy the NSTA requirements the offering material made
available to Norwegian Shareholders will consist of this Offering Circular and
the Letter of Transmittal, plus supplemental offering materials that include the
Company's Form 20-F (including the 1998 Annual Report), filed in May 1999, and
Form 6-K, filed October 13, 1999. Norwegian Shareholders should contact Den
norske Bank Verdipapirservice ASA, Stranden 21, 0250 Oslo, Tel. 22-48-10-50,
Fax. 22-48-11-71, Attn: Grethe Nes or Ketil Giil Berg to receive the Norwegian
offering materials, as reviewed and approved by the OSE.
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The Exchange Offer will not be made to Norwegian Shareholders until such
time as Norwegian offering materials have been reviewed and approved by the OSE.
Brokers, dealers, commercial banks, trust companies and other nominees who hold
Common Shares in their name for the account of clients domiciled in, or with
registered addresses in, Norway must not forward copies of the Offering Circular
and Letter of Transmittal to such clients without simultaneously forwarding the
Norwegian offering materials to such clients. Such Norwegian offering materials
will be available from Den norske Bank Verdipapirservice ASA, Stranden 21, 0250
Oslo, Norway, Tel. 22-48-10-50, Fax. 22-48-11-71, Attn: Grethe Nes or Ketil Giil
Berg.
Except as set forth elsewhere in this Offering Circular, the Company is not
aware of any license or regulatory permit that is material to its business that
might be adversely affected by its acquisition of Common Shares or Common
Options as contemplated in the Exchange Offer or of any approval or other action
by any government or governmental, administrative or regulatory authority or
agency, domestic or foreign, that would be required for the Company's
acquisition or ownership of Common Shares or Common Options pursuant to the
Exchange Offer. Should any such approval or other action be required, the
Company currently contemplates that it will seek such approval or other action.
The Company cannot predict whether it may determine that it is required to delay
the acceptance for exchange of Common Shares or Common Options tendered pursuant
to the Exchange 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 the failure to
obtain any such approval or other action might not result in adverse
consequences to the Company's business. The Company intends to make all required
filings under the Exchange Act. The Company's obligation under the Exchange
Offer to accept Common Shares and Common Options for exchange is subject to
certain conditions. See "--Certain Conditions of the Exchange Offer."
EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time and regardless of whether or not any of the events set
forth under "--Certain Conditions of the Exchange Offer" shall have occurred or
shall be deemed by the Company to have occurred, to extend the period of time
during which the Exchange Offer is open and thereby delay acceptance for
exchange of any Common Shares or Common Options by giving oral or written notice
of such extension to the Exchange Agent and making a public announcement
thereof. During any such extension, all Common Shares and Common Options
previously tendered and not exchanged or withdrawn will remain subject to the
Exchange Offer, except to the extent that such Common Shares or Common Options
may be withdrawn as set forth under "--Withdrawal Rights." The Company also
expressly reserves the right, in its sole discretion, to withdraw or terminate
the Exchange Offer and not accept for exchange or exchange Class B Shares or
Class B Options for any Common Shares or Common Options not theretofore accepted
for exchange or exchanged, or subject to applicable law, to postpone the
exchange of Class B Shares and Class B Options for Common Shares and Common
Options, respectively, under circumstances including but not limited to the
occurrence of any of the conditions specified under "--Certain Conditions of the
Exchange Offer" by giving oral or written notice of such termination or
postponement to the Exchange Agent and making a public announcement thereof. The
Company's reservation of the right to delay the exchange of Class B Shares and
Class B Options for Common Shares and Common Options, respectively, which it has
accepted for exchange is limited by Rule 13e-4(f)(5) promulgated under the
Exchange Act, which requires that the Company must pay the consideration offered
or return the Common Shares or Common Options tendered promptly after
termination or withdrawal of a tender offer. Subject to compliance with
applicable law, the Company further reserves the right, in its sole discretion,
and regardless of whether or not any of the events set forth under "--Certain
Conditions of the Exchange Offer" shall have occurred or shall be deemed by the
Company to have occurred, to amend the Exchange Offer in any respect (including,
without limitation, by decreasing or increasing the consideration offered in the
Exchange Offer to owners of Common Shares or Common Options or by decreasing the
number of Common Shares and Common
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Options being sought in the Exchange Offer). Amendments to the Exchange Offer
may be made at any time or from time to time effected by public announcement
thereof, such announcement, in the case of an extension, to be issued no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. Any disclosure of a material change in the
information published, sent or given to holders of Common Shares or Common
Options will be disseminated promptly to holders of Common Shares or Common
Options in a manner reasonably calculated to inform holders of such change to
the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated under the
Exchange Act. Without limiting the manner in which the Company may choose to
make a public announcement pursuant to or concerning the Exchange Offer, except
as required by applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
making a release to the Dow Jones News Service.
If the Company makes a material change in the terms of the Exchange Offer or
the information concerning the Exchange Offer or waives a material condition of
the Exchange Offer, the Company will extend the Exchange Offer to the extent
required by applicable rules or regulations promulgated under the Exchange Act.
The minimum period during which an offer or information concerning the offer
(other than a change in consideration or a change in percentage of securities
sought) will depend on the facts and circumstances then existing, including the
relative materiality of the changed terms or information. If (a) the Company
(i) increases or decreases the consideration for which Common Shares or Common
Options may be properly tendered or (ii) decreases the number of Common Shares
or Common Options being sought, and (b) the Exchange Offer is scheduled to
expire at any time earlier than the expiration of a period ending on the tenth
business day from and including the date that notice of such increase or
decrease is first published, sent or given, the Exchange Offer will be extended
until the expiration of such ten business day period.
FEES AND EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer, and will not pay any fees or commissions to
any broker, dealer, commercial bank, trust company or other person for
soliciting Common Shares or Common Options pursuant to the Exchange Offer. The
Company will, however, on request, reimburse such persons for customary handling
and mailing expenses incurred in forwarding materials in respect of the Exchange
Offer to the beneficial owners for which they act as nominees. Except as set
forth herein, no broker, dealer, commercial bank, trust company or other person
has been authorized to act as an agent for the Company for the purpose of the
Exchange Offer. The Company will pay (or cause to be paid) any stock transfer
taxes on its purchase of Common Shares and Common Options pursuant to the
Exchange Offer, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
FINANCIAL ADVISOR. The Company has engaged ING Barings LLC to act as
financial advisor (the "Financial Advisor") to the Company in connection with
the Exchange Offer. The Financial Advisor has not been retained to solicit any
tenders pursuant to the Exchange Offer. For its services, the Financial Advisor
is entitled to received a fixed fee of $500,000 payable at the earlier to occur
of the consummation of the Exchange Offer or March 31, 2000, regardless of
whether the Exchange Offer is consummated, and to be reimbursed monthly for
certain out-of-pocket expenses. The Company has agreed to indemnify the
Financial Advisor against certain liabilities, including liabilities under
federal securities laws, to which the Financial Advisor may become subject in
connection with its services to the Company as financial advisor.
EXCHANGE AGENT. First Chicago Trust Company of New York has been appointed
exchange agent in connection with the Exchange Offer. The Company has agreed to
pay the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.
Letters of Transmittal and all correspondence in connection with the Exchange
Offer must be sent or delivered to the Exchange Agent at the address set forth
herein.
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INFORMATION AGENT. D.F. King & Co., Inc. has been retained by the Company
as Information Agent in connection with the Exchange Offer. The Information
Agent will assist shareholders who request assistance in connection with the
Exchange Offer. The Company has agreed to pay the Information Agent reasonable
and customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith.
None of the Financial Advisor, the Exchange Agent or the Information Agent
has been authorized to make solicitations or recommendations in connection with
the Exchange Offer.
The following is an estimate of the costs and expenses expected to be
incurred by the Company in connection with the Exchange Offer:
<TABLE>
<S> <C>
Advisor fees and expenses................................... $500,000
Legal, accounting and filing fees, printing and mailing
costs and other expenses.................................. 295,000
--------
795,000
</TABLE>
All such costs and expenses will be paid by the Company out of operating
cash flow.
Certain employees of the Company have provided assistance with respect to
the Exchange Offer, primarily with respect to the preparation of this Offering
Circular to comply with the requirements under the Exchange Act. No employee of
the Company has received, or will receive, any additional or separate
compensation for such services.
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CERTAIN U.S. FEDERAL AND NON-U.S. INCOME TAX CONSIDERATIONS
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the anticipated material U.S. Federal
income tax consequences to "U.S. holders" (as defined below) of Common Shares
who exchange their Common Shares for Class B Shares or ADSs pursuant to the
Exchange Offer. This discussion is based upon the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury Regulations, administrative rulings and
pronouncements of the Internal Revenue Service (the "IRS") and judicial
decisions, all as of the date hereof. All of the foregoing are subject to change
and any such change may be retroactively applied. This discussion does not
purport to address all of the U.S. Federal income tax consequences that may be
applicable to particular categories of holders of Common Shares, some of which
may be subject to special rules, such as financial institutions, thrift
institutions, real estate investment trusts, tax-exempt organizations, regulated
investment companies, insurance companies and brokers and dealers or traders in
securities or currencies, persons whose functional currency is not the United
States dollar, and persons that will hold Class B Shares or ADSs as part of a
position in a straddle or as part of a hedging, conversion or other integrated
investment transaction. THIS DISCUSSION DOES NOT ADDRESS THE U.S. FEDERAL ESTATE
AND GIFT OR ALTERNATIVE MINIMUM TAX CONSEQUENCES OF THE EXCHANGE OFFER OR ANY
STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF THE EXCHANGE OFFER.
A "U.S. holder" is a beneficial owner of Common Shares who or which for U.S.
Federal income tax purposes is (a) a United States citizen or resident
individual, (b) a corporation or partnership created or organized in or under
the laws of the United States, (c) an estate if its income is subject to U.S.
Federal income taxation regardless of its source, or (d) a trust, if the trust
has validly elected to be treated as a United States person for U.S. federal
income tax purposes or if (i) a United States court can exercise primary
supervision over its administration and (ii) one or more United States persons
have the authority to control all of its substantial decisions.
The exchange of Common Shares for Class B Shares or ADSs pursuant to the
Exchange Offer should qualify as a "recapitalization" under
Section 368(a)(1)(E) of the Code. Although the IRS could take a contrary
position, the premium received on the exchange of Common Shares for Class B
Shares or ADSs, based on the respective market prices of the Common Shares,
Class B Shares and ADSs prior to the announcement of the Exchange Offer, should
not result in taxable income to the U.S. holders of Common Shares. Accordingly,
U.S. holders of Common Shares should not be required to recognize any income,
gain or loss on the exchange.
The aggregate tax basis of the Class B Shares or ADSs received pursuant to
the Exchange Offer should be equal to the tax basis of the exchanging U.S.
holder of Common Shares' tax basis in the Class B Shares exchanged therefor.
Provided that an exchanging U.S. holder of Common Shares holds its Common Shares
as a capital asset on the date of the exchange, the holding period of the
Class B Shares or ADSs received by such exchanging holder of Common Shares
should include the period during which it held the Common Shares exchanged
therefor.
Holders of Common Options who receive Class B Options in accordance with the
Exchange Offer should not recognize income, gain or loss as a result of such
exchange. If a holder of Common Options that are not intended to qualify as
"incentive stock options" under Section 422 of the Code elects to exchange such
Common Options for Class B Options in accordance with the Exchange Offer, the
Class B Options received will continue to be subject to the same tax treatment
as the Common Options so exchanged.
If a holder of Common Options that are intended to qualify as "incentive
stock options" elects to exchange such Common Options for Class B Options in
accordance with the Exchange Offer, the Class B Options received will not
qualify as "incentive stock options." If a holder of Common Options that are
intended to qualify as "incentive stock options" elects not to exchange such
Common Options for Class B Options in accordance with the Exchange Offer, such
Common Options retained will cease to qualify as "incentive stock options" after
the Exchange Offer is made to holders of Common Options. After the
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Exchange Offer, all Common Options and Class B Options outstanding on the date
of the Exchange Offer will be treated, for U.S. Federal income tax purposes, as
stock options that are not intended to qualify as "incentive stock options." The
exercise of such a Common Option or Class B Option will generally result in
immediate recognition of ordinary income by the holder of such Common Option or
Class B Option in the amount by which the fair market value of the Common Shares
or Class B Shares, as the case may be, purchased, on the date of such exercise,
exceeds the aggregate option price paid. Any appreciation or depreciation in the
fair market value of such shares after the date of such exercise will generally
result in a capital gain or loss to the holder at the time he or she disposes of
such shares.
THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION PURPOSES ONLY. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS
TO DETERMINE THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF
EXCHANGES MADE BY THEM PURSUANT TO THE EXCHANGE OFFER IN VIEW OF THEIR OWN
PARTICULAR CIRCUMSTANCES.
NORWEGIAN INCOME TAX CONSIDERATIONS
The following is a summary of material Norwegian income tax considerations
relevant to holders of Common Shares and holders of Common Options who are tax
residents of Norway and who exchange their Common Shares for Class B Shares or
Common Options for Class B Options. This summary does not purport to be a
comprehensive description of all the tax considerations that may be relevant to
such holders. This summary is based on Norwegian laws in force on the date of
this Offering Circular and is subject to any changes in such laws occurring
after such date.
It is expected that the exchange of Common Shares for Class B Shares will be
deemed a realization of shares under Norwegian tax legislation. This means that
an exchange may result in a capital gain or capital loss. Such capital gain or
loss is calculated for each share as the difference between the consideration
received (the market value of the share received) and the acquisition cost of
the share. Costs incurred in connection with the purchase and realization of
shares may be deducted in the year of realization. A capital gain is subject to
the general tax rate of 28 per cent, while a capital loss may be deducted
against general income, if such loss is considered final.
An exchange of Common Options for Class B Options in accordance with the
Exchange Offer will be deemed as a taxable event under Norwegian tax law. The
exchange may be deemed as a realization of a stock option derived from
employment, wherefrom it follows that a capital gain may be determined as a
benefit calculated at the time of grant of the Class B Options under the tax
provisions on stock options related to employment (the Norwegian Tax Act of 1999
Section 5-14 Paragraph 3) possibly less a benefit taxed upon the grant of the
Common Options. Such capital gain or benefit will be taxed as employment income.
It should be noted that no authoritative guidelines exist with regard to the
foregoing.
THE INCOME TAX CONSIDERATIONS SET FORTH ABOVE ARE INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE TAX CONSEQUENCES OF EXCHANGES MADE BY THEM PURSUANT TO THE
EXCHANGE OFFER IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
LUXEMBOURG TAX CONSIDERATIONS
A holder of Common Shares who is not a resident or former resident of
Luxembourg and who does not maintain a permanent establishment in Luxembourg
with which the holding of Common Shares is connected, will not be subject to any
income or capital gains taxation in Luxembourg in connection with the Exchange
Offer.
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DESCRIPTION OF CAPITAL STOCK
AUTHORIZED SHARES
The Company has authorized share capital consisting of the following:
- 60,000,000 Common Shares, no par value
- 60,000,000 Class B Shares, no par value
- 15,000,000 Founder's Shares, no par value.
As of November 30, 1999, the issued share capital of the Company consisted
of 31,280,438 Common Shares, 30,974,974 Class B Shares and 7,820,109 Founder's
Shares.
Under the Luxembourg Company Law, Founder's Shares are not considered as
representing capital of a company.
Pursuant to the Company's Articles, and as required by Luxembourg law as
presently in effect, authorized capital will automatically be reduced to the
amount represented by outstanding shares on the fifth anniversary date of the
publication of the most recent amendment of the Articles revising the Company's
authorized capital. Such amendment was last effected at an Extraordinary General
Meeting held in December 1995, with the publication thereof taking place in
March 1996. The Company takes from time to time such steps as are required to
continue the authorized capital in effect.
The Board of Directors is authorized to issue additional Common Shares,
Class B Shares and Founder's Shares from time to time up to the maximum
authorized number. The Articles of Incorporation require all shares to be issued
in registered form. All shares, when issued, are fully paid and non-assessable.
As a general rule, shareholders are entitled to preemptive rights under
Luxembourg law in respect of the issuance of shares of the same class of shares
for cash, unless the Articles of Incorporation provide otherwise. The Company's
Articles authorize the Board of Directors to deny shareholders' preemptive
rights, and the Company's Board of Directors has done so with respect to all
authorized but unissued Common Shares and Class B Shares issued for cash
(approved by the shareholders in 1995). Upon the expiration of authorized but
unissued shares as described above, the suppression of preemptive rights will
also terminate and shareholders will be entitled to preemptive rights once again
unless, upon recommendation by the Board, the shareholders vote to deny further
preemptive rights.
The Company's Articles contain an anti-dilution provision which maintains
the level of Founder's Shares at 20% of all outstanding voting shares (Common
Shares and Founder's Shares). In the event of a stock dividend, recapitalization
or other issuance of Common Shares, additional Founder's Shares are distributed
to the existing holder thereof on a proportionate basis so as to maintain the
20% level at all times.
VOTING RIGHTS
Except in the case of transactions requiring a class vote, holders of Common
Shares and Founder's Shares vote as a single class on all matters submitted to a
vote of the shareholders, with each share entitled to one vote. Under Luxembourg
law, shareholder action can generally be taken by a simple majority of shares
present or represented, without regard to any minimum quorum requirements. Three
exceptions to the general provisions of the law are (i) to amend the Company's
Articles, which requires (x) a two-thirds vote of those shares present or
represented, and (y) when the meeting is first convened, a quorum of 50% of the
outstanding shares entitled to vote, (ii) to change the country of incorporation
of the Company to a country other than Luxembourg or to increase the
contribution of the shareholders, which requires the affirmative vote of 100% of
the Common Shares, Founder's Shares and Class B Shares and (iii) any action for
which the Company's Articles require more than a simple majority vote or a
quorum. Luxembourg law
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<PAGE>
further provides that a two-thirds majority vote of the shares present or
represented and when the meeting is first convened, a quorum of 50% of such
shares, of the outstanding Common Shares, Class B Shares and Founder's Shares,
each voting and counted for quorum purposes as a separate class, is required to
authorize any amendment to the Company's Articles in respect of a
recapitalization, reclassification and similar transactions affecting the
relative rights, preferences and priorities of the Common Shares, Class B Shares
and Founder's Shares.
As a general matter, the Class B Shares are not entitled to vote in matters
requiring shareholder action. Notwithstanding the foregoing, pursuant to the
provisions of Article 46(1) of the Luxembourg Company Law, the holders of
Class B Shares are entitled to vote at general meetings of shareholders dealing
with the following matters: (i) the issue of new shares carrying preferential
rights; (ii) the determination of a preferential recoverable dividend attaching
to non-voting shares; (iii) the conversion of shares carrying preferential
rights into Common Shares; (iv) the reduction of the capital of the Company;
(v) any change in the corporate purposes of the Company; (vi) the issue of
convertible bonds; (vii) the adoption of any plan of liquidation, dissolution or
winding up of the Company or any of its subsidiaries representing a substantial
part of the Company's assets; and (viii) the conversion of the Company into a
company of another legal form.
Furthermore, pursuant to the provisions of Articles 44(2) and 46(2) of the
Luxembourg Company Law, the Class B Shares shall have the same rights as voting
shares for all purposes if INTER ALIA the preferential element of any dividend
to which such Class B Shares are entitled has not been paid out of profits for
two successive fiscal years, such voting rights continuing until such deficiency
is fully cured (see also "Dividends" below) or during such time as the number of
issued Class B Shares exceeds the number of issued Common Shares.
EQUAL TREATMENT PROVISION
As a further clarification of the relative rights, preferences and
priorities of the classes of shares of the Company and in an effort to assure
economic equivalence for Class B Shares and Common Shares, the Company's
Articles provide that in a merger or other similar transaction involving a third
party (i) the holders of Class B Shares shall be entitled to receive
consideration which is no less per share than the per share consideration, if
any, received by any holder of Common Shares in such transaction and (ii) the
Class B Shares and Common Shares held by holders other than holder(s) of
Founder's Shares shall be entitled to receive consideration which is no less per
share than the consideration per share received by the holder(s) of Founder's
Shares, the latter per share amount to be determined by dividing the aggregate
of all consideration received by such holder(s) for all shares owned by them,
including Founder's Shares, by the total number of Common Shares and Class B
Shares which they own.
SHAREHOLDER MEETINGS AND NOTICE THEREOF
Under the Company's Articles, the Company is required to hold a general
meeting of shareholders each year in Luxembourg. The meeting is normally
convened in April. In addition, the Board may call any number of extraordinary
general meetings, which may be held in Luxembourg or elsewhere, although any
extraordinary general meeting convened to amend the Articles will be held in
Luxembourg. The Board of Directors is further obliged to call a general meeting
of shareholders to be held within thirty days after receipt of a written demand
therefor by shareholders representing at least one-fifth of the outstanding
shares entitled to vote thereat.
The Company's Articles require notice of any general meeting to be sent by
first class mail, postage prepaid, to all shareholders (including Class B
Shares) at least twenty days prior to such meeting. Shareholders may be
represented by written proxy, provided the written proxy is deposited with the
Company at its registered office in Luxembourg, or with any Director of the
Company, at least five days before the meeting.
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DIVIDENDS
Under the Company's Articles, holders of Common Shares, Class B Shares and
Founder's Shares participate in annual dividends, if any are declared by the
Company, in the following order of priority:
- ten percent of the stated value thereof (I.E., $0.10 per share) to
Class B Shares as a preferred dividend;
- $0.005 per share to Founder's Shares and Common Shares equally;
- $0.095 per share to Common Shares; and
- thereafter, Common Shares and Class B Shares equally in all further
amounts.
Class B Shares being nonvoting shares are also entitled to such other
priorities and preferences concerning accrued but unpaid dividends for past
years as are provided by applicable law.
Interim dividends can be declared, up to three times in any fiscal year by
the Board of Directors. Interim dividends can be paid, but only after the prior
year's financial statements have been approved by the shareholders at a general
meeting, and any such interim dividend must be approved by the Company's
independent statutory auditors. Final dividends are declared once a year at the
annual general meeting of shareholders. Interim and final dividends on Class B
Shares can be paid out of earnings, retained and current. Interim and final
dividends on Common Shares and Founder's Shares can be paid out of any earnings,
retained and current, as well as paid-in surplus.
Luxembourg law authorizes the payment of stock dividends if sufficient
surplus exists to provide for the related increase in stated capital of the
shares issued in connection with any stock dividends.
Luxembourg law requires that 5% of the Company's unconsolidated net profits
each year be allocated to a legal reserve before declaration of dividends. The
requirement continues until the reserve is 10% of the stated capital of the
Company, as represented by Common Shares and Class B Shares, after which no
further allocations are required until further issuance of shares.
The legal reserve may also be satisfied by allocation of the required amount
at the time of issuance of shares or by a transfer from paid-in surplus. The
legal reserve is not available for dividends. The legal reserve for all existing
Common Shares and Class B Shares of the Company has heretofore been satisfied
and appropriate allocations are made to the legal reserve account at the time of
each new issuance of Common Shares and Class B Shares.
Holders of Class B Shares issued in the Exchange Offer will be entitled to
any dividends payable to holders of record of Class B Shares following
consummation of the Exchange Offer.
CONVERSION RIGHTS
Luxembourg law stipulates that the number of issued nonvoting shares shall
not be greater than the number of issued voting shares (excluding Founder's
Shares). As a consequence of this provision and to allow further issuance of
Class B Shares, the Company's Articles provide that if the Board of Directors of
the Company determines it is in the best interest of the Company to issue
further Class B Shares and such issuance would result in the number of Class B
Shares to exceed the number of Common Shares then the Board of Directors of the
Company can direct that the Class B Shares held by either (i) SNTG or
(ii) Jacob Stolt-Nielsen and his family or an affiliated entity be converted
into Common Shares of the Company on a share-for-share basis.
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LIQUIDATION PREFERENCE
Under the Company's Articles, in the event of a liquidation, all debts and
obligations of the Company must first be paid and thereafter all remaining
assets of the Company are paid to the holders of Common Shares, Class B Shares
and Founder's Shares in the following order of priority:
- Class B Shares to the extent, if any, of accrued and unpaid dividends on
such shares, and thereafter ratably to the full aggregate issuance price
thereof;
- Common Shares ratably to the extent of the stated value thereof (I.E.,
$1.00 per share);
- Common Shares and Founder's Shares equally up to $0.05 per share;
- Common Shares ratably to the full aggregate issue price thereof; and
- thereafter, Common Shares and Class B Shares equally in all remaining
assets.
DESCRIPTION OF AMERICAN DEPOSITARY SHARES
The following is a summary of the material provisions of the Deposit
Agreement relating to the ADSs evidenced by American Depositary Receipts
("ADRs"). This summary does not purport to be complete and is qualified in its
entirety by reference to the Deposit Agreement, a copy of which has been filed
as an exhibit to the Registration Statement on Form F-6 filed by the Company
with the SEC for the registration of the ADSs. Terms used herein and not
otherwise defined have the meaning set forth in the Deposit Agreement. Copies of
the Deposit Agreement are available for inspection at the principal office of
the Depositary in New York City, which is currently located at 111 Wall Street,
5th Floor, New York, New York 10043 and at the Oslo, Norway office of Den Norske
Bank (the "Custodian"), which is currently located at Stranden 21, Oslo 0107,
Norway. The Deposit Agreement is governed by the laws of the State of New York.
AMERICAN DEPOSITARY RECEIPTS
ADRs evidencing ADSs are issuable pursuant to the terms of the Deposit
Agreement. Each ADS represents, on the date hereof, one Class B Share deposited
with the Custodian in accordance with the Deposit Agreement. ADRs may evidence
any number of ADSs.
DEPOSIT AND WITHDRAWAL OF SECURITIES
The Depositary has agreed that upon deposit with the Custodian of Class B
Shares or evidence of rights to receive such Class B Shares, accompanied by an
appropriate instrument or instruments of transfer or endorsement in form
satisfactory to the Custodian and any certifications as may be required by the
Depositary or the Custodian and subject to the terms of the Deposit Agreement,
the Depositary will execute and deliver through its principal office, to the
person or persons specified by the depositor upon payment of the fees, charges
and taxes provided for in the Deposit Agreement, an ADR or ADRs registered in
the name of such person or persons for the number of ADSs issuable in respect of
such deposit.
Subject to the terms and conditions of the Deposit Agreement, upon surrender
of ADRs at the principal office of the Depositary, and upon payment of the fees,
charges and taxes provided for in the Deposit Agreement and subject to the terms
of the Deposit Agreement and the Articles of Incorporation, Holders are entitled
to delivery of the Class B Shares and any other Deposited Property at the
principal office of the Depositary or at the office of the Custodian. The
forwarding, if required, of share certificates and other documents of title for
such delivery at the principal office of the Depositary will be at the risk and
expense of the Holder.
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LOANS AND PRE-RELEASE OF CLASS B SHARES AND AMERICAN DEPOSITARY RECEIPTS
The Depositary will lend neither the Class B Shares nor the ADRs; provided,
however, that the Depositary may execute and deliver ADRs prior to the receipt
of Class B Shares and deliver Class B Shares prior to the receipt and
cancellation of ADRs (each such transaction, a "Pre-Release"). The Depositary
may also receive ADRs in lieu of Class B Shares or Class B Shares in lieu of
ADRs, as the case may be, in satisfaction of a Pre-Release. Each such
Pre-Release will be (a) accompanied by or subject to a written agreement whereby
the applicant to whom ADRs or Class B Shares are to be delivered (the
"Applicant") (i) represents that the Applicant or its customer owns the Class B
Shares or ADRs that are to be delivered to the Depositary, (ii) agrees to
indicate the Depositary as owner of such Class B Shares or ADRs in its records
and to hold such Class B Shares or ADRs in trust for the Depositary until such
Class B Shares or ADRs are delivered to the Depositary or the Custodian,
(iii) unconditionally guarantees to deliver to the Depositary or the Custodian,
as applicable, such Class B Shares or ADRs and (iv) agrees to any additional
restrictions or requirements that the Depositary deems appropriate, (b) at all
times fully collateralized with cash, United States government securities or
such other collateral as the Depositary deems appropriate, (c) terminable by the
Depositary on not more than five (5) business days' notice and (d) subject to
such further indemnities and credit regulations as the Depositary deems
appropriate. The number of ADRs and Class B Shares outstanding as a result of
Pre-Releases will not normally exceed thirty percent (30%) of the ADRs
outstanding, provided, however, that the Depositary reserves the right to change
or disregard such limit from time to time as it deems appropriate. The
Depositary may also set limits with respect to the number of ADRs and Class B
Shares involved in Pre-Releases with any one person on a case-by-case basis as
it deems appropriate. The Depositary may retain for its own account any
compensation received by it in connection with the foregoing, including, without
limitation, earnings on the collateral referenced in (b) above.
DIVIDENDS, OTHER DISTRIBUTIONS AND RIGHTS
The Depositary is required, to the extent that in its judgment it can
convert foreign currency on a reasonable basis into dollars and transfer the
resulting dollars to the United States, to convert all cash dividends and other
cash distributions that it receives in respect of the Class B Shares or other
Deposited Property, and to distribute the resulting dollar amount (net of any
reasonable and customary expenses incurred by the Depositary in converting such
foreign currency and any expenses incurred in complying with currency exchange
control or other governmental requirements) to the Holders entitled thereto, in
proportion to the number of ADSs representing such Shares held by them,
respectively. Such distribution may be made upon an averaged or other
practicable basis without regard to any distinctions among Holders on account of
any application of exchange restrictions or otherwise. The amount distributed to
Holders of ADRs will be reduced by any amount on account of taxes or other
governmental charges to be withheld by the Company, the Custodian or the
Depositary. See "--Liability of Holders for Taxes."
In accordance with instructions from the Company, the Depositary will, to
the extent practicable, take reasonable administrative actions to obtain tax
refunds, reduced withholding of tax at source on dividends and other benefits
under applicable tax treaties with respect to dividends and other distributions
on the Deposited Property. Holders of ADRs may be required to provide the
Depositary with certain information and proofs necessary to enable the
Depositary to perform its obligations in connection therewith and will indemnify
the Depositary, the Company, the Custodian and any of their respective
directors, employees, agents and affiliates against, and hold each of them
harmless from any claims by any governmental authority with respect to taxes,
additions to tax, penalties or interest arising out of any refund of taxes,
reduced rate of withholding at source or other tax benefit obtained for such
Holder pursuant to the Deposit Agreement.
If the Depositary determines that in its judgment any foreign currency
received by it is not convertible on a reasonable basis into dollars
transferable to the United States, or if any approval or license of any
government or authority or agency thereof that is required for such conversion
is denied, or in the opinion
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of the Depositary is not obtainable at a reasonable cost or within a reasonable
period as determined by the Depositary, the Depositary may distribute the
foreign currency to, or in its discretion may hold such foreign currency,
without liability for interest thereon, for the respective accounts of, the
Holders entitled to receive the same. If any such conversion of foreign
currency, in whole or in part, is not practicable for distribution to certain
Holders entitled thereto, the Depositary may, in its discretion, make such
conversion and distribution in dollars to the extent practicable to the Holders
entitled thereto and may distribute the balance of the foreign currency received
by the Depositary to, or hold such balance, without liability for interest
thereon, for the account of the Holders entitled thereto.
If a distribution by the Company consists of a dividend in, or free
distribution of, Class B Shares, the Depositary may, and shall if the Company so
requests, subject to the terms of the Deposit Agreement, distribute to the
Holders of outstanding ADRs, in proportion to their holdings, additional ADRs
for an aggregate number of ADRs representing the number of Class B Shares
received as such dividend or free distribution. The Depositary may withhold any
such distribution of ADRs if it has not received satisfactory assurances from
the Company that such distribution does not require registration under the
Securities Act or is exempt from registration under the provisions of such Act.
In lieu of delivering ADRs for fractional ADSs in any such case, the Depositary
will sell the amount of Shares represented by the aggregate of such fractions
and will distribute the net proceeds to Holders in accordance with the terms of
the Deposit Agreement. If additional ADRs are not so distributed, each ADR shall
thenceforth also represent the additional Class B Shares distributed with
respect to the Class B Shares represented thereby.
If the Company offers or causes to be offered to the holders of Class B
Shares or other Deposited Property any rights to subscribe for additional
Class B Shares or any rights of any other nature, the Depositary may and, if
requested by the Company, will either (i) make such rights available to Holders
of ADRs by means of warrants or otherwise, if lawful and feasible, or (ii) if
making such rights available to Holders of ADRs is not lawful or not feasible,
or if the rights represented by such warrants or other instruments are not
exercised and appear to be about to lapse, in its discretion, sell such rights
or warrants or other instruments at public or private sale, in a riskless
principal capacity, at such place or places and upon such terms as the
Depositary may deem proper, and allocate the proceeds of such sales for the
accounts of the Holders of ADRs otherwise entitled thereto upon an averaged or
other practicable basis without regard to any distinctions among such Holders
because of exchange restrictions, or the date of delivery of any ADR or ADRs, or
otherwise, and distribute such net proceeds so allocated to the extent
practicable, as in the case of a distribution in cash. Any such disposal of
rights may substantially reduce the equity of the Holders of ADRs. If by the
terms of such rights offering or for any other reason the Depositary may not
make the net proceeds of any sale of rights available to such Holders, then the
Depositary shall allow such rights to lapse. The Depositary will not make
available to Holders of ADRs any rights to subscribe for or to purchase any
securities unless a registration statement is in effect or unless the offering
and sale of such securities to such holders is exempt from registration under
the provisions of the Securities Act. The Company has no obligation, however, to
file a registration statement if an exemption is not available or to use its
best efforts to cause such registration to become effective within a reasonable
period of time before such rights expire.
If the Custodian or the Depositary receives any distribution on Deposited
Property other than cash, rights or Class B Shares, the Depositary shall
distribute such property to the Holders entitled thereto, after deduction or
upon payment of the expenses of the Depositary, in proportion to their holdings
in any manner that the Depositary, after consultation with the Company, deems
equitable and practicable. If the Depositary determines that any such
distribution in securities or property cannot be made proportionately among the
Holders entitled thereto, or if for any reason the Depositary deems such
distribution not to be feasible, the Depositary may adopt such method as it may
deem equitable and practicable for the purpose of effecting such distribution,
including, without limitation, disposal of such property or securities by public
or private sale, and the distribution of the net proceeds (after deduction of
any taxes, fees or charges of the Depositary) to the Holders of ADRs entitled
thereto.
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<PAGE>
In the event that the Depositary determines that any distribution in
property (including Class B Shares or other securities and rights to subscribe
therefor) is subject to any tax or other governmental charges which the
Depositary is obligated to withhold, the Depositary may dispose of all or a
portion of such property (including Class B Shares or other securities and
rights to subscribe therefor) in such amounts and in such manner, including by
public or private sale, as the Depositary deems necessary and practicable to pay
any such taxes or charges, and the Depositary shall distribute the net proceeds
of any such sale after deduction of such taxes or charges to Holders entitled
thereto in proportion to the number of American Depositary Shares held by them
respectively and the Depositary shall distribute any unsold balance of such
property in accordance with the provisions of the Deposit Agreement.
Upon any change in nominal or par value, split-up, cancellation,
consolidation or any other reclassification of Deposited Property, or upon any
recapitalization, reorganization, merger or consolidation or sale of assets
affecting the Company or to which it is a party, any securities which shall be
received by the Depositary or a Custodian in exchange for, or in conversion of
or replacement or otherwise in respect of, such Deposited Property shall be
treated as new Deposited Property under this Deposit Agreement, and the American
Depositary Shares representing or previously representing such Deposited
Property shall, subject to the Deposit Agreement and applicable law, represent
the right to receive the new Deposited Property so received in exchange,
conversion, replacement or otherwise unless additional or new ADRs are delivered
pursuant to the following sentence. In any such case, the Depositary may,
subject to the terms of the Deposit Agreement, execute and deliver additional
ADRs as in the case of a stock dividend on the Class B Shares, or call for the
surrender of outstanding ADRs to be exchanged for new ADRs specifically
describing such new Deposited Property or corporate change. In the event that
any security so received may not be lawfully distributed to some or all Holders
of ADRs, the Depositary may sell such securities at public or private sale and
distribute the net proceeds to the Holders of ADRs otherwise entitled thereto as
in the case of a distribution received in cash. The Depositary shall not be
liable for (i) any failure to determine that it may be lawful or feasible to
make such securities available to Holders in general or any Holders in
particular, (ii) any foreign exchange exposure or loss incurred in connection
with such sale, or (iii) any liability to the purchaser of such securities.
RECORD DATES
Whenever any cash dividend or other cash distribution becomes payable or any
distribution other than cash is made, or whenever rights are issued with respect
to the Class B Shares or other Deposited Property, or whenever there is a change
in the number of Class B Shares that are represented by each ADS, or whenever
the Depositary receives notice of any meeting of holders of securities
represented by each ADS, or whenever the Depositary shall find it necessary or
convenient in connection with the giving of any notice, solicitation of any
consent or any other matter, the Depositary will fix a record date for the
determination of the holders of ADRs (a) who are entitled to receive such
dividend, distribution or rights, or the net proceeds of the sale thereof, or to
give instructions for the exercise of voting rights at any such meeting or to
give or withhold such consent, or to receive such notice or solicitation or to
otherwise take action, or (b) whose ADRs shall evidence such changed number of
Class B Shares, subject in each case to the terms of the Deposit Agreement.
VOTING OF THE UNDERLYING DEPOSITED PROPERTY
Upon receipt of a notice of any meeting at which the holders of Class B
Shares or other Deposited Property are entitled to vote, the Depositary will, if
requested in writing in a timely manner by the Company, mail to Holders of ADRs
(i) the information contained in such notice of meeting (or a summary thereof),
(ii) a statement that Holders of ADRs as of the close of business on the
specified record date will be entitled, subject to any applicable provisions of
law and of the Articles of Incorporation of the Company, to instruct the
Depositary as to the exercise of the voting rights, if any, pertaining to the
Class B Shares or other Deposited Property and (iii) a brief statement as to the
manner in which such instructions may be given. The Depositary has agreed it
will endeavor, insofar as practicable, to vote the Class B Shares or other
securities so represented in accordance with such instructions. Subject to the
terms of the Deposit Agreement, the Depositary has agreed not to vote the
Class B Shares or other Deposited Property unless it has received such
instructions from the Holders of ADRs.
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<PAGE>
REPORTS AND NOTICES
The Depositary will make available for inspection by Holders of ADRs at its
Principal Office any reports and communications, including any proxy soliciting
materials, received from the Company which are both (a) received by the
Depositary, the Custodian or the nominees of either as the registered holder of
the Deposited Property and (b) made generally available to the holders of such
Deposited Property by the Company. The Depositary will also send copies of such
reports to Holders of ADRs when furnished by the Company pursuant to the Deposit
Agreement.
CHARGES OF DEPOSITARY
The Depositary will charge (i) any party who makes a deposit or to whom ADRs
are delivered (including, without limitation, deposit or issuance pursuant to a
stock dividend or stock split declared by the Company or an exchange of stock
regarding the ADRs or Deposited Property or a distribution of ADRs pursuant to
the Deposit Agreement) and (ii) any party surrendering ADRs against the delivery
of Deposited Property or to whom Deposited Property is delivered, up to US$5.00
for each 100 ADSs (or fraction thereof) represented by the ADRs issued or
surrendered. In addition, the Holders of ADRs will pay, where applicable:
(a) taxes and other governmental charges, (b) such registration fees as may from
time to time be in effect for the registration of transfers, if any, of Shares
generally on the share register of the Company (or any appointed agent of the
Company for transfer and registration of Class B Shares which may be the Share
Registrar) and accordingly applicable to transfers of Shares to the name of the
Depositary, a Custodian or their nominees or the person who makes a withdrawal,
on the making of deposits or withdrawals, (c) such cable, telex, facsimile
transmission and delivery expenses as are expressly provided in the Deposit
Agreement to be at the expense of persons depositing Class B Shares or Holders
of ADRs, (d) such expenses as are incurred by the Depositary in the conversion
of foreign currency, (e) a fee for the making of distributions (including cash
dividends and distribution of proceeds of sales of securities or rights pursuant
to the Deposit Agreement) on the Class B Shares or other Deposited Property and
(f) such fees and expenses as are incurred by the Depositary (including, without
limitation, expenses incurred on behalf of Holders in connection with compliance
with foreign exchange control regulations) in delivery of Deposited Property.
Subject to agreements from time to time made between the Company and the
Depositary, the Company will pay all charges, if any, in connection with the
initial issuance of the ADRs evidencing the ADSs offered hereby and all other
charges of the Depositary, as well as such other expenses as are set forth in
the Deposit Agreement.
EXECUTION, TRANSFER, SPLIT-UP AND COMBINATION OF AMERICAN DEPOSITARY RECEIPTS
The ADRs are transferable on the books of the Depositary by a Holder of ADRs
in person or by an authorized attorney upon surrender of such ADR properly
endorsed or accompanied by proper instruments of transfer and stamped as may be
required by law, provided that the Depositary may close the transfer books, at
any time or from time to time, when deemed expedient by it in connection with
the performance of its duties. As a condition precedent to the execution and
delivery, registration of transfer, split-up, combination or surrender of any
ADR or withdrawal of any Deposited Property, the Depositary or the Custodian may
require payment from the depositor or presenter of an ADR of a sum sufficient to
reimburse it for any tax or other governmental charge and any stock transfer or
registration fee with respect thereto and payment of any applicable fees and
charges payable by the Holders of ADRs. The Depositary may refuse to execute and
deliver ADRs, register the transfer of any ADR or make any distribution of or
related to Class B Shares or other Deposited Property, until it has received
such proof of citizenship, residence, exchange control approval or other
information as it may deem necessary or proper. The execution and delivery,
transfer and surrender of ADRs generally may be suspended during any period when
the transfer books of the Depositary, the Registrar or the Company are closed,
if such suspension is deemed necessary or advisable by the Depositary or the
Company at any time or from time to time because of any requirement of law or of
any government or governmental authority, body or
39
<PAGE>
commission or any securities exchange on which ADRs or Class B Shares are
listed, or under any provision of the Deposit Agreement or any provisions
governing the Class B Shares or other Deposited Property, or any meeting of
shareholders of the Company or for any other reason, subject in all cases to
applicable U.S. securities laws. Notwithstanding anything to the contrary
contained herein or in the Deposit Agreement, the surrender of outstanding ADRs
and withdrawal of Class B Shares or other Deposited Property may not be
suspended or refused, except as permitted in General Instruction IA(1) to
Form F-6 (as such instruction may be amended from time to time) under the
Securities Act in connection with (i) temporary delays relating to the deposit
of Shares in connection with voting at a shareholders' meeting, or the payment
of dividends, (ii) the payment of fees, taxes and similar charges and
(iii) compliance with any U.S. or foreign laws or governmental regulations
relating to the ADRs or to the withdrawal of the Deposited Property.
LIABILITY OF HOLDERS FOR TAXES
If any tax or other governmental charge shall become payable with respect to
any ADR or any Deposited Property, such tax or other governmental charge shall
be payable by the Holder of such ADRs to the Depositary. The Depositary may
refuse to effect any registration of transfer of such ADR or to issue any new
ADR or ADRs or to permit any deposit or withdrawal of Deposited Property until
such payment is made, and the Company and the Depositary may withhold or deduct
from any dividends or other distributions, or may sell for the account of the
Holder thereof any part or all of the Deposited Property underlying such ADR,
and may apply such dividends or other distributions or the proceeds of any such
sale in payment of such tax or other governmental charge, the Holder of such ADR
remaining liable for any deficiency.
CERTAIN REPRESENTATIONS AND WARRANTIES OF DEPOSITORS OF CLASS B SHARES
Each person depositing Class B Shares under the Deposit Agreement shall be
deemed thereby (a) to represent and warrant that such Class B Shares and the
certificates therefor are validly issued, fully paid and nonassessable, that all
preemptive rights, if any, with respect to such Class B Shares have been validly
waived or exercised and that each such person making such deposit is duly
authorized so to do, (b) to acknowledge complete responsibility for the report
of any false information relating to foreign exchange transactions to the
Depositary, the Custodian or any governmental authority in Luxembourg in
connection with the issuance of ADRs and the deposit, transfer, surrender or
withdrawal of Class B Shares or ADRs and (c) to represent that (i) the Class B
Shares presented for deposit are not, and the American Depositary Shares
issuable upon such deposit will not be, Restricted Securities and (ii) such
Class B Shares are not liable to disenfranchisement or disposal by the Company
pursuant to the Articles of Incorporation. Such representations and warranties
shall survive the deposit and withdrawal of Shares and the issuance and
cancellation of ADRs in respect thereof.
COMPLIANCE WITH INFORMATION REQUESTS AND REQUIRED DISPOSALS OF AMERICAN
DEPOSITARY RECEIPTS
Each Holder agrees to comply with requests from the Company pursuant to
Luxembourg law, the rules and requirements of the OSE, Nasdaq, and any other
stock exchange on which the Class B Shares are, or will be, registered, traded
or listed or the Articles of Incorporation of the Company, which are made to
provide information regarding, among other things, as to the capacity in which
such Holder owns ADRs (or Class B Shares, as the case may be) and regarding the
identity of any other person interested in such ADRs and the nature of such
interest and various other matters, whether or not they are Holders of ADRs at
the time of such request.
The Company may restrict transfers of the Class B Shares where such transfer
might result in ownership of Class B Shares exceeding the limits under
applicable law or the Company's Articles of Incorporation. The Company may also
restrict, in such manner as it deems appropriate, transfers of the American
Depositary Shares where such transfer may result in the total number of Shares
represented by the ADRs owned by a single Holder exceeding any such limits. The
Company may instruct the Depositary
40
<PAGE>
to take action at the Company's expense with respect to the ownership interest
of any holder in excess of the limitation set forth in the preceding sentence,
including, but not limited to, a mandatory sale or disposition on behalf of a
Holder of the Class B Shares represented by the American Depositary Shares held
by such Holder in excess of such limitations, if and to the extent such
disposition is permitted by applicable law and the Company's Articles of
Incorporation.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of the ADRs and any provisions of the Deposit Agreement may at any
time be amended by agreement between the Company and the Depositary in any
respect which they may deem necessary or desirable without the consent of the
Holders of ADRs, provided, however, that any amendment which imposes or
increases any fees or charges (other than the charges of the Depositary for
deposits, the execution and delivery of ADRs, custody, transfer and registration
fees, fees in connection with foreign exchange control regulations, and taxes
and other governmental charges, delivery and such other expenses), or which
shall otherwise prejudice any substantial existing right of Holders or
beneficial owners of ADRs, will not take effect as to outstanding ADRs until the
expiration of 30 days after notice of such amendment shall have been given to
the Holders of outstanding ADRs. Every Holder and beneficial owner at the time
any amendment so becomes effective will be deemed, by continuing to hold such
ADR, to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby. In no event shall any amendment impair the right
of the Holder to surrender such ADR and receive therefor the Deposited Property
represented thereby, except in order to comply with mandatory provisions of
applicable law. Notwithstanding the foregoing, if any governmental body should
adopt new laws, rules or regulations which would require amendment of the
Deposit Agreement to ensure compliance therewith, the Company and the Depositary
may amend the Deposit Agreement and the form of the ADRs at any time in
accordance with such changed rules, and any such amendment or supplement to the
Deposit Agreement may become effective before a notice of such amendment is
given to Holders of ADRs or within any other period of time as required for
compliance.
The Depositary will, whenever so directed by the Company, terminate the
Deposit Agreement by mailing notice of such termination to the Holders of all
ADRs then outstanding at least 30 days prior to the date fixed in such notice
for such termination. If 60 days shall have expired after (i) the Depositary
shall have delivered to the Company a written notice of its election to resign,
or (ii) the Company shall have delivered to the Depositary a written notice of
the removal of the Depositary, and in either case a successor depositary shall
not have been appointed and accepted its appointment, the Depositary may
terminate the Deposit Agreement by mailing notice of such termination to the
Holders of all ADRs then outstanding at least 30 days prior to the date fixed in
such notice for such termination. On and after the date of termination, the
Holder will, upon surrender of such ADR at the Principal Office of the
Depositary, upon the payment of any applicable taxes or governmental charges and
the charges of the Depositary for the surrender of ADRs, be entitled to delivery
of the amount of Deposited Property represented by such ADRs. If any ADRs shall
remain outstanding after the date of termination, the Registrar will discontinue
the registration of transfers of ADRs, and the Depositary will suspend the
distribution of dividends to the Holders thereof, and will not give any further
notices or perform any further acts under the Deposit Agreement except the
collection of dividends and other distributions pertaining to the Deposited
Property, the sale of rights and delivery of the Deposited Property, together
with any dividends or other distributions received with respect thereto and the
net proceeds of the sale of any rights or other property, in exchange for ADRs
surrendered to the Depositary. At any time after the expiration of six months
from the date of termination, the Depositary may sell the Deposited Property and
hold uninvested the net proceeds of any such sale in an unsegregated escrow
account, without liability for interest thereon, for the pro rata benefit of the
Holders of ADRs that have not theretofore been surrendered. After making such
sale, the Depositary shall be discharged from all obligations under the Deposit
Agreement, except to account for net proceeds and other cash. Upon termination
of the Deposit
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Agreement, the Company shall be discharged from all obligations thereunder,
except for certain of its obligations to the Depositary.
GENERAL
Neither the Depositary nor the Company nor any of their respective
directors, employees, agents or affiliates shall incur any liability to any
Holder or any other person, if, by reason of any provision of any present or
future law or regulation of the United States, Luxembourg or any other
jurisdiction, or of any other governmental authority or regulatory authority or
stock exchange, or by reason of any provision, present or future, of the
Company's Articles or the provisions of or governing any Deposited Property, or
by reason of any act of God or war or other circumstances beyond its control,
the Depositary or its agents or the Company or its agents shall be prevented or
forbidden from or subjected to any civil or criminal penalty or restraint on
account of, or delayed in, doing or performing any act or thing which by the
terms of the Deposit Agreement it is provided shall be done or performed; nor
shall the Depositary or its agents or the Company or its agents incur any
liability to any Holder or other person by reason of any non-performance or
delay, caused as aforesaid, in performance of any act or thing which by the
terms of the Deposit Agreement it is provided shall or may be done or performed,
or by reason of any exercise of, or failure to exercise, any discretion provided
for in the Deposit Agreement or in the Company's Articles or the provisions of
or governing any Deposited Property. Where, by the terms of an offering or
distribution pursuant to the Deposit Agreement, or any provision of the
Company's Articles or for any other reason, such distribution or offering may
not be made available to Holders of ADRs, and the Depositary may not dispose of
such distribution or offering on behalf of such Holders and make the net
proceeds available to such Holders, then the Depositary shall not make such
distribution or offering, and shall allow any such rights, if applicable, to
lapse.
None of the Company or its agents assumes any obligation or shall be subject
to any liability under the Deposit Agreement or the ADRs to Holders of ADRs or
other persons, except that each of the Company and its agents agrees to perform
its obligations specifically set forth in this Deposit Agreement without
negligence or bad faith and using its reasonable judgment, without any liability
on the part of the Company or the Depositary to any Holder of ADRs. None of the
Depositary or its agents assumes any obligation or shall be subject to any
liability under the Deposit Agreement or the ADRs to Holders of ADRs or other
persons (including, without limitation, liability with respect to the validity
or worth of the Deposited Property), except that each of the Depositary and its
agents agrees to perform its obligations specifically set forth in the Deposit
Agreement without negligence or bad faith.
The Holders of ADRs may inspect the books for the registration and transfer
of ADRs at all reasonable times, provided that such inspection shall not be for
the purposes of communicating with Holders of ADRs in the interest of a business
or object other than the business of the Company or a matter related to the
Deposit Agreement or the ADRs.
If any ADRs or the ADSs evidenced thereby are listed on one or more stock
exchanges or automated quotation systems in the United States, the Depositary
shall act as Registrar, or with the written approval of the Company, appoint a
Registrar or one or more co-registrars for registration of ADRs and transfers,
combinations and split-ups, and to countersign such ADRs in accordance with any
requirements of any such exchanges or systems and in accordance with the terms
of such appointments. Any Registrar or co-registrar may be removed and a
substitute or substitutes appointed by the Depositary upon the written request
or with the written approval of the Company. In carrying out its functions, a
co-transfer agent may require evidence of authority and compliance with
applicable laws and other requirements by Holders of ADRs or persons entitled to
ADRs and will be entitled to protection and indemnity to the same extent as the
Depositary.
The Depositary may own and deal in any class of securities of the Company
and its affiliates and in ADRs.
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DESCRIPTION OF THE OPTION PLANS
The Board of Directors adopted the Company's 1987 Stock Option Plan (the
"1987 Option Plan") on October 2, 1987, and the shareholders ratified and
approved such plan on October 8, 1987. The 1987 Option Plan was most recently
amended by the Board of Directors on July 14, 1994. The purpose of the 1987
Option Plan is to provide a special incentive to selected key employees of the
Company and its subsidiaries to promote the Company's business. No future option
grants are permitted under the terms of the 1987 Option Plan.
The Board of Directors adopted the Company's 1997 Stock Option Plan (the
"1997 Option Plan") on March 7, 1997, and the shareholders ratified and approved
such plan on May 2, 1997. The purpose of the 1997 Option Plan is to provide a
special incentive to selected key employees and directors of the Company and its
subsidiaries to promote the Company's business. The Company may deliver up to
5,180,000 shares, which may be Common Shares or Class B Shares, or any
combination thereof (as stated in the instrument evidencing an option), upon the
exercise of options under the 1997 Option Plan. No options may be granted under
the 1997 Option Plan after March 7, 2007; however, options granted before such
date will remain in effect, in accordance with their terms.
The Compensation Committee of the Board of Directors administers the Option
Plans. The Option Plans permit the Company to grant options to purchase Common
Shares or Class B Shares to eligible employees and directors of the Company and
its subsidiaries, including special purchase arrangements for individuals
residing in countries where options are inappropriate. Options granted under the
Option Plans may be non-qualified stock options or incentive stock options
intended to qualify for special U.S. Federal income tax treatment, as determined
by the Compensation Committee. The option exercise price may be paid by the
holder of an option in cash, certified bank or cashier's check or Common Shares,
or, in the case of options under the 1997 Option Plan, Class B Shares. Options
granted under the Option Plans are not transferable other than by will or by the
laws of descent and distribution following the holder's death. The Compensation
Committee selects eligible individuals to receive options, and determines the
number and type of shares covered by each such option, the option price thereof
(which may not be less than the fair market value of a Common Share or Class B
Share covered by such option on the date of grant), and the time or times at
which an option may be exercised (and to accelerate the exercisability of an
outstanding option) and the term of an option (which may not exceed ten years
from the grant date thereof), in accordance with the terms and conditions of the
applicable Option Plan.
If the Company undergoes a "change in control" (as defined in the Option
Plans), and, within one year thereafter, the employment or service of a holder
of an option is terminated (within the meaning of the Option Plans), all of the
holder's outstanding options become immediately exercisable, and such options
may be exercised during the following ten-day period.
The Common Shares and Class B Shares that may be delivered upon the exercise
of options granted under the Option Plans are either authorized but unissued
shares or treasury shares. The Board of Directors will make appropriate
adjustments in the number and kind of shares that can be sold under the Option
Plans, the option price and any other relevant provisions in the event of
certain capital changes of the Company, such as a share dividend, spin-off,
merger or recapitalization. All outstanding options terminate if the Company
dissolves or liquidates or enters into a merger or reorganization in which the
Company is not the surviving corporation, provided that the Board of Directors
either accelerates the exercisability of such options, arranges for the grant of
replacement options to the holders of such options or provides for payment to
the holders of such options equal to the difference between the aggregate
exercise price and consideration receivable for the number of shares covered by
such options. Subject to particular limitations specified in the Option Plans,
the Board of Directors may at any time amend or terminate the 1987 Option Plan
or the 1997 Option Plan, and modify any outstanding options under the Option
Plans.
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TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Shares is First Chicago
Trust Company of New York and for the Class B Shares is Den norske Bank ASA.
January 21, 2000
STOLT-NIELSEN S.A.
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SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE AND ADMINISTRATIVE EMPLOYEES OF STOLT-NIELSEN S.A.
Stolt-Nielsen S.A is a Luxembourg holding company and does not have officers
as such. Set forth below is the name, business address, present principal
occupation or employment and material occupations, positions, offices or
employments for the past five years of each member of the Board of Directors of
Stolt-Nielsen S.A. and those persons employed by its subsidiaries who perform
the indicated executive and administrative functions for the combined business
of the Company's subsidiaries. Unless otherwise indicated, the address where
each individual's material occupations, positions, offices or employments were
carried on is the same as that individual's current business address.
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- ---------------------------------------------------
<S> <C>
Jacob Stolt-Nielsen.......................... Chairman of the Board and Chief Executive Officer,
Norwegian Stolt-Nielsen S.A., 1959 to Present. Chairman of
c/o Stolt-Nielsen Limited the Board of Directors, Stolt Comex Seaway S.A.,
Aldwych House 1993 to Present.
71-91 Aldwych
London WC2B 4HN
England
Carroll N. Bjornson.......................... Director, Stolt-Nielsen S.A., 1974 to Present.
American Chairman and Chief Executive Officer, Maryland
8 Sound Shore Drive Marine, Inc., 1985 to November 1997, c/o
Greenwich, Connecticut 06836 Stolthaven, Jacintoport Boulevard, Houston, Texas,
USA USA.
Philip W. Darwin............................. Director, Stolt-Nielsen S.A., 1989 to Present.
British Chairman, The Smaller Companies Investment Trust
c/o Stolt-Nielsen Limited plc., 1995 to Present, One Bow Churchyard,
Aldwych House Cheapside, London, EC4M 9HH. Director, IFG Group
71-91 Aldwych plc., 1995 to Present, 19 Fitzwilliam Square,
London WC2B 4HN Dublin 2, Ireland. Director, Lomond Underwriting
England plc, (name later changed to Atrium Underwriting,
plc.), 1995 to December 1998, Room 790 Lloyd's,
Lime Street, London EC3M 7DQ. Director, J & A
Gardner & Co. Ltd., 1995 to May 1997, 16 Robertson
Street, Glasgow G2 8DU.
Erling C. Hjort.............................. Director, Stolt-Nielsen S.A., 1995 to Present.
Norwegian Attorney, Wikborg, Rein & Co., 1964 to Present.
Wikborg, Rein & Co.
Olav V's Gate 6
P.O. Box 1513 Vika
0117 Oslo
Norway
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- ---------------------------------------------------
<S> <C>
Tadoshi Mamiya............................... Director, Stolt-Nielsen S.A., 1997 to Present.
Japanese Director, Nippon Yusen Kaisha, Ltd. ("NYK Line"),
NYK Line Tokyo, 1998 to Present. Chairman, NYK Line (Europe)
2-3-2 Marunouchi Ltd., London, June 1998 to June 1999. Managing
Chiyoda-ku Director, NYK Bulkship (Europe) Ltd., London, June
Tokyo 100 1997 to June 1998. General Manager, NYK Line,
Japan Tokyo, January 1995 to June 1997.
Christer Olsson.............................. Director, Stolt-Nielsen S.A., 1993 to Present.
Swedish President [and Chairman], Walleniusrederierna AB,
Walleniusrederierna AB 1984 to Present. Chairman, Swedish Shipowners'
Swedenborgs 19 Association.
P.O. Box 17086
S10462 Stockholm
Sweden
Jacob B. Stolt-Nielsen....................... Director, Stolt-Nielsen S.A., 1995 to Present.
Norwegian President and Managing Director, Stolthaven
Stolt-Nielsen Limited Terminals Division of Stolt-Nielsen Transportation
Aldwych House Group Ltd., November 1992 to Present.
71-91 Aldwych
London WC2B 4HN
England
Niels G. Stolt-Nielsen....................... Director, Stolt-Nielsen S.A., 1996 to Present.
Norwegian Managing Director, Stolt Sea Farm Holdings Ltd.,
Stolt Sea Farm A.S. 1996 to Present. General Manager, Stolt-Nielsen
Grev Wedels Plass 5 Shanghai Representative Office, November 1994 to
P.O. Box 370 Sentrum July 1996.
0102 Oslo
Norway
Christopher J. Wright........................ President and Chief Operating Officer,
British Stolt-Nielsen S.A., July 1986 to Present. Deputy
Stolt-Nielsen Limited Chairman of the Board of Stolt Comex S.A., 1993 to
Aldwych House Present.
71-91 Aldwych
London WC2B 4HN
England
Jan Chr. Engelhardtsen....................... Chief Financial Officer, Stolt-Nielsen S.A.,
Norwegian July 1992 to Present. Chief Financial Officer,
c/o Stolt-Nielsen Inc. Stolt-Nielsen Transportion Group Ltd.,
8 Sound Shore Drive January 1999 to Present.
Greenwich, Connecticut 06836
USA
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ---------------- ---------------------------------------------------
<S> <C>
Samuel Cooperman............................. Chief Executive Officer, Stolt-Nielsen
American Transportation Group Ltd., February 1999 to
Stolt-Nielsen Transportation Group Ltd. Present.
8 Sound Shore Drive
Greenwich, Connecticut 06836
USA
Bernard Vossier.............................. Chief Executive Officer, Stolt Comex Seaway S.A.,
French May 1995 to Present. Chief Operating Officer, Stolt
Stolt Comex Seaway M.S. Ltd. Comex Seaway S.A., December 1994 to May 1995.
Bucksburn House
Howes Road
Bucksburn
Aberdeen AB21 9RQ
Scotland
</TABLE>
I-3
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Common
Shares and any other required documents should be sent or delivered by each
holder of the Common Shares or such holder's broker, dealer, commercial bank,
trust company or other nominee to the Exchange Agent at one of its addresses set
forth below. Questions and requests for assistance may be directed to the
Information Agent at its address and telephone numbers set forth below.
The Exchange Agent for the Exchange Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
Attention: Tenders & Exchanges Attention: Tenders & Exchanges Attention: Tenders & Exchanges
Department Department Department
P.O. Box 2569 c/o Securities Transfer and 525 Washington Boulevard,
Suite 4660 Reporting Services, Inc. Third Floor
Jersey City, New Jersey 07303-2565 100 William Street, Galleria Jersey City, New Jersey 07310
New York, New York 10038
BY FACSIMILE TRANSMISSION:
(201) 324-3402
(201) 324-3403
CONFIRMATION BY TELEPHONE:
(201) 222-4707
</TABLE>
The Information Agent for the Exchange Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Bankers and Brokers call collect: (212) 269-5550
ALL OTHERS CALL TOLL-FREE: (800) 347-4750
- --------------------------------------------------------------------------------
Any questions or requests for assistance or for additional copies of this
Offering Circular, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent. Holders of Common Shares may
also contact their broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Exchange Offer.
- --------------------------------------------------------------------------------
<PAGE>
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE
IN ANY DOUBT AS TO THE ACTION TO BE TAKEN, YOU SHOULD SEEK YOUR OWN FINANCIAL
ADVICE IMMEDIATELY FROM YOUR OWN APPROPRIATELY AUTHORIZED INDEPENDENT FINANCIAL
ADVISOR.
IF YOU HAVE SOLD OR TRANSFERRED ALL OF YOUR COMMON SHARES (AS DEFINED BELOW)
OF STOLT-NIELSEN S.A., PLEASE FORWARD THIS DOCUMENT AND ALL ACCOMPANYING
DOCUMENTS AT ONCE TO THE STOCKBROKER, BANK OR OTHER AGENT THROUGH OR TO WHOM THE
SALE OR TRANSFER WAS EFFECTED, FOR TRANSMISSION TO THE PURCHASER OR TRANSFEREE.
LETTER OF TRANSMITTAL
TO EXCHANGE ANY AND ALL COMMON SHARES
OF
STOLT-NIELSEN S.A.
PURSUANT TO THE OFFERING CIRCULAR DATED JANUARY 21, 2000
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 18, 2000 UNLESS THE OFFER IS
EXTENDED.
- --------------------------------------------------------------------------------
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK, EXCHANGE AGENT
<TABLE>
<CAPTION>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
TENDERS & EXCHANGE TENDERS & EXCHANGE DEPARTMENT TENDERS & EXCHANGE
DEPARTMENT C/O SECURITIES TRANSFER AND REPORTING DEPARTMENT
P.O. BOX 2569 SERVICES, INC. 525 WASHINGTON BOULEVARD
SUITE 4660 100 WILLIAM STREET, GALLERIA 3RD FLOOR
JERSEY CITY, NJ 07303-2565 NEW YORK, NY 10038 JERSEY CITY, NJ 07310
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY TO THE EXCHANGE AGENT.
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 USED ONLY IF CERTIFICATES FOR COMMON
SHARES ARE TO BE DELIVERED WITH IT OR, UNLESS AN AGENT'S MESSAGE (AS DEFINED IN
THE OFFERING CIRCULAR) IS UTILIZED, COMMON SHARES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT AT THE
DEPOSITORY TRUST COMPANY ("DTC" OR THE "BOOK-ENTRY TRANSFER FACILITY") AS SET
FORTH UNDER "THE EXCHANGE OFFER--PROCEDURE FOR EXCHANGING COMMON SHARES" IN THE
OFFERING CIRCULAR (AS DEFINED BELOW).
HOLDERS WHOSE CERTIFICATES FOR COMMON SHARES ARE NOT IMMEDIATELY AVAILABLE
(OR WHO CANNOT FOLLOW THE PROCEDURE FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS)
OR WHO CANNOT TRANSMIT THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS TO THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE (AS DEFINED
IN THE OFFERING CIRCULAR) MAY NEVERTHELESS TENDER THEIR COMMON SHARES ACCORDING
TO THE GUARANTEED DELIVERY PROCEDURES SET FORTH UNDER "THE EXCHANGE
OFFER--PROCEDURE FOR EXCHANGING COMMON SHARES" IN THE OFFERING CIRCULAR. SEE
INSTRUCTION 2.
CAPITALIZED TERMS USED IN THIS LETTER OF TRANSMITTAL AND NOT OTHERWISE
DEFINED HEREIN SHALL HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THEM IN THE
OFFERING CIRCULAR.
DELIVERY OF THE LETTER OF TRANSMITTAL AND THE OTHER REQUIRED DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
DESCRIPTION OF COMMON SHARES TENDERED (SEE INSTRUCTIONS 3 AND 4)
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN BLANK EXACTLY AS NAME(S) APPEAR(S) COMMON SHARES TENDERED
ON THE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -----------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF
COMMON SHARES
COMMON SHARE REPRESENTED BY NUMBER OF
CERTIFICATE COMMON SHARE COMMON SHARES
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-------------------------------------------
-------------------------------------------
-------------------------------------------
TOTAL COMMON
SHARES
- -----------------------------------------------------------------------------------------------------------------
* Need not be completed if Common Shares are delivered by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Common Shares represented by any Common Share
certificate(s) delivered to the Exchange Agent are being tendered. See Instruction 4.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------
EXCHANGE ELECTION FORM
- ----------------------------------------------------------------------------
I, the undersigned, hereby instruct the Exchange Agent to:
/ / Deliver ADSs in exchange for the Common Shares tendered
herewith.
/ / Deliver Class B Shares in exchange for the Common Shares
tendered herewith by book-entry transfer to the
Verdipapirsentralen (VPS) account named below:
VPS Account Number:
VPS Account Name:
- ----------------------------------------------------------------------------
IMPORTANT: ONLY ONE OF THE BOXES ABOVE SHOULD BE CHECKED. IF (i) BOTH BOXES
ARE CHECKED, OR (ii) NEITHER BOX IS CHECKED, OR (iii) CLASS B SHARES ARE
ELECTED BUT NO VPS ACCOUNT INFORMATION IS PROVIDED, IT WILL BE DEEMED TO BE
AN INSTRUCTION TO THE EXCHANGE AGENT TO DELIVER ADSs IN EXCHANGE FOR THE
COMMON SHARES TENDERED HEREWITH.
PLEASE NOTE THAT IN THE EVENT THAT DELIVERY OF CLASS B SHARES IS ELECTED, NO
DELIVERY OF PHYSICAL SHARES WILL BE MADE.
- ----------------------------------------------------------------------------
</TABLE>
/ / CHECK HERE IF COMMON SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT AT THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ______________________________________________
DTC Account Number: _________________________________________________________
Transaction Code Number: ____________________________________________________
/ / CHECK HERE IF CERTIFICATES FOR TENDERED COMMON SHARES ARE BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE
AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Tendering Holder(s): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: _________________________
Name of Eligible Institution that Guaranteed Delivery: ______________________
Account Number (if Delivered by Book-Entry Transfer): _______________________
Transaction Code Numbers: ___________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Stolt-Nielsen S.A., a company organized
under the laws of Luxembourg (the "Company"), each of the above-described Common
Shares, no par value (the "Common Shares"), in exchange for (i) if so indicated
in this Letter of Transmittal, one uncertificated Class B Share, no par value
(together, the "Class B Shares"), registered in the Verdipapirsentralen system
in Norway or (ii) one American Depositary Share ("ADS") representing one
Class B Share, on the terms and subject to the conditions set forth in the
Offering Circular dated January 21, 2000 (the "Offering Circular"), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which together
constitute the "Exchange Offer").
Subject to, and effective upon, acceptance for exchange of the Common Shares
tendered herewith in accordance with the terms of the Exchange Offer (including,
if the Exchange Offer is extended or amended, the terms or conditions of any
such extension or amendment), the undersigned hereby sells, assigns, and
transfers to, or upon the order of, the Company, all right, title, and interest
in and to all of the Common Shares tendered hereby that are exchanged pursuant
to the Exchange Offer and hereby irrevocably constitutes and appoints the
Exchange Agent for the Exchange Offer (the "Exchange Agent") the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Common
Shares, with full power of substitution (such power of attorney being deemed to
be an irrevocable power coupled with an interest), to (i) deliver certificates
for such Common Shares, or transfer ownership of such Common Shares on the
account books maintained by the Book-Entry Transfer Facility, together, in any
such case, with all accompanying evidence of transfer and authenticity, to or
upon the order of the Company, upon receipt by the Exchange Agent, as the
undersigned's agent, of the Class B Shares or ADSs to which the undersigned is
entitled upon the acceptance by the Company of such Common Shares under the
Exchange Offer, (ii) present certificates for such Common Shares for
cancellation and transfer of such Common Shares on the Company's books and
(iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Common Shares, all in accordance with the terms of the
Exchange Offer.
The undersigned hereby represents and warrants that (i) the undersigned owns
the Common Shares tendered hereby and has the full power and authority to
validly tender, sell, assign and transfer the Common Shares tendered hereby,
(ii) when and to the extent the Company accepts the Common Shares for exchange,
the Company will acquire good, marketable and unencumbered title thereto, free
and clear of all security interests, liens, charges, encumbrances, conditional
sales agreements or other obligations relating to their sale or transfer, and
not subject to any adverse claim, (iii) on request, the undersigned will execute
and deliver any additional documents the Exchange Agent or the Company deems
necessary or desirable to complete the assignment, transfer and exchange of the
Common Shares tendered hereby and (iv) the undersigned has read and agrees to
all the terms of the Exchange Offer.
The undersigned understands that tenders of Common Shares pursuant to any
one of the procedures described under "The Exchange Offer--Procedure for
Exchanging Common Shares" in the Offering Circular and in the instructions
hereto will constitute a binding agreement between the undersigned and the
Company on the terms and subject to the conditions of the Exchange Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offering Circular, the Company may terminate or amend the Exchange Offer or
may not be required to accept for exchange any of the Common Shares.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligations of the undersigned hereunder shall be binding upon the heirs, legal
representatives, executors, administrators, successors and assigns of the
undersigned. Except as stated in the Offering Circular, this tender is
irrevocable.
Unless otherwise indicated herein under "Special Issuance Instructions,"
please issue Class B Shares or ADSs and/or return or issue the certificate(s)
evidencing any Common Shares not tendered or not accepted for exchange in the
name(s) of the registered holder(s) appearing under "Description of Common
Shares Tendered." Similarly, (unless otherwise indicated under "Special Delivery
Instructions" in the case of delivery of Class B Shares) please deliver or cause
the delivery of Class B Shares or ADSs and/or the certificate(s) evidencing any
Common Shares not tendered or not accepted for exchange (and accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Common Shares Tendered." In the event that both
the "Special Delivery Instructions" and the "Special Issuance Instructions" are
completed, please issue or cause the issuance of the Class B Shares or ADSs
and/or issue or return the certificate(s) evidencing any Common Shares not
tendered or accepted for exchange in the name(s) of, and deliver said
certificate(s) to, the person or persons so indicated. In the case of book-entry
delivery of Common Shares, please credit the account maintained at the
Book-Entry Transfer Facility indicated above with any Common Shares not accepted
for exchange. The undersigned recognizes that the Company has no obligation
pursuant to the "Special Issuance Instructions" to transfer any Common Shares
from the name(s) of the registered holder(s) thereof if the Company does not
accept for exchange any of the Common Shares so tendered.
This Letter of Transmittal shall not be considered complete and valid, and
delivery of Class B Shares or ADSs pursuant to the Exchange Offer shall not be
made, until the Common Shares being tendered and all other required
documentation have been received by the Exchange Agent as provided in the
Offering Circular and this Letter of Transmittal. Delivery of documents to the
Book-Entry Transfer Facility does not constitute delivery to the Exchange Agent.
<PAGE>
- ------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS(*)
(SEE INSTRUCTIONS 4 AND 8)
To be completed ONLY if certificate(s) for ADSs and/or certificates for
Common Shares not tendered or not exchanged are to be mailed to someone
other than the undersigned, or to the undersigned at an address other than
that shown below the undersigned's signature.
Mail shares(s) or ADS(s) to:
Name: ______________________________________________________________________
(PLEASE TYPE OR PRINT)
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
____________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6 AND 8)
To be completed ONLY if Class B Shares, certificate(s) for ADSs and/or
certificates for Common Shares not tendered or not exchanged are to be
registered and issued in the name of someone other than the undersigned.
Issue any shares(s) or ADS(s) to:
Name: ______________________________________________________________________
(PLEASE TYPE OR PRINT)
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
____________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
- -----------------------------------------------------
* Delivery of Class B Shares will be made only through the Verdipapirsentralen
(VPS) system in Norway.
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT
OWNER(S) SIGN HERE
(SEE INSTRUCTIONS 1 AND 5)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 CONTAINED HEREIN)
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Common Share certificate(s) or on a security position listing or by
person(s) authorized to become registered holder(s) by certificate(s) and
documents transmitted with this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, agent, officer
of a corporation or other person acting in a fiduciary or representative
capacity, please set forth the capacity in which such person is signing. See
Instruction 5.)
Signature(s) of Owner(s) ___________________________________________________
Dated: _____________________________________________________________________
Name(s): ___________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title): _____________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
------------------------------------------------------------
------------------------------------------------------------
(DAYTIME AREA CODE AND TELEPHONE NO.) (TAX IDENTIFICATION AND SOCIAL
SECURITY NO.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________
____________________________________________________________________________
(PLEASE TYPE OR PRINT)
Title: _____________________________________________________________________
Name of Firm: ______________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ____________________________________________
Dated: _____________________________________________________________________
- --------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most 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 Program or the Stock
Exchange Medallion Program (an "Eligible Institution"). Signatures on this
Letter of Transmittal need not be guaranteed if (i) this Letter of Transmittal
is signed by the registered owner(s) of the Common Shares (which term, for
purposes of this document, shall include any participant in the Book-Entry
Transfer Facility whose name appears on a security position listing as the owner
of Common Shares) tendered herewith and such owner(s) have not completed either
of the boxes entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this Letter of Transmittal or (ii) such Common Shares are
tendered for the account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND COMMON SHARES; GUARANTEED DELIVERY
INSTRUCTIONS. This Letter of Transmittal is to be used only if
(i) certificates for Common Shares are to be forwarded with it to the Exchange
Agent or (ii) unless an Agent's Message is used, delivery of Common Shares is to
be made by book-entry transfer pursuant to the procedures set forth under "The
Exchange Offer--Procedure for Exchanging Common Shares" in the Offering
Circular. Certificates for all physically delivered Common Shares, or
confirmation of a book-entry transfer of all Common Shares delivered
electronically into the Exchange Agent's account at the Book-Entry Transfer
Facility, together in each case with a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof), with any
required signature guarantees (or, in the case of a book-entry delivery, an
Agent's Message), and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at one of its addresses set
forth on the front page of this Letter of Transmittal before the Expiration Date
(as defined in the Offering Circular). Delivery of documents to the Book-Entry
Transfer Facility does not constitute delivery to the Exchange Agent.
Holders whose certificates are not immediately available (or who cannot
follow the procedures for book-entry transfer on a timely basis) or who cannot
transmit this Letter of Transmittal and all other required documents to reach
the Exchange Agent before the Expiration Date, may nevertheless tender their
Common Shares by delivering to the Exchange Agent a Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedures set forth under "The
Exchange Offer--Procedure for Exchanging Common Shares" in the Offering
Circular. Pursuant to such procedure: (i) such tender must be made by or through
an Eligible Institution, (ii) the Exchange Agent must receive (by hand, mail or
facsimile transmission), before the Expiration Date, a properly completed and
duly executed Notice of Guaranteed Delivery substantially in the form the
Company has provided with the Offering Circular and (iii) the certificates for
all tendered Common Shares in proper form for transfer (or confirmation of a
book-entry transfer of all such Common Shares into the Exchange Agent's account
at the Book-Entry Transfer Facility), together with a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile thereof)
with any required signature guarantees or, in the case of a book-entry transfer,
an Agent's Message, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent within three Nasdaq trading
days after the date of execution of such Notice of Guaranteed Delivery, all as
provided under "The Exchange Offer--Procedure for Exchanging Common Shares" in
the Offering Circular.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR COMMON
SHARES, THIS LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE
ELECTION AND RISK OF THE TENDERING HOLDER. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. DELIVERY
SHOULD BE EFFECTED AS SOON AS POSSIBLE BUT IN ANY EVENT NOT LATER THAN THE
EXPIRATION DATE.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Common Shares will be exchanged. By executing this Letter of
Transmittal or a facsimile hereof, each tendering holder waives any right to
receive any notice of the acceptance of such holder's tender.
3. INADEQUATE SPACE. If the space provided in the box entitled
"Description of Common Shares Tendered" is inadequate, the certificate numbers
and/or the number of Common Shares should be listed on a separate signed
schedule and attached to this Letter of Transmittal.
4. PARTIAL TENDERS AND UNEXCHANGED COMMON SHARES. (Not applicable to
holders who deliver Common Shares by book-entry transfer.) If fewer than all the
Common Shares evidenced by any certificate delivered to the Exchange Agent are
to be tendered, the holder thereof should so indicate by filling in the number
of Common Shares that are to be tendered in the box entitled "Number of Common
Shares Tendered." If such Common Shares are exchanged, a new certificate for the
remainder of the Common Shares evidenced by the old certificate(s) will be sent
to and in the name of the registered holder(s) (unless otherwise specified by
such holder(s) having completed either or both of the boxes entitled "Special
Delivery Instructions" or "Special Issuance Instructions" on this Letter of
Transmittal) as soon as practicable following the expiration or termination of
the Exchange Offer. All Common Shares represented by the certificate(s) listed
and delivered to the Exchange Agent 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 Common
Shares tendered herewith, the signature(s) must correspond exactly with the
name(s) as written on the face of the certificates without alteration,
enlargement or any change whatsoever.
<PAGE>
If any of the Common Shares tendered herewith are registered in the names of
two or more joint owners, all such owners must sign this Letter of Transmittal.
If any of the Common Shares tendered herewith are registered in different
names on different certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal as there are different
registrations of certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Common Shares tendered herewith, no endorsements of certificates or separate
stock powers are required unless Class B Shares or ADSs are to be issued and/or
certificates for Common Shares not tendered or not exchanged are to be issued to
a person other than the registered holder(s).
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Common Shares tendered herewith, however, the
certificates must be endorsed or accompanied by appropriate stock powers, in
either case, signed exactly as the name(s) of the registered holder(s) appear on
such certificates for such Common Shares. Signatures on any such certificates or
stock powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal or any certificates or stock powers are signed
by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
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 Company of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. The Company will pay any stock transfer taxes
with respect to the transfer of Common Shares to it or its order pursuant to the
Exchange Offer. If, however, any Class B Shares or ADSs are to be issued to, or
certificates for Common Shares not tendered or accepted for exchange are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder or such person) payable on
account of the transfer to such person will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
7. IRREGULARITIES. All questions as to the number of Common Shares to be
accepted and the validity, form, eligibility (including time of receipt) and
acceptance for exchange of any tender of Common Shares will be determined by the
Company, in its sole discretion, which determination shall be final and binding
on all parties. The Company reserves the absolute right to reject any or all
tenders determined by it not to be in proper form or the acceptance for exchange
of which may, in the opinion of the Company's counsel, be unlawful. The Company
also reserves the absolute right to waive any of the conditions of the Exchange
Offer and any defect or irregularity in the tender of any particular Common
Shares. The Company's interpretation of the terms and conditions of the Exchange
Offer (including these instructions) shall be final and binding on all parties.
No tender of Common Shares will be deemed properly made until all defects or
irregularities have been cured or waived. None of the Company, the Exchange
Agent, the Information Agent or any other person is or will be obligated to give
notice of any defects or irregularities in tenders, and none of them will incur
any liability for failure to give any such notice.
8. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If any Class B Shares or
ADSs are to be issued to, or any certificates for Common Stock not tendered or
not exchanged are to be returned in the name of, a person other than the
person(s) signing this Letter of Transmittal or if any of the ADSs or any
certificates for Common Stock not tendered or not exchanged are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that shown
in the box entitled "Description of Common Stock Tendered," the boxes entitled
"Special Issuance Instructions" and/or "Special Delivery Instructions" on this
Letter of Transmittal should be completed.
Class B Shares issued in exchange for Common Shares tendered herewith will
be delivered by book-entry transfer through the Verdipapirsentralen system in
Norway; no physical shares will be delivered.
9. REQUEST FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance or
additional copies of the Offering Circular, this Letter of Transmittal or the
Notice of Guaranteed Delivery may be directed to the Information Agent at its
address or telephone numbers set forth below.
10. SUBSTITUTE FORM W-9. Except as provided below under "Important Tax
Information," each tendering holder is required to provide the Exchange Agent
with a correct TIN on Substitute Form W-9 which is provided under "Important Tax
Information" below. Failure to provide the information on the form may subject
the tendering holder to a $50 penalty and a 31% U.S. Federal backup withholding
tax may be imposed on the cash payments made to the holder or other payee with
respect to Common Shares exchanged pursuant to the Exchange Offer.
Facsimile copies of this Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Common
Shares and any other required documents should be sent or delivered by each
holder of Common Shares or such holder's broker, dealer, commercial bank, trust
company or other nominee to the Exchange Agent at one of its addresses set forth
below.
<PAGE>
IMPORTANT TAX INFORMATION
Under U.S. Federal income tax law, a holder whose tendered Common Shares are
accepted for exchange is required by law to provide the Exchange Agent with such
holder's correct taxpayer identification number ("TIN") on the Substitute
Form W-9 below. If the Exchange Agent is not provided with the correct TIN, the
Internal Revenue Service may subject the tendering holder or other payee to a
$50 penalty. In addition, delivery of ADSs or Class B Shares to such holder or
other payee with respect to Common Shares exchanged pursuant to the Exchange
Offer may be subject to 31% backup withholding.
Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. Completion of a Substitute Form W-9, in the case of a U.S. holder,
provided in this Letter of Transmittal should be used to establish such
exemption. In order for a foreign holder to qualify as an exempt recipient, the
holder must submit a Form W-8, signed under penalties of perjury, attesting to
such holder's exempt status. A Form W-8 can be obtained from the Exchange Agent.
See the enclosed "Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9" for more instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments to be made to the holder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of holders 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.
Box number 1 in Part 2 of the Substitute Form W-9 may be checked if the
tendering U.S. holder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If box number 1 in Part 2 is
checked, the holder or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number below in order to avoid backup
withholding. Notwithstanding that box number 1 in Part 2 is checked and the
Certificate of Awaiting Taxpayer Identification Number is completed, the
Exchange Agent will withhold 31% on all payments made prior to the time a
properly certified TIN is provided to the Exchange Agent.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the record owner of the
Common Shares or of the last transferee appearing on the transfers attached to,
or endorsed on, the certificates evidencing the Common Shares. If the Common
Shares are registered in more than one name or are not registered 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.
<PAGE>
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<C> <S> <C>
- -----------------------------------------------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR TIN Social Security Number
IN THE BOX AT RIGHT AND CERTIFY or
BY SIGNING AND DATING BELOW Employer Identification Number:
------------------------
-----------------------------------------------------------------
SUBSTITUTE PART 2--
FORM W-9 1. / / CHECK BOX IF YOU ARE AWAITING TIN
2. / / CHECK BOX IF YOU ARE EXEMPT FROM BACKUP WITHHOLDING
----------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 3--CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
INTERNAL REVENUE SERVICE (1) The Number shown on this form is my correct Taxpayer Identification
PAYER'S REQUEST FOR TAXPAYER Number (or I am waiting for a number to be issued to me), AND
IDENTIFICATION NUMBER ("TIN") (2) I am not subject to backup withholding because (i) I am exempt from
AND CERTIFICATION backup withholding, or (ii) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup withholding as a result
of a failure to report all interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup withholding.
CERTIFICATION 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 under-reporting interest or dividends on your tax return.
- -----------------------------------------------------------------------------------------------------------------------
NAME
- -----------------------------------------------------------------------------------------------------------------------
(Please print)
ADDRESS
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
(Including Zip Code)
SIGNATURE -------------------------------------------------------------------------------------------------------------
DATE ------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED BOX NUMBER 1 IN PART 2 OF SUBSTITUTE FORM W-9
- -----------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I
have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near
future. I understand that, notwithstanding that I have checked box number 1 in Part 2 (and completed this Certificate
of Awaiting Taxpayer Identification Number), all reportable cash payments made to me before the time I provide the
Exchange Agent with a properly certified taxpayer identification number will be subject to a 31% backup withholding
tax.
Signature Date
------------------------------------------------------------------ ----------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENT MADE TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL
DETAILS.
<PAGE>
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
Tenders & Exchange Department Tenders & Exchange Department Tenders & Exchange Department
P.O. Box 2569 c/o Securities Transfer and 525 Washington Boulevard
Suite 4660 Reporting Services, Inc. 3(rd) Floor
Jersey City, NJ 07303-2565 100 William Street, Galleria Jersey City, NJ 07310
New York, NY 10038
BY FACSIMILE TRANSMISSION:
(201) 324-3402
(201) 324-3403
CONFIRMATION BY TELEPHONE:
(201) 222-4707
</TABLE>
THE INFORMATION AGENT FOR THE EXCHANGE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL-FREE: (800) 347-4750
- --------------------------------------------------------------------------------
Any questions or requests for assistance or for additional copies of the
Offering Circular, this Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent. Holders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Exchange Offer.
- --------------------------------------------------------------------------------
<PAGE>
STOLT-NIELSEN S.A.
OFFER TO EXCHANGE CLASS B SHARES
FOR ANY AND ALL COMMON SHARES
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON FRIDAY, FEBRUARY 18, 2000, UNLESS THE EXCHANGE OFFER IS EXTENDED.
January 21, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Stolt-Nielsen S.A., a company organized under the laws of Luxembourg (the
"Company"), is offering to exchange (i) if so indicated in the Letter of
Transmittal, one uncertificated Class B Share, no par value (together, the
"Class B Shares"), registered in the Verdipapirsentralen system in Norway or
(ii) one American Depositary Share (representing one Class B Share), for each
outstanding Common Share, no par value (together, the "Common Shares"), on the
terms and subject to the conditions set forth in the Offering Circular dated
January 21, 2000 (the "Offering Circular"), and in the related Letter of
Transmittal (which together constitute the "Exchange Offer"). The Company
encloses herewith the materials listed below relating to the Exchange Offer.
THE EXCHANGE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF COMMON SHARES
BEING VALIDLY TENDERED. THE EXCHANGE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE "THE EXCHANGE OFFER--CERTAIN CONDITIONS OF THE EXCHANGE OFFER"
IN THE OFFERING CIRCULAR.
For your information and for forwarding to your clients for whom you hold
Common Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offering Circular dated January 21, 2000;
2. Letter of Transmittal for your use and for the information of your
clients (together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9);
3. Notice of Guaranteed Delivery to be used to accept the Exchange Offer if
certificates for Common Shares are not immediately available (or the
procedure for book-entry transfer cannot be followed on a timely basis)
or time will not permit the Letter of Transmittal and all other required
documents to reach the exchange agent for the Exchange Offer (the
"Exchange Agent") before the Expiration Date (as defined in the Offering
Circular);
4. Letter to Clients which may be sent to your clients for whose accounts
you hold Common Shares registered in your name (or in the name of your
nominee), with space provided for obtaining such clients' instructions
with regard to the Exchange Offer;
5. Return envelope addressed to First Chicago Trust Company of New York,
the Exchange Agent.
PLEASE BRING THE OFFER TO THE ATTENTION OF YOUR CLIENTS AS PROMPTLY AS
POSSIBLE. THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON FRIDAY, FEBRUARY 18, 2000, UNLESS THE EXCHANGE OFFER IS
EXTENDED.
THE EXCHANGE OFFER IS NOT BEING MADE TO, AND YOU CANNOT DELIVER OFFERING
MATERIALS TO (OR OTHERWISE SEEK EXCHANGE INSTRUCTIONS FROM), CLIENTS FOR WHOSE
ACCOUNTS YOU HOLD COMMON SHARES AND WHO ARE DOMICILED IN, OR HAVE A REGISTERED
ADDRESS IN, NORWAY WITHOUT FIRST PROVIDING SUCH CLIENTS WITH SUPPLEMENTAL
OFFERING MATERIALS THAT HAVE BEEN REVIEWED AND APPROVED BY THE OSLO STOCK
EXCHANGE. SUCH OFFERING MATERIALS ARE AVAILABLE FROM DEN NORSKE BANK
VERDIPAPIRSERVICE ASA, STRANDEN 21,
<PAGE>
POSTBOKS 1171 SENTRUM, 0107 OSLO, NORWAY, TEL. 22-48-10-50, FAX. 22-48-11-71,
ATTN: GRETHE NES OR KETIL GIIL BERG.
None of the Company, the Board of Directors of the Company, the executive
officers of the Company, the Financial Advisor (as defined in the Offering
Circular), the Information Agent or the Exchange Agent makes any recommendation
as to whether or not any holder of Common Shares should exchange any or all of
such holder's Common Shares pursuant to the Exchange Offer.
No fees or commissions will be payable to brokers, dealers or other persons
for soliciting tenders of Common Shares pursuant to the Exchange Offer. The
Company will, however, upon request, reimburse you for customary mailing and
handling expenses incurred by you in forwarding any of the enclosed materials to
your clients. The Company will pay any stock transfer taxes with respect to the
transfer and sale of Common Shares to it or its order pursuant to the Exchange
Offer, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
To take advantage of the Exchange Offer, a duly executed and properly
completed Letter of Transmittal, or an Agent's Message (as defined in the
Offering Circular) in connection with a book-entry delivery of Common Shares,
and any other required documents should be sent to the Exchange Agent with
either certificate(s) representing the tendered Common Shares or confirmation of
their book-entry transfer, all in accordance with the instructions set forth in
the Letter of Transmittal and the Offering Circular.
As described under "The Exchange Offer--Procedure for Exchanging Common
Shares" in the Offering Circular, tenders may be made even though certificates
are not immediately available (or the procedure for book-entry transfer cannot
be followed on a timely basis) or time will not permit the Letter of Transmittal
and all other required documents to reach the Exchange Agent before the
Expiration Date, if such tenders are made by or through an "Eligible
Institution" (as defined in the Offering Circular). Certificates for Common
Shares so tendered in proper form for transfer (or a confirmation of a
book-entry transfer of such Common Shares into the Exchange Agent's account at
the "Book-Entry Transfer Facility" described in the Offering Circular), together
with a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by the Letter of Transmittal, must be
received by the Exchange Agent within three Nasdaq trading days after the date
of execution of a properly completed and duly executed Notice of Guaranteed
Delivery.
Any questions you have or request for additional copies of the enclosed
material may be directed to D.F. King & Co., Inc., the Information Agent, at its
address and telephone numbers set forth on the back cover of the enclosed
Offering Circular.
Very truly yours,
STOLT-NIELSEN S.A.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE COMPANY, THE EXCHANGE AGENT OR THE INFORMATION
AGENT OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY
MATERIAL ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER, OTHER THAN
THE MATERIAL ENCLOSED HEREWITH AND THE STATEMENTS SPECIFICALLY CONTAINED IN SUCH
MATERIAL.
<PAGE>
STOLT-NIELSEN S.A.
OFFER TO EXCHANGE CLASS B SHARES
FOR ANY AND ALL COMMON SHARES
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON FRIDAY, FEBRUARY 18, 2000, UNLESS THE OFFER IS EXTENDED.
January 21, 2000
To Our Clients:
Enclosed for your consideration are the Offering Circular, dated
January 21, 2000 (the "Offering Circular"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer") in connection with
the offer by Stolt-Nielsen S.A., a company organized under the laws of
Luxembourg (the "Company"), pursuant to which the Company is offering to
exchange (i) if so indicated in the Letter of Transmittal, one uncertificated
Class B Share, no par value (together, the "Class B Shares"), registered in the
Verdipapirsentralen system in Norway or (ii) one American Depositary Share
(representing one Class B Share), for each outstanding Common Share, no par
value (together, the "Common Shares"), on the terms and subject to the
conditions of the Exchange Offer.
All Common Shares properly tendered and not withdrawn will be exchanged, on
the terms and subject to the conditions of the Exchange Offer. All Common Shares
not exchanged pursuant to the Exchange Offer will be returned to the tendering
holders at the Company's expense as promptly as practicable following the
Expiration Date (as defined in the Offering Circular).
We are the holder of record of Common Shares held for your account. As such,
we are the only ones who can tender your Common Shares, and then only pursuant
to your instructions. THE LETTER OF TRANSMITTAL IS FOR YOUR INFORMATION ONLY AND
CANNOT BE USED BY YOU TO TENDER COMMON SHARES WE HOLD FOR YOUR ACCOUNT.
Please instruct us as to whether you wish us to tender any or all of the
Common Shares we hold for your account on the terms and subject to the
conditions of the Exchange Offer.
We call your attention to the following:
1. You may exchange any portion or all of your Common Shares.
2. The Exchange Offer is not conditioned on any minimum number of Common
Shares being tendered. The Exchange Offer is, however, subject to certain
other conditions. See "The Exchange Offer--Certain Conditions of the
Exchange Offer" in the Offering Circular.
3. The Exchange Offer and withdrawal rights will expire at 5:00 p.m., New
York City time, on February 18, 2000, unless the Exchange Offer is
extended.
4. Tendering holders may elect to receive either Class B Shares or American
Depositary Shares representing Class B Shares in exchange for tendered
Common Shares by so indicating in the Letter of Transmittal. In the
absence of such election, tendering holders will receive American
Depositary Shares in exchange for tendered Common Shares.
4. Tendering holders will not be obligated to pay any brokerage
commissions, solicitation fees, or, subject to Instruction 6 of the
Letter of Transmittal, any stock transfer taxes with respect to the
transfer of Common Shares to the Company pursuant to the Exchange Offer.
IF YOU ARE DOMICILED IN OR HAVE A REGISTERED ADDRESS IN NORWAY, YOU MUST ALSO
INDICATE THAT YOU HAVE RECEIVED CERTAIN SUPPLEMENTAL OFFERING MATERIALS THAT
HAVE BEEN REVIEWED AND APPROVED BY THE OSLO STOCK
<PAGE>
EXCHANGE. YOU MAY OBTAIN COPIES OF SUCH MATERIALS FROM DEN NORSKE BANK
VERDIPAPIRSERVICE ASA, STRANDEN 21, POSTBOKS 1171 SENTRUM, 0107 OSLO, NORWAY,
TEL. 22-48-10-50, FAX. 22-48-11-71, ATTN: GRETHE NES OR KETIL GIIL BERG.
ALTERNATIVELY, YOU MAY CONTACT US AND WE WILL OBTAIN SUCH MATERIALS FROM DEN
NORSKE BANK ON YOUR BEHALF.
If you wish to have us tender any or all of your Common Shares, please so
instruct us by completing, executing and returning to us the attached
instruction form. An envelope to return your instruction form to us is enclosed.
If you authorize us to tender your Common Shares, we will tender all such Common
Shares unless you specify otherwise on the instruction form.
If you have any questions about the Exchange Offer, please call
D.F. King & Co., Inc., the Information Agent for the Exchange Offer, at
(800) 347-4750 (toll free) or (212) 269-5550 (collect).
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF BEFORE THE EXPIRATION DATE. THE EXCHANGE OFFER
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY,
FEBRUARY 18, 2000, UNLESS THE EXCHANGE OFFER IS EXTENDED.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT TENDERS
FROM OR ON BEHALF OF, OWNERS OF COMMON SHARES RESIDING IN ANY JURISDICTION IN
WHICH THE MAKING OF THE EXCHANGE OFFER OR ITS ACCEPTANCE WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION.
-2-
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO EXCHANGE CLASS B SHARES
FOR ANY AND ALL COMMON SHARES
OF
STOLT-NIELSEN S.A.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offering
Circular, dated January 21, 2000, and the related Letter of Transmittal (which
together constitute the "Exchange Offer"), in connection with the offer by
Stolt-Nielsen S.A., a company organized under the laws of Luxembourg (the
"Company"), pursuant to which the Company is offering to exchange (i) one of its
Class B Shares, no par value (together, the "Class B Shares"), or (ii) one
American Depositary Share (representing one Class B Share) for each outstanding
Common Share, no par value (together, the "Common Shares"), on the terms and
subject to the conditions of the Exchange Offer.
The undersigned hereby instruct(s) you to tender to the Company the number
of Common Shares indicated below or, if no number is indicated, all Common
Shares you hold for the account of the undersigned, upon the terms and subject
to the conditions of the Exchange Offer.
AGGREGATE NUMBER OF COMMON SHARES TO BE TENDERED BY YOU FOR THE ACCOUNT OF
THE UNDERSIGNED AND FORM OF SECURITIES TO BE RECEIVED IN EXCHANGE:
<TABLE>
<S> <C>
Number of Common Shares to be Tendered*:
Date:
Form of Securities to be Received in Exchange (check one):**
/ / American Depositary Shares / / Class B Shares
Please check one of the following:
/ / I am not domiciled in and I do not have a registered
address in Norway.
/ / I am domiciled in, or I have a registered address in
Norway and I have received the supplemental offering
materials reviewed by the Oslo Stock Exchange from you
or from Den Norske Bank Verdipapirservice ASA.
SIGN HERE
Signature(s):
Print Name(s):
Print Address(es):
Area Code and Telephone Number(s):
Taxpayer Identification or Social Security Number(s):
</TABLE>
- ------------------------
* Unless otherwise indicated, it will be assumed that all the Common Shares
held for the account of the undersigned will be tendered.
** If neither box is checked, or if both boxes are checked, the undersigned
will receive American Depositary Shares.
-3-
<PAGE>
NEWS RELEASE
- ------------
STOLT-NIELSEN S.A. OFFERS TO EXCHANGE
COMMON SHARES FOR CLASS B SHARES
London, England - January 14, 2000 - Stolt-Nielsen S.A.
(Nasdaq: STLTF, STLBY; Oslo Stock Exchange: SNIB) announced
today that it intends to commence next week an exchange offer
pursuant to which all holders of its outstanding Common Shares
(Nasdaq: STLTF) will be offered the opportunity to exchange
these shares for an equal number of its Class B Shares (Nasdaq:
STLBY; Oslo Stock Exchange: SNIB). Holders of the Company's
stock options will also be offered the opportunity to exchange
their options to purchase Common Shares for options to purchase
Class B Shares. The Company expects to commence the offer on
January 21, 2000 and will be distributing an offering circular
describing the exchange offer at that time. The exchange offer
will be open for at least 20 business days.
At the close of trading on Nasdaq on Thursday, January 13,
2000, the Common Share price was $16.50 and the Class B Share
price was $18.25, a price differential of $1.75 (or 11%). The
price differential of the Common and Class B Shares traded on
Nasdaq recently has been as much as $3.69 (or 25%). The Class
B Shares are listed on both Nasdaq and the Oslo Stock Exchange,
while the Common Shares are listed on Nasdaq only. The Class B
Shares are structured to be economically equivalent to the
Common Shares but do not have the right to vote on most matters
that require shareholder approval whereas each Common Share is
entitled to one vote on all matters submitted to the
shareholders for approval.
The Common Shares currently have a public "float" of 8.3
million shares, versus approximately 13.6 million publicly
traded Class B Shares. Upon the completion of the exchange
offer, assuming all publicly-held Common Shares were to be
exchanged, there would be approximately 21.9 million shares of
Class B Shares publicly traded between both Nasdaq and the Oslo
Stock Exchange. The Company believes that a single class of
publicly-held shares could result in a lower cost of equity for
the Company and it is appropriate that the Class B Shares,
because of their greater liquidity compared to the Common
Shares, continue to be publicly traded. In order to focus
investor attention on a single publicly traded share,
Stolt-Nielsen S.A. will seek to de-list the Common Shares
(STLTF) if a sufficient number of Common Shares are exchanged.
<PAGE>
Commenting on the proposed exchange offer, Jacob
Stolt-Nielsen, Chairman and Chief Executive Officer of
Stolt-Nielsen S.A. said today, "We are pleased to offer our
shareholders the opportunity to exchange their Common Shares
for the more liquid Class B Shares. As we indicated upon its
creation in November 1995, we intend the Class B Shares to be
the Company's principal equity instrument. The aim of this
transaction will be to streamline our capital structure,
providing our shareholders with a single, more liquid class of
stock."
All shareholders will be sent a formal notice that the Company
will hold an Extraordinary General Meeting of shareholders on
Wednesday, February 16, 2000 at 2:00 p.m. at the offices of
Services Generaux de Gestion S.A., 23, avenue Monteray, L-2086
Luxembourg, for the purpose of amending the Articles of
Incorporation of the Company to authorize the conversion of
Common Shares into Class B Shares. All Common shareholders of
record as of Friday, January 21, 2000 will be entitled to vote
at the meeting.
Stolt-Nielsen S.A. is one of the world's leading providers of
transportation services for bulk liquid chemicals, edible oils,
acids, and other specialty liquids. The Company, through its
parcel tanker, tank container, terminal, rail, and barge
services, provides integrated transportation for its customers.
The Company also owns 40 percent of Stolt Comex Seaway S.A.
(Nasdaq: SCSWF, SCSAY; Oslo Stock Exchange: SCS, SCSA), which
is among the largest subsea services contractors in the world.
SCS specializes in providing engineering, flowline lay,
construction, inspection, and maintenance services to the
offshore oil and gas industry. Stolt Sea Farm, wholly-owned by
the Company, produces and markets high quality Atlantic salmon,
salmon trout, turbot, halibut, sturgeon, and caviar.
This news release contains forward-looking statements as
defined in the U.S. Private Securities Litigation Reform Act of
1995. Actual future results and trends could differ materially
from those set forth in such statements due to various factors.
Additional information concerning these factors is contained
from time to time in the Company's U.S. SEC filings, including
but not limited to the Company's report on Form 20-F for the
year ended November 30, 1998. Copies of these filings may be
obtained by contacting the Company or the U.S. SEC.
Contact: William W. Galvin
USA (203) 618-9800
Samira Ashraf
UK (171) 611-8963
-2-
<PAGE>
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE
IN ANY DOUBT AS TO THE ACTION TO BE TAKEN, YOU SHOULD SEEK YOUR OWN
FINANCIAL ADVICE IMMEDIATELY FROM YOUR OWN APPROPRIATELY AUTHORIZED
INDEPENDENT FINANCIAL ADVISOR.
IF YOU HAVE SOLD OR TRANSFERRED ALL OF YOUR COMMON SHARES (AS DEFINED
BELOW), PLEASE FORWARD THIS DOCUMENT AND ALL ACCOMPANYING DOCUMENTS TO THE
STOCKBROKER, BANK OR OTHER AGENT THROUGH WHOM THE SALE OR TRANSFER WAS
EFFECTED, FOR TRANSMISSION TO THE PURCHASER OR TRANSFEREE.
NOTICE OF GUARANTEED DELIVERY
TO
EXCHANGE COMMON SHARES
OF
STOLT-NIELSEN S.A.
PURSUANT TO THE OFFERING CIRCULAR
DATED JANUARY 21, 2000
This form or a facsimile hereof must be used to accept the Exchange Offer
(as defined below) if (i) certificates for Common Shares, no par value ("Common
Shares"), of Stolt-Nielsen S.A., a company organized under the laws of
Luxembourg (the "Company"), are not immediately available, (ii) the procedure
for book-entry transfer (set forth under "The Exchange Offer--Procedure for
Exchanging Common Shares" in the Company's Offering Circular dated January 21,
2000 (the "Offering Circular")) cannot be followed on a timely basis or
(iii) time will not permit the Letter of Transmittal and all other required
documents to be delivered to the exchange agent for the Exchange Offer (the
"Exchange Agent") before the Expiration Date (as defined in the Offering
Circular). This Notice of Guaranteed Delivery, properly completed and duly
executed, may be delivered by hand, mail or facsimile transmission to the
Exchange Agent. See "The Exchange Offer--Procedure for Exchanging Common Shares"
in the Offering Circular. Certain terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Offering Circular.
The Exchange Agent is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
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<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
Tenders & Exchange Department Tenders & Exchange Department Tenders & Exchange Department
P.O. Box 2569 c/o Securities Transfer and 525 Washington Boulevard
Suite 4660 Reporting Services, Inc. 3rd Floor
Jersey City, NJ 07303-2565 100 William Street, Galleria Jersey City, NJ 07310
New York, NY 10038
BY FACSIMILE TRANSMISSION:
(201) 324-3402
(201) 324-3403
CONFIRMATION BY TELEPHONE:
(201) 222-4707
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE TO A NUMBER OTHER THAN AS SET
FORTH ABOVE DOES 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" (AS DEFINED IN THE OFFERING CIRCULAR)
UNDER THE INSTRUCTION THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
THE ELIGIBLE INSTITUTION THAT COMPLETES THIS FORM MUST COMMUNICATE THE
GUARANTEE TO THE EXCHANGE AGENT AND MUST DELIVER THE LETTER OF TRANSMITTAL OR AN
AGENT'S MESSAGE AND CERTIFICATE FOR COMMON SHARES (OR BOOK-ENTRY CONFIRMATION OF
SUCH TRANSFER) TO THE EXCHANGE AGENT WITHIN THE TIME PERIOD SHOWN HEREIN.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in the Offering Circular and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the number of Common Shares indicated below pursuant to
the guaranteed delivery procedure described under "The Exchange Offer--Procedure
for Exchanging Common Shares" in the Offering Circular.
Number of Common Shares tendered:
Certificate No.(s) (if available):
If Common Shares will be delivered by book-entry transfer:
Name of Tendering Institution:
Account Number at The Depository Trust Company:
Transaction Code Number:
Signature(s):
Signature(s):
Name(s) (Please Print):
Address:
(INCLUDE ZIP CODE)
Area Code and Tel. No.:
Dated:
THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED.
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as defined in the Offering
Circular), guarantees that the undersigned will deliver to the Exchange Agent,
at one of its addresses set forth above, either the certificates representing
the Common Shares tendered hereby, in proper form for transfer, or confirmation
of the book-entry transfer of such Common Shares into the Exchange Agent's
account at The Depository Trust Company, in any such case together with a
properly completed and duly executed Letter of Transmittal or a facsimile
thereof (or, in the case of a book-entry transfer, an Agent's Message (as
defined in the Offering Circular)) and any other required documents, all within
three Nasdaq trading days after the date of execution of this notice.
- -------------------------------------------
Name of Firm:
____________________________________________________________________________
Name: ______________________________________________________________________
(PLEASE PRINT OR TYPE)
Address: ___________________________________________________________________
____________________________________________________________________________
(ZIP CODE)
Area Code and Tel. No.: ____________________________________________________
- -------------------------------------------
- -------------------------------------------
____________________________________________________________________________
(AUTHORIZED SIGNATURE)
Title: _____________________________________________________________________
Dated: _____________________________________________________________________
- -------------------------------------------
NOTE: DO NOT SEND CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY;
COMMON SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<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>
- --------------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT NUMBER OF--
- --------------------------------------------------------------------
<S> <C> <C>
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of The minor(2)
a minor (Uniform Gift
to Minors Act)
5. Adult and minor The adult or, if the
(joint account) minor is the only
contributor, the
minor(3)
6. Account in the name The ward, minor, or
of guardian or incompetent person(4)
committee for a
designated ward,
minor, or incompetent
person
7. a. The usual The
revocable savings grantor-trustee(3)
trust account
(grantor is also
trustee)
b. So-called trust The actual owner(3)
account that is not
a legal or valid
trust under State
law
8. Sole proprietorship The owner(5)
account
- --------------------------------------------------------------------
GIVE THE
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT NUMBER OF--
<S> <C> <C>
- --------------------------------------------------------------------
9. A valid trust, The legal entity (do
estate, or pension not furnish the
trust identifying number of
the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title.)(3)
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
held in the name of
the partnership
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or The broker or nominee
registered nominee
15. Account with the The public entity
Department of
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) List first and circle the name of the legal trust, estate, or pension trust.
(4) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(5) Show the name of the Owner.
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 do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number (for businesses and all
other entites), at the local office of the Social Security Administration or the
Internal Revenue Service (the "IRS") and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on AI.I, payments
include the following:
- A corporation.
- A financial institution
- An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
- The United States or any agency or instrumentalities.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality.
- 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) of the Code.
- An exempt charitable remainder trust, or non-exempt trust described in
section 4947(a)(1) of the Code.
- 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
of the Code.
- 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 made to a nominee.
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
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- Payments described in section 6049(b)(5) of the Code to nonresident
aliens.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file a Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND
DATE THE FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NONRESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the sections 6041, 6041A, 6041A(a), 6045, 6050A
and 6050N of the Code and the regulations promulgated therein.
PRIVACY ACT NOTICE. Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, diviends and certain other payments to a payee who does not
furnish a taxpayer identification number to a payer. Certain 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 subject 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 that results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION-- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.
<PAGE>
STOLT-NIELSEN S.A.
NOTICE OF ELECTION TO EXCHANGE OPTIONS
The capitalized terms used without definition in this Notice of Election to
Exchange Options are defined in the Offering Circular, dated January 21, 2000,
setting forth the Stolt-Nielsen S.A. Offer to Exchange Class B Options for
Common Options.
Please complete the information requested below for each outstanding Common
Option to be exchanged for a Class B Option (use additional copies of this
Notice of Election, if necessary, for all Common Options that you wish to
exchange for Class B Options).
________________________________________________________________________________
My Name
________________________________________________________________________________
My Address
________________________________________________________________________________
Office Telephone Home Telephone
________________________________________________________________________________
Social Security Number
I hereby elect to surrender all of my outstanding Common Options, and understand
that such surrendered Common Options will be canceled, in exchange for new
Class B Options, pursuant to the terms and conditions of the Exchange Offer set
forth in the Offering Circular.
I acknowledge receipt of the Offering Circular. By signing this Notice of
Election, I agree to be bound by all of the terms and conditions of the Exchange
Offer as set forth in the Offering Circular.
<TABLE>
<S> <C>
Print your name
Date Signed Signature
</TABLE>
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
A TENDER OF COMMON OPTIONS PURSUANT TO THIS NOTICE OF ELECTION WILL CONSTITUTE A
BINDING AGREEMENT BETWEEN YOU AND THE COMPANY ON THE TERMS AND SUBJECT TO THE
CONDITIONS OF THE EXCHANGE OFFER, INCLUDING A REPRESENTATION BY YOU THAT EACH
COMMON OPTION BEING TENDERED HAS NOT PREVIOUSLY TERMINATED OR EXPIRED OR BEEN
CANCELED OR EXERCISED AND THAT YOU ARE THE DULY AUTHORIZED HOLDER OF SUCH COMMON
OPTION.
IF YOU WISH TO EXCHANGE YOUR COMMON OPTIONS, YOU MUST EXCHANGE ALL OF YOUR
COMMON OPTIONS. PARTIAL EXCHANGES WILL NOT BE PERMITTED.
THIS NOTICE OF ELECTION, TOGETHER WITH THE LETTERS OR OTHER INSTRUMENTS
REPRESENTING THE COMMON OPTIONS BEING TENDERED, IF AVAILABLE, MUST BE RECEIVED
BY THE COMPANY AT ONE OF THE FOLLOWING ADDRESSES NO LATER THAN FEBRUARY 18, 2000
(UNLESS THE EXCHANGE OFFER IS EXTENDED):
<TABLE>
<S> <C>
LAND-BASED PERSONNEL: SEA PERSONNEL:
Attn: Mindy Miles Attn: Hogne von der Fehr
Stolt-Nielsen Transportation Group Ltd. Stolt-Nielsen Transportation Group Ltd.
8 Sound Shore Drive Shipowning Division
P.O. Box 2300 15635 Jacintoport Blvd.
Greenwich, CT 06836 Houston, TX 77015-6534
USA USA
Tel. (203) 625-3675 Tel. (281) 860-5138
Fax. (203) 625-3917 Fax. (281) 860-5176
</TABLE>
<PAGE>
<TABLE>
<S> <C>
[LOGO] [LOGO]
</TABLE>
<TABLE>
<S> <C>
SOCIETE ANONYME MAILING ADDRESS:
R.C.LUXEMBOURG B. 12179 ALDWYCH HOUSE
REGISTERED OFFICE: 71-91 ALDWYCH
23, AVENUE MONTEREY LONDON WC2B 4HN
L-2086 LUXEMBOURG ENGLAND
</TABLE>
January 21, 2000
To Our Holders of Common Shares and Class B Shares:
On January 14, 2000, Stolt-Nielsen S.A. announced its intention to commence
an offer to holders of Common Shares to exchange their Common Shares for an
equal number of Class B Shares (or American Depositary Shares, each representing
one Class B Share). The Exchange Offer is also being made available to our
option holders whereby they may exchange their options to purchase Common Shares
for options to purchase Class B Shares. The Exchange Offer will remain open
until Friday, February 18, 2000, unless it is extended.
HOLDERS OF OUR CLASS B SHARES (OR AMERICAN DEPOSITARY SHARES REPRESENTING
CLASS B SHARES) ARE RECEIVING THIS LETTER AND THE ENCLOSED MATERIALS FOR THEIR
INFORMATION ONLY AND TO COMPLY WITH APPLICABLE REGULATORY REQUIREMENTS, AND
SHOULD NOT TAKE ANY ACTION TO PARTICIPATE IN THE EXCHANGE OFFER.
In 1996, when we first offered Class B Shares to the public, we announced
that the Class B Shares would be the Company's principal equity instrument.
Since that time, the Class B Shares have generally traded at a premium over the
Common Shares. On January 13, 2000, the last trading day before the announcement
of the Exchange Offer, the closing sale price on Nasdaq of the Common Shares was
$16.50 per share and of the American Depositary Shares was $18.25 per ADS, a
price differential of $1.75 (or 11%). This price differential recently has been
as great as $3.69 (or 25%). We believe this disparity relates primarily to the
greater liquidity of the Class B Shares.
If successful, the Exchange Offer will result in improved market liquidity
of the Class B Shares. We believe that this could result in a higher level of
investor interest. If the number of Common Shares outstanding after the
termination of the Exchange Offer falls below the Nasdaq requirements, we intend
to apply to Nasdaq for delisting of the Common Shares.
The Class B Shares carry economic rights that are at least equal to the
Common Shares. The Class B Shares, however, have very limited rights to vote on
matters that require shareholder approval. With respect to voting rights,
however, the Stolt-Nielsen family today controls approximately 70% of the votes
that can be cast at any shareholder meeting. This is enough to determine the
outcome of almost all matters requiring a shareholder vote. Fiducia Ltd., a
Bermuda company owned by trusts whose beneficiaries are members of the
Stolt-Nielsen family, does not intend to exchange its Common Shares in the
Exchange Offer, so the Exchange Offer is not expected to affect the control of
the Company in a meaningful way. The directors and executive officers of the
Company who are members of the Stolt-Nielsen family have indicated their
intention to exchange their Common Shares held outside of Fiducia Ltd., and the
other directors and executive officers have indicated their intention to
exchange all of their Common Shares and options to purchase Common Shares.
The Exchange Offer is explained in detail in the enclosed Offering Circular
and Letter of Transmittal. I encourage you to read these materials carefully
before making any decision with respect to the Exchange Offer.
Sincerely,
[LOGO]
Jacob Stolt-Nielsen
Chairman of the Board and
Chief Executive Officer
<PAGE>
<TABLE>
<S> <C>
[LOGO] [LOGO]
</TABLE>
<TABLE>
<S> <C>
SOCIETE ANONYME MAILING ADDRESS:
R.C.LUXEMBOURG B. 12179 ALDWYCH HOUSE
REGISTERED OFFICE: 71-91 ALDWYCH
23, AVENUE MONTEREY LONDON WC2B 4HN
L-2086 LUXEMBOURG ENGLAND
</TABLE>
January 21, 2000
To Holders of Options to Purchase Common Shares:
On January 14, 2000, Stolt-Nielsen S.A. announced its intention to commence
an offer to holders of options to purchase Common Shares ("Common Options")
whereby the Company will exchange an option to purchase one Class B Share (a
"Class B Option") for each Common Option which you currently hold. Our records
reflect that you are a holder of Common Options and, therefore, are entitled to
participate in the Exchange Offer.
The Exchange Offer is also being made to persons who own Common Shares (as
opposed to options for Common Shares) whereby they may exchange their Common
Shares for an equal number of Class B Shares (or American Depositary Shares,
each representing one Class B Share). If you also own Common Shares, you will be
receiving a separate mailing containing additional offering materials describing
how to exchange your Common Shares if you so desire.
The Exchange Offer will remain open until Friday, February 18, 2000, unless
it is extended.
In 1996, when we first offered Class B Shares to the public, we announced
that the Class B Shares would be the Company's principal equity instrument.
Since that time, the Class B Shares have generally traded at a premium over the
Common Shares. On January 13, 2000, the last trading day before the announcement
of the Exchange Offer, the closing sale price on Nasdaq of the Common Shares was
$16.50 per share and of the American Depositary Shares was $18.25 per ADS, a
price differential of $1.75 (or 11%). This price differential recently has been
as great as $3.69 (or 25%). We believe this disparity relates primarily to the
greater liquidity of the Class B Shares.
If successful, the Exchange Offer will result in improved market liquidity
of the Class B Shares. We believe that this could result in a higher level of
investor interest. If the number of Common Shares outstanding after the
termination of the Exchange Offer falls below the Nasdaq requirements, we intend
to apply to Nasdaq for delisting of the Common Shares.
The Class B Shares carry economic rights that are at least equal to the
Common Shares. The Class B Shares, however, have very limited rights to vote on
matters that require shareholder approval. With respect to voting rights,
however, the Stolt-Nielsen family today controls approximately 70% of the votes
that can be cast at any shareholder meeting. This is enough to determine the
outcome of almost all matters requiring a shareholder vote. Fiducia Ltd., a
Bermuda company owned by trusts whose beneficiaries are members of the
Stolt-Nielsen family, does not intend to exchange its Common Shares in the
Exchange Offer, so the Exchange Offer is not expected to affect the control of
the Company in a meaningful way. The directors and executive officers of the
Company who are members of the Stolt-Nielsen family have indicated their
intention to exchange their Common Shares held outside of Fiducia Ltd., and the
other directors and executive officers have indicated their intention to
exchange all of their Common Shares and options to purchase Common Shares.
The Exchange Offer is explained in detail in the enclosed Offering Circular
and related materials. I encourage you to read these materials carefully before
making any decision with respect to the Exchange Offer. The instructions on how
to exchange Common Options for Class B Options are also explained in detail in
the enclosed materials.
<PAGE>
As you review the enclosed information, please keep the following points in
mind:
- To exchange your Common Options, you must deliver a complete, signed
Notice of Election (or facsimile thereof) and, if available, the letters
or other instruments representing your Common Options before 5:00 p.m.,
New York City time, on February 18, 2000, unless the deadline is extended
by the Company. These documents should be delivered directly to (i) in the
case of land-based personnel, Mindy Miles, Stolt-Nielsen Transportation
Group Ltd., 8 Sound Shore Drive, P.O. Box 2300, Greenwich, Connecticut
06836, USA (telephone number 1-203-625-3675 and facsimile number
1-203-625-3917) and (ii) in the case of sea personnel, Hogne von der Fehr,
Stolt-Nielsen Transportation Group Ltd., Shipowning Division, 15635
Jacintoport Blvd., Houston, Texas 77015-6534, USA (telephone number
1-281-860-5138 and facsimile number 1-281-860-5176).
- If you wish to tender your Common Options but cannot, for any reason,
deliver the letters or other instruments representing your Common Options
to the Company, you may send a duly executed Notice of Election to the
Company (or a facsimile of the Notice of Election) and, to the extent your
tender is accepted by the Company, your option letters or other
instruments will be deemed amended to reflect the exchange.
- If you choose to exchange your Common Options in the Exchange Offer, you
must exchange ALL of your Common Options for Class B Options. Partial
tenders of Common Options will not be accepted.
- If you exchange your Common Options in the Exchange Offer, the exercise
price of the Class B Options you will receive and the period during which
you may exercise the Class B Options you receive will be identical to the
exercise price and exercise period of the Common Options you exchange.
- We suggest that you review the section entitled "Certain U.S. Federal and
Non-U.S. Income Tax Considerations" in the Offering Circular. YOU SHOULD
CONSULT WITH YOUR OWN TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF
TAKING OR NOT TAKING ANY ACTION CONCERNING YOUR COMMON OPTIONS PRIOR TO OR
IN CONNECTION WITH THE EXCHANGE OFFER.
- If you have any questions after reviewing the enclosed materials, please
contact Mindy Miles or Hogne von der Fehr at the numbers listed above or
D.F. King & Co., the information agent for the Exchange Offer, at
1-800-347-4750.
We believe that our Stock Option Plans represent an important way of tying
the interests of all of us who work for Stolt-Nielsen S.A. with the interests of
the Company's shareholders and that a long-term incentive plan of this type
provides you with an opportunity to share in the wealth that you work so hard to
create.
Sincerely,
[LOGO]
Jacob Stolt-Nielsen
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
<PAGE>
Consolidated Statements of Income
(in thousands, except per share data)
<TABLE>
<CAPTION>
=======================================================================================
For the years ended November 30, 1998 1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net operating revenue:
Stolt-Nielsen Transportation Group:
Tankers $ 657,821 $ 665,187 $ 655,613
Tank Containers 218,789 218,980 185,617
Terminals 53,768 46,652 49,017
Stolt Comex Seaway 649,764 431,126 313,358
Stolt Sea Farm 216,483 164,107 146,932
- ---------------------------------------------------------------------------------------
1,796,625 1,526,052 1,350,537
- ---------------------------------------------------------------------------------------
Operating expenses:
Stolt-Nielsen Transportation Group:
Tankers 539,696 518,816 491,338
Tank Containers 163,787 159,482 135,401
Terminals 37,204 34,064 32,205
Stolt Comex Seaway 540,891 353,361 292,177
Stolt Sea Farm 184,964 146,643 135,093
- ---------------------------------------------------------------------------------------
1,466,542 1,212,366 1,086,214
- ---------------------------------------------------------------------------------------
Gross profit 330,083 313,686 264,323
Equity in net income of non-consolidated
joint ventures (Note 4) 17,250 19,592 13,108
Administrative and general expenses (157,061) (139,609) (137,476)
- ---------------------------------------------------------------------------------------
Income from operations before write down of
certain assets and restructuring charges 190,272 193,669 139,955
Write down of certain assets (Note 6) -- (28,098) --
Restructuring charges (Note 6) -- -- (3,873)
- ---------------------------------------------------------------------------------------
Income from operations 190,272 165,571 136,082
- ---------------------------------------------------------------------------------------
Non-operating (expense) income:
Interest expense (60,657) (59,897) (51,343)
Interest income 7,342 2,864 2,575
Foreign currency exchange (loss) gain, net (288) 582 (452)
Gain on disposal of assets, net (Note 7) 16,384 10,633 6,815
Minority interest (Note 8) (32,613) (15,992) 3,829
Gain on sale of common stock of a subsidiary,
net (Note 6) -- 139,508 --
Other, net 2,365 (415) (2,620)
- ---------------------------------------------------------------------------------------
(67,467) 77,283 (41,196)
- ---------------------------------------------------------------------------------------
Income before income tax provision and
extraordinary item 122,805 242,854 94,886
Income tax provision (Note 9) (26,530) (13,161) (2,946)
- ---------------------------------------------------------------------------------------
Income before extraordinary item 96,275 229,693 91,940
Extraordinary item--gain on early repayment of
debt, net of taxes (Note 6) -- 7,416 --
- ---------------------------------------------------------------------------------------
Net income $ 96,275 $ 237,109 $ 91,940
=======================================================================================
Earnings per Common and Class B share and
equivalents (Note 2):
Basic $ 1.76 $ 4.34 $ 1.73
Diluted 1.75 4.28 1.72
=======================================================================================
Weighted average number of Common and Class B shares
and equivalents outstanding
Basic 54,732 54,658 53,156
Diluted 54,998 55,439 53,381
=======================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
Consolidated Balance Sheets
(in thousands, except per share data)
<TABLE>
<CAPTION>
====================================================================================
As of November 30, 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 37,776 $ 68,571
Trade receivables, net of allowance for doubtful
accounts of $9,185 and $5,207 in 1998 and
1997, respectively 336,019 243,798
Inventories (Note 10) 127,782 109,271
Receivables from related parties (Note 4) 17,236 9,566
Restricted cash deposits (Note 11) 1,460 980
Prepaid expenses and other current assets 105,020 70,300
- ------------------------------------------------------------------------------------
Total current assets 625,293 502,486
- ------------------------------------------------------------------------------------
Fixed assets, at cost:
Tankers 1,539,229 1,475,630
Tankers under construction 257,699 156,796
Tank containers 216,744 198,424
Terminal facilities 275,260 263,497
Subsea Services ships and facilities 549,327 356,249
Seafood facilities 94,026 86,097
Other 31,611 27,979
- ------------------------------------------------------------------------------------
2,963,896 2,564,672
Less--accumulated depreciation and amortization (880,384) (791,639)
- ------------------------------------------------------------------------------------
2,083,512 1,773,033
- ------------------------------------------------------------------------------------
Investments in non-consolidated joint ventures
and other assets (Note 4) 135,563 90,673
Deferred income tax asset (Note 9) 2,954 4,973
Goodwill and other intangible assets, net of
accumulated amortization of $20,477 and
$16,119 in 1998 and 1997, respectively (Note 5) 160,803 31,587
- ------------------------------------------------------------------------------------
Total assets $3,008,125 $2,402,752
====================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank loans (Note 12) $ 17,645 $ 19,852
Current maturities of long-term debt (Note 13) 71,634 90,330
Accounts payable 184,443 90,988
Accrued liabilities and other current liabilities 219,132 189,316
- ------------------------------------------------------------------------------------
Total current liabilities 492,854 390,486
- ------------------------------------------------------------------------------------
Long-term debt (Note 13) 1,057,313 686,298
Minority interest (Note 8) 227,215 197,289
Deferred income tax liability (Note 9) 35,008 9,234
Other non-current liabilities 63,368 56,888
Commitments and contingencies (Note 15) Shareholders' equity:
Founder's shares: no par value--15,000,000 shares authorized,
7,809,328 and 7,799,362 shares issued and outstanding in
1998 and 1997, respectively, at stated value -- --
Capital stock:
Common shares no par value--60,000,000 authorized,
31,237,313 and 31,197,450 shares issued and
outstanding in 1998 and 1997, respectively, at stated
value 31,237 31,198
Class B shares no par value--60,000,000 authorized
30,953,412 and 30,933,246 shares issued and
outstanding in 1998 and 1997, respectively, at
stated value 30,954 30,933
Paid-in surplus 347,019 346,437
Retained earnings 884,615 815,795
Cumulative translation adjustments (27,434) (36,266)
- ------------------------------------------------------------------------------------
1,266,391 1,188,097
Less--Treasury stock, 1,921,905 Common shares and
5,766,905 Class B shares in 1998, and 1,601,905
Common shares and 5,607,605 Class B shares in 1997 (134,024) (125,540)
- ------------------------------------------------------------------------------------
Total shareholders' equity 1,132,367 1,062,557
- ------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $3,008,125 $2,402,752
====================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
Consolidated Statements of Shareholders' Equity
(in thousands, except share data)
<TABLE>
<CAPTION>
=================================================================================================================
Cumulative
Capital Paid-in Retained translation Treasury
stock surplus earnings adjustments stock
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, November 30, 1995 $ 45,513 $ 70,861 $ 527,673 $ 11,217 $ (15,011)
Net income -- -- 91,940 -- --
Public offering of 8,200,000 Class B shares 8,200 134,963 -- -- --
Issuance of 7,600,016 Class B shares in connection
with the merger of Stolt Partner S.A 7,600 132,202 -- -- (106,949)
Distribution of 282,332 treasury stock in
connection with the acquisition of a subsidiary -- -- -- -- 5,174
Exercise of stock options for 182,030 Common
shares and 91,008 Class B shares 273 2,637 -- -- --
Issuance of 123,008 Founder's shares -- -- -- -- --
Purchase of treasury stock--500,000 Common shares -- -- -- -- (8,278)
Cash dividends paid--$0.25 per Common and
Class B share -- -- (13,602) -- --
Cash dividends paid--$0.005 per Founder's share -- -- (39) -- --
Translation adjustments, net -- -- -- (9,554) --
- -----------------------------------------------------------------------------------------------------------------
Balance, November 30, 1996 61,586 340,663 605,972 1,663 (125,064)
Net income -- -- 237,109 -- --
Exercise of stock options for 363,645 Common
shares and 181,334 Class B shares 545 5,774 -- -- --
Issuance of 90,911 Founder's shares -- -- -- -- --
Purchase of treasury stock--20,700 Common shares -- -- -- -- (476)
Cash dividends paid--$0.50 per Common and
Class B share -- -- (27,247) -- --
Cash dividends paid--$0.005 per Founder's share -- -- (39) -- --
Translation adjustments, net -- -- -- (37,929) --
- -----------------------------------------------------------------------------------------------------------------
Balance, November 30, 1997 62,131 346,437 815,795 (36,266) (125,540)
Net income -- -- 96,275 -- --
Exercise of stock options for 39,863 Common
shares and 20,166 Class B shares 60 582 -- -- --
Issuance of 9,966 Founder's shares -- -- -- -- --
Purchase of treasury stock--320,000 Common
shares and 159,300 Class B shares -- -- -- -- (8,484)
Cash dividends paid--$0.50 per Common
and Class B share -- -- (27,416) -- --
Cash dividends paid--$0.005 per Founder's share -- -- (39) -- --
Translation adjustments, net -- -- -- 8,832 --
- -----------------------------------------------------------------------------------------------------------------
Balance, November 30, 1998 $ 62,191 $ 347,019 $ 884,615 $ (27,434) $(134,024)
=================================================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
===============================================================================================
For the years ended November 30, 1998 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Income before extraordinary item $ 96,275 $ 229,693 $ 91,940
Adjustments to reconcile income before
extraordinary item to net cash provided
by operating activities:
Depreciation of fixed assets 128,589 112,410 107,029
Amortization of intangible assets 4,225 2,297 1,837
Amortization of drydock costs 18,303 19,365 23,931
Provisions for reserves, taxes and lease payments 26,283 7,582 6,455
Equity in net income of non-consolidated
joint ventures (17,250) (19,592) (13,108)
Minority interest 32,613 15,992 (3,829)
Gain on disposal of assets, net (16,384) (10,633) (6,815)
Write down of certain assets -- 28,098 --
Gain on sale of common stock of a subsidiary, net -- (139,508) --
Changes in assets and liabilities, net of
effect of acquisitions, divestitures and
declared dividends:
Increase in trade receivables (21,413) (45,681) (40,030)
Decrease (increase) in inventories 14,685 (19,475) (6,433)
Increase in prepaid expenses and other
current assets (19,979) (3,528) (5,093)
(Decrease) increase in accounts payable and
accrued liabilities (14,746) 30,496 (3,717)
Payments of drydock costs (15,632) (23,542) (21,009)
Other, net (3,607) (4,961) 9,450
- -----------------------------------------------------------------------------------------------
Net cash provided by operating activities 211,962 179,013 140,608
===============================================================================================
Cash flows from investing activities:
Capital expenditures (378,809) (450,916) (396,370)
Proceeds from sales of ships and other assets 57,627 47,934 46,727
Acquisition of subsidiaries, net of cash acquired (217,584) (22,268) --
(Investment in and advances to) repayments
from affiliates and others, net (31,758) (14,708) 3,129
Dividends from non-consolidated joint ventures 18,384 13,249 14,879
Decrease in restricted cash deposits 5,756 5,053 1,201
Other, net (9,379) (8,198) (747)
- -----------------------------------------------------------------------------------------------
Net cash used in investing activities (555,763) (429,854) (331,181)
===============================================================================================
Cash flows from financing activities:
(Decrease) increase in loans payable to banks, net (2,455) (3,758) 14,741
Repayment of long-term debt (82,731) (211,275) (320,831)
Principal payments under capital lease obligations (2,731) (747) (1,266)
Proceeds from issuance of long-term debt
--Private Placement 216,000 125,000 187,000
Proceeds from issuance of long-term debt
--ship financing/other 219,074 121,920 180,047
Proceeds from Class B share equity offering -- -- 143,163
Proceeds from secondary offerings by subsidiary, net -- 179,797 --
Proceeds from sale of common stock in a subsidiary, net -- 117,060 --
Proceeds from exercise of stock options in the
Company and Stolt Comex Seaway 1,033 6,319 2,910
Purchases of treasury stock (8,484) (476) (8,278)
Dividends paid (27,455) (27,286) (13,641)
Proceeds from early repayment of debt -- 7,416 --
Other, net -- -- (19)
- -----------------------------------------------------------------------------------------------
Net cash provided by financing activities 312,251 313,970 183,826
===============================================================================================
Effect of exchange rate changes on cash 755 (1,336) (765)
- -----------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents (30,795) 61,793 (7,512)
Cash and cash equivalents at beginning of year 68,571 6,778 14,290
- -----------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 37,776 $ 68,571 $ 6,778
===============================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
Notes to Consolidated Financial Statements For the years ended November 30,
1998, 1997, and 1996 a29
1 THE COMPANY
Stolt-Nielsen S.A. ("SNSA"), a Luxembourg company, and subsidiaries (together,
the "Company") is engaged in three businesses: Transportation Services, Subsea
Services, and Seafood.
The Transportation Services business, which is carried out through Stolt-Nielsen
Transportation Group ("SNTG"), is engaged in the worldwide transportation,
storage, and distribution of bulk liquid chemicals, edible oils, acids, and
other speciality liquids providing its customers with integrated logistics
solutions by utilizing its parcel tanker, tank container, terminal, barge, and
rail services.
The Subsea Services business is carried out through Stolt Comex Seaway S.A.
("SCS"), a subsidiary in which the Company held a 43% economic interest and a
60% voting interest at November 30, 1998. SCS is among the largest subsea
services contractors in the world providing technologically sophisticated subsea
engineering, flexible and rigid flowline lay, subsea construction, inspection,
maintenance, and repair services to its customers in the offshore oil and gas
industry.
The Seafood business, wholly-owned by the Company and carried out through Stolt
Sea Farm ("SSF"), produces, processes, and markets high quality seafood
products, including Atlantic salmon, salmon trout, turbot, halibut, sturgeon,
and caviar.
2 SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the financial statements of all
majority-owned companies after the elimination of all significant intercompany
transactions and balances. The results of SCS are included in the consolidated
results of the Company because the Company holds a 60% voting interest in SCS.
The Company has equity investments of 50% or less in various affiliated
companies which are accounted for using the equity method.
SNTG operates the Stolt Tankers Joint Service (the "Joint Service"), an
arrangement for the co-ordinated marketing, operation, and administration of
tankers owned or chartered by the Joint Service participants in the deep sea
intercontinental market. Net revenue available for distribution to the
participants is defined in the Joint Service Agreement as the combined operating
revenue of the ships which participate in the Joint Service, less combined
voyage expenses, overhead costs, and commission to outside brokers. The net
revenue is distributed proportionately to each participant according to a
formula which takes into account each ship's cargo capacity, its number of
operating days during the period, and an earnings factor assigned. For the years
ended November 30, 1998, 1997, and 1996, SNTG received approximately 72%, 86%,
and 87%, respectively, of the net revenues of the Joint Service. The financial
statements of the Joint Service have been included in the accompanying
consolidated financial statements, with a provision included in tanker operating
expenses for the amount of net revenues distributed to the minority
participants. These provisions were approximately $92.8 million, $43.3 million,
and $43.2 million for the years ended November 30, 1998, 1997, and 1996,
respectively, and include amounts distributed to non-consolidated joint ventures
of SNTG of $34.2 million, $22.0 million, and $24.2 million. The amounts
distributed are net of commissions to SNTG of $2.3 million, $0.7 million, and
$0.7 million for the years ended November 30 1998, 1997, and 1996, respectively.
As of November 30, 1998 and 1997, the net amounts payable to participants in
which the Company holds an equity interest for amounts to be distributed by the
Joint Service were $3.8 million and $0.4 million, respectively. These amounts
are included in accrued liabilities and other current liabilities in the
accompanying consolidated balance sheets as at November 30, 1998 and 1997.
Revenue Recognition
SNTG. Consistent with shipping industry practice, revenues from tanker
operations are shown in the consolidated statements of income net of
commissions, sublet costs, transshipment, and barging expenses.
The operating results of voyages in progress at the end of each reporting period
are estimated and pro-rated on a per day basis for inclusion in the consolidated
statements of income. The consolidated balance sheets reflect the deferred
portion of revenues and expenses on voyages in progress at the end of each
reporting period as applicable to the subsequent period. As of November 30, 1998
and 1997, deferred revenues of $29.3 million and $26.3 million, respectively,
are included in accrued liabilities and other current liabilities in the
accompanying consolidated balance sheets.
SCS. Long-term contracts of SCS are accounted for using the percentage of
completion method. Revenue and gross profit are recognized each period based
upon the advancement of the work-in-progress unless the stage of completion is
insufficient to enable a reasonably certain forecast of gross profit to be
established. In such cases, no gross profit is recognized during the period.
Provisions for anticipated losses are made in the period in which they become
known. A major portion of SCS's revenue is billed under fixed-price contracts.
However, due to the nature of the services performed, variation orders are
commonly billed to the customers in the normal course of business. The majority
of such items are agreed and settled in full by the customers, but occasionally
there is a time lag between the end of the project and the agreement of such
variation orders. In these instances management make estimates of the
recoverability of the sums involved and establish a reserve against related
contract receivables. The net amounts recoverable amounted to $1.9 million and
$3.8 million in 1998 and 1997, respectively.
SSF. SSF recognizes revenues on dispatch of product to customers.
Foreign Currency Translation
The Company translates the financial statements of its non-U.S. subsidiaries
into U.S. dollars from their functional currencies (usually local currencies) in
accordance with the provisions of Statement of Financial Accounting Standards
("SFAS") No. 52. Under SFAS No. 52, assets and liabilities denominated in
<PAGE>
Notes to Consolidated Financial Statements continued
foreign currencies are generally translated at the exchange rates in effect at
the balance sheet date. Revenues and expenses are translated at exchange rates
which approximate the average rate prevailing during the period. The resulting
translation adjustments are recorded in a separate component of shareholders'
equity as "Cumulative translation adjustments." Exchange gains and losses
resulting from transactions denominated in a currency other than the functional
currency are included in "Foreign currency exchange (loss) gain, net" in the
accompanying consolidated statements of income.
Capitalized Interest
Interest costs during the construction period of significant assets are
capitalized and charged to expense over the lives of the related assets. The
Company capitalized $16.2 million, $9.9 million, and $5.4 million of interest
expense in fiscal years 1998, 1997, and 1996, respectively.
Earnings per Share
The Company has adopted the provisions of SFAS No. 128, "Earnings per Share."
This standard requires companies to present basic and diluted earnings per share
("EPS"), instead of primary and fully diluted EPS previously required. The
adoption of the new standard is required for the year ended November 30, 1998
and requires restatement of EPS of all previous periods presented. Basic EPS has
been computed by dividing net income by the weighted average number of shares
and equivalents outstanding during the period. Diluted EPS is computed by
adjusting the weighted average number of shares and equivalents outstanding
during the period for all dilutive potential shares and equivalents outstanding
during the period and adjusting net income for any changes that would result
from the conversion of such potential shares and equivalents. As further
discussed in Note 17, Founder's shares, which provide the holder thereof with
certain control features, only participate in earnings to the extent of $0.005
per share for years out of which dividends are declared, and are limited to
$0.05 per share upon liquidation. For purposes of computing EPS, dividends paid
on Founder's shares are deducted from earnings to arrive at earnings available
to Common and Class B shareholders.
The outstanding stock options under the Company's 1987 Stock Option Plan and
1997 Stock Option Plan (Note 18) are included in the diluted EPS calculation to
the extent they are dilutive. In accordance with SFAS 128, the following is a
reconciliation of the numerator and denominator of the basic and diluted EPS
computations.
For the years ended November 30,
================================================================================
(in thousands, except per share data) 1998 1997 1996
- --------------------------------------------------------------------------------
Income before extraordinary item $ 96,275 $ 229,693 $ 91,940
Less: Dividends on Founder's shares (39) (39) (39)
- --------------------------------------------------------------------------------
Income before extraordinary item
attributable to Common and Class
B shareholders 96,236 229,654 91,901
Extraordinary item--gain on early
repayment of debt, net of taxes -- 7,416 --
- --------------------------------------------------------------------------------
Net income attributable to Common and
Class B shareholders $ 96,236 $ 237,070 $ 91,901
================================================================================
Basic weighted average shares 54,732 54,658 53,156
Options issued to executives
(Note 18) 266 781 225
- --------------------------------------------------------------------------------
Diluted weighted average shares 54,998 55,439 53,381
================================================================================
Basic EPS
Income before extraordinary item $ 1.76 $ 4.20 $ 1.73
Net income 1.76 4.34 1.73
Diluted EPS
Income before extraordinary item $ 1.75 $ 4.14 $ 1.72
Net income 1.75 4.28 1.72
================================================================================
Cash and Cash Equivalents
Cash and cash equivalents include time deposits and certificates of deposit with
an original maturity of three months or less.
Inventory
SCS inventories are stated at the lower of cost or market value. Cost is
generally determined using the weighted average cost method. Mobilization costs
(costs, principally labor and materials, of fitting out and preparing equipment
for specific contracts) are amortized over the shorter of the expected duration
of the related contracts or the estimated useful life of the equipment.
Mobilization costs and contract progress payments of $2.6 million and $6.8
million in 1998 and 1997, respectively, are included in work-in-progress.
SSF's raw materials, biomass, and finished goods are valued at average
production cost or market price, whichever is lower. Finished goods consist of
frozen and processed fish products.
<PAGE>
Depreciation of Fixed Assets
Tankers are depreciated on a straight-line basis to a residual value of 10% of
cost over management's estimate of the ships' useful lives from acquisition,
which range up to 25 years.
Tank containers are depreciated on a straight-line basis over their estimated
useful lives of 20 years.
Terminal facility assets are depreciated substantially on a straight-line basis
over their estimated useful lives, which primarily range from five to 40 years.
The most significant assets, storage tanks, are depreciated over 30 years.
SCS assets are depreciated on a straight-line basis over their estimated useful
lives which range from seven to 10 years for operating equipment, six to 25
years for construction support ships, and five to 33 years for buildings and
other assets.
SSF facilities are depreciated substantially on a straight-line basis over their
estimated useful lives, which range from four to 20 years.
Other fixed assets consist primarily of furniture and fixtures which are
depreciated on a straight-line basis over their estimated useful lives of three
to 10 years.
Depreciation expense, which excludes amortization of capitalized dry dock costs,
for the years ended November 30, 1998, 1997 and 1996 was $128.6 million, $112.4
million, and $107.0 million, respectively.
Drydock costs are capitalized under the deferral method, whereby the Company
capitalizes its drydock costs and amortizes them over the period until the next
drydock. Amortization of capitalized drydock costs was $18.3 million, $19.4
million, and $23.9 million for the years ended November 30, 1998, 1997, and
1996, respectively. The unamortized portion of capitalized drydock costs of
$41.8 million and $33.8 million is included in "Investments in non-consolidated
joint ventures and other assets" in the accompanying consolidated balance sheets
at November 30, 1998 and 1997, respectively.
Maintenance and repair costs, which exclude amortization of the costs of ship
surveys, drydock, and renewals of tank coatings, for the years ended November
30, 1998, 1997, and 1996 were $56.6 million, $52.7 million, and $51.2 million,
respectively.
Effective December 1, 1996, the Company adopted SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of." The impact of adopting this standard is set out in Note 6 to the financial
statements.
Financial Instruments
The Company enters into forward exchange and options contracts to hedge foreign
currency transactions on a continuing basis for periods consistent with its
committed exposures. This hedging minimizes the impact of foreign exchange rate
movement on the Company's U.S. dollar results. The Company's foreign exchange
contracts do not subject the Company's results of operations to risk due to
exchange rate movements because gains and losses on these contracts generally
offset gains and losses on the assets and liabilities being hedged. Contracts
are generally held to their maturity date, which matches that of the assets or
liabilities hedged.
Gains and losses on these foreign exchange contracts are deferred and included
in the basis of the transaction when it is completed. Losses are not deferred if
it is estimated that deferral would lead to recognizing losses in later periods.
The Company also uses interest rate swaps to hedge underlying debt obligations.
For qualifying hedges, the interest rate differential is reflected as an
adjustment to interest expense over the life of the swap.
The Company does not engage in foreign currency speculation.
Cash flows resulting from hedge contracts which are accounted for as hedges of
identifiable transactions or events are classified in the consolidated
statements of cash flows in the same category as the cash flows from the items
being hedged. Net cash flows from such contracts in 1998, 1997, and 1996 were
not significant.
Consolidated Statements of Cash Flows
Net cash paid for interest and income taxes was as follows:
For the years ended November 30,
================================================================================
(in thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
Interest, net of amounts capitalized $58,353 $58,107 $54,398
Income taxes 8,534 4,528 1,480
================================================================================
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of
certain assets acquired. Goodwill and other intangible assets, which includes
patents and trademarks, are being amortized on a straight-line basis, over
periods of five to 40 years. The Company continuously monitors the realizable
value of goodwill and other intangible assets using expected related future
undiscounted cash flows. Total amortization of goodwill and other intangibles
was $4.2 million, $2.3 million, and $1.8 million in 1998, 1997, and 1996,
respectively.
Stock-based Compensation
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." This statement establishes a fair value method of accounting for
an employee stock option or similar equity instrument but allows companies to
continue to measure compensation cost for those plans using the intrinsic value
based method of accounting prescribed by APB Opinion No. 25, "Accounting for
Stock Issued to Employees." The Company has elected to continue accounting for
its stock-based compensation awards to employees and directors under the
accounting prescribed by APB Opinion No. 25 and to provide the disclosures
required by SFAS No. 123 (Note 18).
Future Adoption of New Accounting Standards
In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public
<PAGE>
Notes to Consolidated Financial Statements continued
Accountants issued the Statement of Position 98-1 ("SOP 98-1"), "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use", which
provides guidance on accounting for the costs of computer software developed or
obtained for internal use. This SOP requires computer software costs that are
incurred in the preliminary project stage to be expensed as incurred. Once the
capitalization criteria of the SOP have been met, directly attributable
development costs should be capitalized. It also provides guidance on the
treatment of upgrade and maintenance expenditure. SOP 98-1 is effective for
fiscal years beginning after December 15, 1998. Costs incurred prior to initial
application of this SOP, whether capitalized or not, should not be adjusted to
the amounts that would have been capitalized had this SOP been in effect when
those costs were incurred. The Company has not determined the impact that this
SOP will have on its consolidated financial statements.
SFAS No. 130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information," have been issued and
are effective for fiscal year beginning after December 15, 1997. SFAS No. 130
defines comprehensive income and outlines certain reporting and disclosure
requirements related to comprehensive income. SFAS No. 131 requires certain
disclosures about business segments of an enterprise, if applicable. The
adoption of SFAS No. 130 and SFAS No. 131 is not expected to have a significant
effect on Company's financial statements or disclosures.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities." The Statement
establishes accounting and reporting standards in the U.S. requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. The Statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for a qualifying hedge
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999. A
company may also implement the Statement as of the beginning of any fiscal
quarter after issuance (that is, fiscal quarters beginning June 16, 1998 and
thereafter). SFAS No. 133 cannot be applied retroactively. SFAS No. 133 must be
applied to derivatives and certain derivative instruments embedded in hybrid
contracts that were issued acquired, or substantively modified after December
31, 1997.
The Company has not yet quantified the impacts of adopting SFAS No. 133 on the
amounts presented under U.S. generally accepted accounting standards. However,
the Statement could increase volatility in earnings and other comprehensive
income.
3 BUSINESS AND GEOGRAPHIC SEGMENT INFORMATION
Segment information as of and for the years ended November 30, 1998, 1997, and
1996 is as follows:
For the years ended November 30,
========================================================================
(in millions) 1998 1997 1996
- ------------------------------------------------------------------------
Net operating revenue:
Stolt-Nielsen
Transportation Group:
Tankers $ 658 $ 665 $ 656
Tank Containers 219 219 186
Terminals 54 47 49
Stolt Comex Seaway 650 431 313
Stolt Sea farm 216 164 147
- ------------------------------------------------------------------------
$ 1,797 $ 1,526 $ 1,351
========================================================================
Income from operations:
Stolt-Nielsen
Transportation Group:
Tankers $ 61 $ 95 $ 115
Tank Containers 29 36 27
Terminals 8 (9) 7
Stolt Comex Seaway 78 55 (3)
Stolt Sea farm 14 (11) (10)
- ------------------------------------------------------------------------
$ 190 $ 166 $ 136
========================================================================
Depreciation and amortization:
Stolt-Nielsen
Transportation Group:
Tankers--amortization
of drydock costs $ 15 $ 19 $ 24
Tankers--other 66 59 56
Tank Containers 13 13 11
Terminals 10 11 9
Stolt Comex Seaway--
amortization of
drydock costs 3 -- --
Stolt Comex Seaway--other 36 25 26
Stolt Sea Farm 8 7 7
- ------------------------------------------------------------------------
$ 151 $ 134 $ 133
========================================================================
Capital expenditures:
Stolt-Nielsen Transportation Group:
Tankers $ 206 $ 277 $ 284
Tank Containers 20 30 39
Terminals 16 23 16
Stolt Comex Seaway 123 109 40
Stolt Sea Farm 14 12 17
- ------------------------------------------------------------------------
$ 379 $ 451 $ 396
========================================================================
<PAGE>
As of November 30,
========================================================================
(in millions) 1998 1997 1996
- ------------------------------------------------------------------------
Identifiable assets:
Stolt-Nielsen Transportation Group:
Tankers $ 1,485 $ 1,350 $ 1,111
Tank Containers 220 214 181
Terminals 217 185 134
Stolt Comex Seaway 877 457 357
Stolt Sea farm 209 197 195
- ------------------------------------------------------------------------
$ 3,008 $ 2,403 $ 1,978
========================================================================
The following table sets out operating revenue in the major geographical areas
of the world for the Company's businesses for each of the periods indicated.
SNTG operating revenue is allocated on the basis of the geographical area where
cargo is loaded.
For the years ended November 30,
===============================================================================
(in millions) 1998 1997 1996
- -------------------------------------------------------------------------------
Net operating revenue:
Stolt-Nielsen Transportation
Group--Tankers:
North America $ 313 $ 329 $ 310
Europe 146 160 154
Asia 152 165 155
Other areas and
miscellaneous revenue 105 75 86
Less commissions, sublet
costs, transshipment and
barging expenses (58) (64) (49)
- -------------------------------------------------------------------------------
$ 658 $ 665 $ 656
===============================================================================
Stolt-Nielsen Transportation
Group--Tank Containers:
North America $ 78 $ 81 $ 66
Europe 76 68 55
Asia 54 57 53
South America and other 11 13 12
- -------------------------------------------------------------------------------
$ 219 $ 219 $ 186
===============================================================================
Stolt-Nielsen Transportation
Group--Terminals:
North America $ 48 $ 42 $ 46
South America 6 5 3
- -------------------------------------------------------------------------------
$ 54 $ 47 $ 49
===============================================================================
Stolt Comex Seaway:
North America $ 63 $ 9 $ 8
Europe 433 339 217
Asia 38 40 39
South America and other 116 43 49
- -------------------------------------------------------------------------------
$ 650 $ 431 $ 313
===============================================================================
Stolt Sea Farm:
North America $ 88 $ 62 $ 59
Europe 52 54 72
Asia and other 76 48 16
- -------------------------------------------------------------------------------
$ 216 $ 164 $ 147
===============================================================================
Total $ 1,797 $ 1,526 $ 1,351
===============================================================================
The following table sets out income from operations and identifiable assets by
geographic area for the Company's businesses. SNTG's tanker and tank container
operations and SCS operate on a worldwide basis and are not restricted to
specific locations. Accordingly, it is not possible to allocate the assets of
these businesses and the income from operations of SNTG's tanker and tank
container operations to specific geographical areas.
For the years ended November 30,
===============================================================================
(in millions) 1998 1997 1996
- -------------------------------------------------------------------------------
Income from operations:
Stolt-Nielsen Transportation
Group--Terminals:
North America $ 10 $ (8) $ 7
South America (2) (1) --
- -------------------------------------------------------------------------------
$ 8 $ (9) $ 7
===============================================================================
Stolt Comex Seaway:
North America $ 6 $ -- $ (3)
Europe 64 44 4
Asia 6 6 (2)
South America and other 2 5 (2)
- -------------------------------------------------------------------------------
$ 78 $ 55 $ (3)
===============================================================================
Stolt Sea farm:
North America $ 11 $ (3) $ 5
Europe 3 (8) (11)
Asia and other -- -- (4)
- -------------------------------------------------------------------------------
$ 14 $ (11) $ (10)
===============================================================================
As at November 30,
===============================================================================
(in millions) 1998 1997 1996
- --------------------------------------------------------------------------------
Identifiable assets:
Stolt-Nielsen Transportation
Group--Terminals:
North America $ 181 $ 155 $ 115
South America 36 30 19
- -------------------------------------------------------------------------------
$ 217 $ 185 $ 134
===============================================================================
Stolt Sea Farm:
North America $ 73 $ 85 $ 72
Europe 121 98 115
Asia and other 15 14 8
- -------------------------------------------------------------------------------
$ 209 $ 197 $ 195
===============================================================================
Indirect costs and assets have been apportioned to the businesses on the basis
of corresponding direct costs and assets.
<PAGE>
Notes to Consolidated Financial Statements continued
4 EQUITY INVESTMENTS
Summarized financial information for the Company's non-consolidated joint
ventures, representing 100% of the respective amounts included in the joint
ventures' financial statements, is as follows:
Income statement data:
For the years ended November 30,
================================================================================
(in millions) 1998 1997 1996
- --------------------------------------------------------------------------------
Net operating revenue $331 $293 $235
Gross profit 63 72 67
Net income 39 48 22
================================================================================
Balance sheet data:
As of November 30,
================================================================================
(in millions) 1998 1997
- --------------------------------------------------------------------------------
Current assets $129 $101
Non-current assets 287 119
Current liabilities 97 82
Non-current liabilities 193 103
================================================================================
The income statement data for the joint ventures presented above includes the
following expenses related to transactions with the Company:
For the years ended November 30,
================================================================================
(in millions) 1998 1997 1996
- --------------------------------------------------------------------------------
Charter hire expense $48.4 $45.0 $40.2
Management and other fees 3.5 7.0 19.1
Freight and Joint Service Commission 1.2 0.7 0.6
Interest expense 1.8 2.4 2.7
================================================================================
The joint ventures also recorded the following revenues related to transactions
with the Company:
For the years ended November 30,
================================================================================
(in millions) 1998 1997 1996
- --------------------------------------------------------------------------------
Charter hire revenue $29.6 $22.0 $20.6
Tank container cleaning station revenue 4.5 4.2 4.3
Rental income (from office building
leased to the Company) 2.3 2.2 2.2
================================================================================
The balance sheet data includes:
As of November 30,
================================================================================
(in millions) 1998 1997
- --------------------------------------------------------------------------------
Amounts due from the Company $ 4.9 $ 0.4
Amounts due to the Company 24.3 16.0
================================================================================
Included within "Amounts due to the Company" is $17.2 million and $9.6 million
at November 30, 1998 and 1997 respectively, for trading balances. These amounts
are reflected in the consolidated balance sheet as "Receivables from related
parties."
5 BUSINESS ACQUISITION
On August 18, 1998, SCS acquired Ceanic Corporation (later renamed Stolt Comex
Seaway Inc.) for a cash purchase price of $218.9 million including transaction
costs. The transaction has been accounted for under the purchase method of
accounting.
The purchase price generated goodwill of approximately $114.8 million which is
being amortized on a straight-line basis over 25 years. The Company does not
believe that the final purchase price allocation will differ significantly from
the preliminary allocation.
The Company's share in the results of Ceanic has been included in the
consolidated statements of income from the date of acquisition. The following
unaudited pro forma information presents a summary of the consolidated results
of operations of the Company and the former Ceanic Corporation as if the
acquisition occurred at the beginning of each respective year. The pro forma
consolidated results do not purport to be indicative of results that would have
occurred had the acquisition been in effect for the period presented, nor do
they purport to be indicative of the results that will be obtained in the
future. Pro forma adjustments include depreciation and amortization, interest
charges on debt and lines of credit, tax benefit related to additional interest
charges, and minority interests:
For the years ended November 30,
================================================================================
(in thousands, except per share data) 1998 1997 1996
- --------------------------------------------------------------------------------
Net operating revenue $1,916,445 $1,656,534 $1,455,238
Income before
extraordinary item 90,577 222,511 84,895
Net income 90,577 229,927 84,895
Basic EPS
Income before
extraordinary item $1.65 $4.07 $1.60
Net income 1.65 4.21 1.60
Diluted EPS
Income before
extraordinary item $1.65 $4.01 $1.59
Net income 1.65 4.15 1.59
================================================================================
6 NON-RECURRING ITEMS
Effect of Accounting Policy Change in Stolt Comex Seaway
As a consequence of the acquisition of Ceanic in August 1998, SCS changed its
accounting policy from an accrual basis to a deferral basis. The effect of this
change is a gain of $3.1 million, net of taxes, which has been included in
"Other non-operating income."
<PAGE>
Write Down of Certain Assets
Effective December 1, 1996, the Company adopted SFAS No. 121. In 1997, as a
consequence the Company recognized a write down within SNTG amounting to $11.6
million, before income tax, in respect of certain assets at its Perth Amboy
terminal. Projections indicated that due to the downturn in the North East U.S.
specialty chemical industry and a reduced market demand for the type of storage
facilities offered by these assets, the cashflows which will be generated by the
assets did not support their carrying value. The assets were written down to
values considered by management to be their fair market value.
In 1997, the Company also recognized a write down of $4.2 million, before income
tax, in respect of certain assets in SCS which are unable to generate sufficient
utilization, and therefore cashflows, to support their net book value.
In July 1997, the Norwegian government reached an agreement with the European
Union ("EU") for a five year period to regulate the supply of Norwegian salmon
into the EU market. In addition, the Norwegian government has maintained feed
quota and production regulations which have a significant impact on the
cost-competitiveness of the Norwegian operation of SSF. In the light of these
events, the Company considered that the cost of its investment in its SSF
Norwegian operation was permanently impaired, and in 1997 wrote down the entire
goodwill balance of $3.6 million relating to this investment. Projections also
indicated that future cashflows to be generated from certain other assets of SSF
may not be sufficient to recover their carrying value, and accordingly, the
Company recognized a write down of $8.7 million in 1997 in respect of these
assets.
Gain on Sale of Common Stock of Subsidiary
In March 1997, SCS completed a secondary offering of 8.05 million new Common
shares at a per share price of $8.23 raising proceeds, net of expenses, of $64.6
million. Concurrently, SCS exchanged 14.0 million Class B shares (which are
economically equivalent to 7.0 million Common shares) for $57.6 million of debt
owed to SNSA. As a consequence of the offering and the debt-for-equity exchange,
the Company realized a gain, on a before and after income tax basis, of $9.5
million on the reduction of its economic interest in SCS from 70% to 60%.
In November 1997, SCS completed a secondary offering of 4.0 million Common
shares. In conjunction with the offering, SNSA sold 4.0 million Common shares of
SCS. Both transactions were carried out at a per share price of $29.27, raising
proceeds, net of expenses, of $232.2 million. These transactions resulted in the
Company realizing a gain, on a before and after income tax basis, of $130.0
million as the Company's economic interest in SCS was reduced from 60% to 43%.
In January 1998, subsequent to the above transactions, SCS completed a
two-for-one share split. The share figures and the per share prices quoted above
have been restated to reflect the share split.
Extraordinary Item
In October 1997, the Company prepaid debt relating to the first four ships in
SNTG's Danish newbuilding series. The early repayment of the debt under the
terms of the loan agreement with the Danish Ship Credit Fund resulted in an
extraordinary gain, on a before and after income tax basis, of $7.4 million.
Restructuring Charges
During 1996, the Company restructured SSF in order to reduce overhead and
improve flexibility by making increased use of external suppliers for value
added processing. A provision of $3.9 million was made in the year to cover
severance costs, write downs of fixed assets and site closure costs primarily at
SSF's production sites in Norway. As of November 30, 1998, there was no material
remaining liability relating to the 1996 restructuring program and there was no
material difference between the provision and the amount subsequently paid.
7 GAIN ON DISPOSAL OF ASSETS, NET
Gain on disposals of assets is comprised of the following:
For the years ended November 30,
================================================================================
(in thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
Insurance settlement for total
constructive loss of
SNTG ship $ 10,208 $ -- $ --
Sale of SNTG ships 466 5,294 4,906
Sale of SSF fish farm concessions 5,243 -- --
Sale of investments -- -- 1,264
Sale of SCS assets (342) 4,874 --
Sale of other assets 809 465 645
- --------------------------------------------------------------------------------
$ 16,384 $ 10,633 $ 6,815
================================================================================
8 MINORITY INTEREST
The minority interest in the consolidated balance sheets of the Company
primarily reflects the minority interest in SCS. During 1997, the Company's
economic ownership in SCS decreased from 70% to 43% (Note 6). The consolidated
statements of income also reflect the minority interest in SCS and, in the case
of 1996, in Stolt Partner S.A. During 1996, the Company acquired the remaining
23.5% of shares in Stolt Partner S.A. that it did not already hold and merged
the company into SNTG.
<PAGE>
Notes to Consolidated Financial Statements continued
9 INCOME TAXES
The 1998, 1997, and 1996 income tax provision consists of the following by
business segment:
<TABLE>
<CAPTION>
For the year ended November 30, 1998
===================================================================================
(in thousands) SNTG SCS SSF Total
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current:
U.S. $ 716 $ 1,361 $ 64 $ 2,141
Non-U.S 2,244 7,074 1,403 10,721
Deferred:
U.S. 886 -- 730 1,616
Non-U.S 71 9,102 2,879 12,052
- -----------------------------------------------------------------------------------
Income tax provision $ 3,917 $ 17,537 $ 5,076 $ 26,530
===================================================================================
<CAPTION>
For the year ended November 30, 1997
===================================================================================
(in thousands) SNTG SCS SSF Total
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current:
U.S. $ 785 $ -- $ 453 $ 1,238
Non-U.S 5,266 1,991 285 7,542
Deferred:
U.S. (4,260) -- 400 (3,860)
Non-U.S (75) 9,147 (831) 8,241
- -----------------------------------------------------------------------------------
Income tax provision $ 1,716 $ 11,138 $ 307 $ 13,161
===================================================================================
<CAPTION>
For the year ended November 30, 1996
===================================================================================
(in thousands) SNTG SCS SSF Total
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current:
U.S. $ 2,740 $ -- $ 372 $ 3,112
Non-U.S 1,556 1,063 1,090 3,709
Deferred:
U.S. 90 -- 221 311
Non-U.S 54 (2,821) (1,419) (4,186)
- -----------------------------------------------------------------------------------
Income tax provision (benefit) $ 4,440 $ (1,758) $ 264 $ 2,946
===================================================================================
</TABLE>
Substantially all of SNTG's shipowning and ship operating subsidiaries are
incorporated in countries which do not impose an income tax on shipping
operations. Pursuant to the Internal Revenue Code of the U.S., effective for the
Company's fiscal years beginning on or after December 1, 1987, U.S. source
income from the international operation of ships is generally exempt from U.S.
tax if the company operating the ship meets certain requirements. Among other
things, in order to qualify for this exemption, the company operating the ship
must be incorporated in a country which grants an equivalent exemption to U.S.
citizens and corporations that meet certain residency requirements. The Internal
Revenue Service has agreed that the Company qualifies for this exemption for
years up to and including fiscal 1992, but may review the Company's
qualification for fiscal 1993 onwards.
The Company believes that substantially all of SNTG's shipowning and ship
operating subsidiaries meet the requirements to qualify for this exemption from
U.S. taxation. For these reasons, no provision for U.S. income taxes has been
made with respect to SNTG's U.S. source shipping income.
An analysis of the Company's deferred tax assets and liabilities as of November
30, 1998 and 1997 is set out in the table below. A valuation allowance has been
recorded to reduce the deferred tax asset to an amount that management believe
is more likely than not to be realized:
===============================================================================
1998 Deferred tax (liabilities)/
assets (in thousands) SNTG SCS SSF
- -------------------------------------------------------------------------------
Net operating loss carryforwards $ 6,831 $ 22,694 $ 22,167
Valuation allowances (2,144) (7,291) (14,204)
- -------------------------------------------------------------------------------
Net operating loss carryforwards
after valuation allowances 4,687 15,403 7,963
Differences between book and
tax depreciation (16,801) (39,481) 9,733
U.S. State deferred taxes (1,790) -- --
Other timing differences--net 7,275 7,127 (26,170)
- -------------------------------------------------------------------------------
Net deferred tax liability $ (6,629) $(16,951) $ (8,474)
- -------------------------------------------------------------------------------
Deferred tax asset $ -- $ 2,954 $ --
Deferred tax liability (6,629) (19,905) (8,474)
- -------------------------------------------------------------------------------
$ (6,629) $(16,951) $ (8,474)
===============================================================================
<PAGE>
===============================================================================
1997 Deferred tax (liabilities)/
assets (in thousands) SNTG SCS SSF
- -------------------------------------------------------------------------------
Net operating loss carryforwards $ 7,379 $ 30,240 $ 29,980
Valuation allowances (1,845) (9,970) (20,323)
- -------------------------------------------------------------------------------
Net operating loss carryforwards
after valuation allowances 5,534 20,270 9,657
Differences between book and
tax depreciation (16,563) (15,865) (1,887)
U.S. State deferred taxes (1,475) -- --
Other timing differences--net 7,459 568 (11,959)
- -------------------------------------------------------------------------------
Net deferred tax (liability) asset $ (5,045) $ 4,973 $ (4,189)
===============================================================================
Management consider that net operating losses ("NOLs") carried forward, to the
extent that valuation allowances have not been provided, will result in a
realizable tax asset as a result of expected future profitability.
Included within the SSF deferred tax liability in 1998 is an amount of $13.3
million arising in Canada. This results primarily from provisions under Canadian
tax law which permit operators of sea farming facilities to report income for
tax purposes using cash-basis accounting, effectively deducting investments in
working capital for tax purposes. Also included within the SSF deferred tax
liability is $10.2 million arising in Norway as Norwegian tax law permits
cash-basis accounting for certain expenses associated with inventory growth.
For SNTG, approximately $19.5 million of NOLs were available at November 30,
1998 to offset future taxable income. These NOLs expire in the years 1999
through 2008 except for approximately $5.0 million which can be carried forward
indefinitely. For SCS, approximately $27.1 million of NOLs were available at
November 30, 1998 to offset future taxable income. These NOLs expire at various
dates through 2005, except those in the United Kingdom, Brazil, Australia and
some NOLs in France amounting to $20.7 million which can be carried forward
indefinitely. SSF had approximately $74.3 million of NOLs at November 30, 1998.
These NOLs expire at various dates through 2007. The group NOLs expire as
follows:
================================================================================
(in thousands)
- --------------------------------------------------------------------------------
1999 $ 3,253
2000 3,481
2001 12,321
2002 20,744
2003 19,381
Thereafter 36,020
================================================================================
A reconciliation of income taxes at the U.S. federal tax rate applied to pre-tax
income and the actual income tax provision is shown below:
For the years ended November 30,
===============================================================================
(in thousands) 1998 1997 1996
- -------------------------------------------------------------------------------
Income before income tax
provision and extraordinary
item $ 122,805 $ 242,854 $ 94,886
Minority interest 32,613 15,992 (3,829)
- -------------------------------------------------------------------------------
Income before income tax
provision, minority interest
and extraordinary item 155,418 258,846 91,057
Non-U.S. source shipping and
other income not subject
to income tax (48,526) (148,800) (61,167)
U.S. source shipping income
not subject to income tax (22,993) (85,812) (41,521)
Utilization of loss carryforwards (20,594) (10,759) (7,984)
Losses for which no tax benefit
is recognized 10,428 13,267 42,176
- -------------------------------------------------------------------------------
$ 73,733 $ 26,742 $ 22,561
===============================================================================
Tax at U.S. federal rate (35%) $ 25,806 $ 9,360 $ 7,897
Differences between U.S. and
non-U.S. tax rates (3,568) (2,155) 289
Non-taxable dividend income
from non-consolidated
joint ventures (1,758) (1,131) (1,554)
Exchange gain (49) (179) (230)
Change in management's
estimates of valuation and
other allowances 2,266 3,662 (3,305)
Differences between book
and tax bases 2,322 1,762 (272)
Tax credits from foreign
jurisdictions (61) -- (280)
State and local taxes, net of
federal benefit 311 (195) (116)
Non-deductible amortization
of goodwill and other
tangibles 1,556 798 546
Other non-deductible costs,
principally travel and
entertainment expenditures 647 709 208
Other, net (942) 530 (237)
- -------------------------------------------------------------------------------
Income tax provision $ 26,530 $ 13,161 $ 2,946
===============================================================================
Withholding and remittance taxes have not been recorded on the undistributed
earnings of SNSA's subsidiaries, which represent substantially all of the
Company's consolidated retained earnings, primarily because, under the current
tax laws of Luxembourg and the countries in which substantially all of SNSA's
subsidiaries are incorporated, no taxes would be assessed upon the payment or
receipt of dividends. Earnings retained by subsidiaries incorporated in those
countries which
<PAGE>
Notes to Consolidated Financial Statements continued
impose withholding or remittance taxes are considered by management to be
permanently reinvested in such subsidiaries. The undistributed earnings of these
subsidiaries as of November 30, 1998 were not significant.
10 INVENTORIES
Inventories as of November 30, 1998 and 1997 consisted of the following:
================================================================================
1998
(in thousands) Total SCS SSF
- --------------------------------------------------------------------------------
Raw materials $ 9,667 $ -- $ 9,667
Consumables 17,907 13,871 4,036
Work-in-progress 13,205 13,205 --
Seafood biomass 80,566 -- 80,566
Finished goods 6,437 -- 6,437
- --------------------------------------------------------------------------------
$127,782 $ 27,076 $100,706
================================================================================
================================================================================
1997
(in thousands) Total SCS SSF
- --------------------------------------------------------------------------------
Raw materials $ 4,908 $ -- $ 4,908
Consumables 5,493 5,202 291
Work-in-progress 5,680 5,680 --
Seafood biomass 85,310 -- 85,310
Finished goods 7,880 -- 7,880
- --------------------------------------------------------------------------------
$109,271 $ 10,882 $ 98,389
================================================================================
11 RESTRICTED CASH DEPOSITS
Restricted cash deposits comprise both funds held in a separate Company bank
account, which will be used to settle accrued taxation liabilities, and deposits
made by the Company as security for certain third-party obligations. There are
no significant conditions on the restricted cash balances.
12 SHORT-TERM BANK LOANS
Loans payable to banks, which amounted to $17.6 million and $19.9 million as of
November 30, 1998 and 1997, respectively, consist principally of drawdowns under
bid facilities, lines of credit and bank overdraft facilities. Amounts borrowed
pursuant to these facilities bear interest at rates ranging from 5.4% to 9.2%.
The weighted average interest rate was 8.0% and 6.3% for the years ended
November 30, 1998 and 1997, respectively.
As of November 30, 1998, the Company had various credit lines, including
committed lines ranging through 2003 totalling $572.0 million, of which $488.4
million was available for future use. Of the amounts drawn down under these
facilities, $66.0 million has been classified as long-term debt as the Company
does not intend to repay this amount within one year.
13 LONG-TERM DEBT
Long-term debt as of November 30, 1998 and 1997 consisted of the following:
As of November 30,
===============================================================================
(in thousands) 1998 1997
- -------------------------------------------------------------------------------
Senior unsecured notes
On 11/30/98 interest rates ranged
from 6.96% to 10.56%, maturities
vary through 2013 $ 566,969 $ 398,565
Preferred ship fixed rate mortgages
On 11/30/98 fixed interest rates
ranged from 5.42% to 8.69%,
maturities vary through 2011 296,710 265,709
Preferred ship variable rate mortgages
On 11/30/98 interest rates ranged
from 4.97% to 5.66%, maturities
vary through 2007 44,007 22,340
Economic development and other bonds
On 11/30/98 interest rates ranged
from 3.25% to 6.00%, maturing
in 2014 and 2018 34,600 34,600
Bank and other notes payable 186,661 55,414
- -------------------------------------------------------------------------------
1,128,947 776,628
Less--current maturities (71,634) (90,330)
- -------------------------------------------------------------------------------
$ 1,057,313 $ 686,298
===============================================================================
On November 30, 1997, the Company's senior unsecured notes carried fixed
interest rates ranging from 7.72% to 10.56%, preferred ship fixed rate mortgages
had interest rates ranging from 5.67% to 8.74%, preferred ship variable rate
mortgages had interest rates of 5.21%, and the economic development bonds had
interest rates ranging from 4.75% to 10.5%.
Long-term debt is denominated primarily in U.S. dollars, with $7.2 million and
$2.2 million denominated in other currencies as of November 30, 1998 and 1997,
respectively.
Annual principal repayments of debt for the five years subsequent to November
30, 1998 and thereafter are as follows:
================================================================================
(in thousands)
- --------------------------------------------------------------------------------
1999 $ 71,634
2000 52,765
2001 53,758
2002 161,128
2003 107,112
Thereafter 682,550
- --------------------------------------------------------------------------------
$1,128,947
================================================================================
Agreements executed in connection with certain debt obligations require that the
Company maintain defined financial ratios and also impose certain restrictions
relating, among other things, to payment of cash dividends (see Note 20), and
purchases, redemptions, etc., of capital. Certain of the debt is secured by
mortgages on vessels, tank containers, terminals, and seafood facilities with a
net book value of $745.1 million as of November 30, 1998.
<PAGE>
14 LEASES
Operating leases
As of November 30, 1998 the Company was obligated to make payments under
long-term operating lease agreements for tankers, land, terminal facilities,
tank containers, barges, equipment and offices. Certain of the leases contain
clauses requiring payments in excess of the base amounts to cover operating
expenses related to the leased assets. Minimum annual lease commitments and
sub-lease revenues under agreements which expire at various dates through 2026,
and which are payable in various currencies, are as follows:
===============================================================================
(in thousands)
- -------------------------------------------------------------------------------
1999 $116,041
2000 88,767
2001 78,480
2002 36,353
2003 11,143
Thereafter 13,606
- -------------------------------------------------------------------------------
344,390
Less--sub-lease revenues (12,468)
- -------------------------------------------------------------------------------
$331,922
===============================================================================
Rental and charter hire expenses under operating lease agreements for the years
ended November 30, 1998, 1997, and 1996 were $121.1 million, $91.0 million, and
$103.8 million, respectively, net of sub-lease income of $4.0 million, $0.6
million, and $1.1 million, respectively.
15 COMMITMENTS AND CONTINGENCIES
In 1997, the Company entered into an agreement with Danyard Shipyards to
purchase a further two 37,000 deadweight tons ("dwt") parcel tankers at an
approximate cost of $76 million each. Under the terms of the contracts, the
price for the remaining Danyard ships has been converted to U.S. dollars. The
Company has obtained a financing commitment from the Danish Ship Credit Fund for
a 14 year financing of up to 80% of the U.S. dollar cost of the two tankers.
The Company had also contracted in March 1995 with a French yard, Societe
Nouvelle des Ateliers et Chantiers du Havre to purchase three new 37,000 dwt
parcel tankers at a similar net price to the Danish newbuildings. Subsequent to
November 30, 1998, the shipyard has canceled the delivery of the third ship.
Under the terms of the contract, the price has been converted to U.S. dollars.
The Company has obtained a financing commitment supported by a guarantee from
Compagnie Francaise Di Assurance Pour Le Commerce Exterieur for a 12 year
financing of 80% of the cost of the tankers.
The Company has also entered into an agreement with a Spanish shipyard to
purchase six new 22,450 dwt parcel tankers at an approximate cost of $46 million
each and with an Italian shipyard to purchase three 5,200 dwt parcel tankers,
the first at an approximate cost of $20 million and the other two at an
approximate cost of $16 million per vessel.
As of November 30, 1998, the Company had total capital expenditure purchase
commitments outstanding of approximately $485.0 million for 1999 and future
years.
The Swiss Court of Insurance "Tribunal Federal des Assurances" entered a
judgement on April 29, 1992 against Sogexpat S.A. ("Sogexpat"), a subsidiary of
the Company, in the litigation brought by a Swiss governmental entity claiming
payment of social security contributions in arrears. During the year ended
November 30, 1993, the Company wound up Sogexpat and transferred the employees
to other Group companies.
The French government has investigated SCS of France alleging violations of
French labor and social security legislation, which has resulted during 1998 in
a condemnation by the French Supreme Court of SCS France and two of its former
directors. In addition, a number of former and present employees have started
civil proceedings against certain subsidiaries of the Company alleging loss of
employment and social security benefits. Some of the proceedings have commenced
recently while some already have resulted in court decisions. One such decision
has been appealed to the French Supreme Court. While the Company believes that
its subsidiaries have meritorious defenses in these cases, there can be no
certainty as to the number of claims which may be brought or the amount for
which the Company may eventually be liable with respect thereto. Comex S.A., a
former shareholder of Comex Services S.A. ("Comex"), in an agreement with SNSA
executed on June 5, 1992 for the sale of Comex, agreed to indemnify the Company
with respect to certain aspects of the foregoing. There can be no assurance,
however, as to the amount which the Company may ultimately recover from Comex
S.A. pursuant to such indemnity.
Coflexip S.A. has commenced legal proceedings against three subsidiaries of SCS
claiming infringement of a certain patent relating to flexible flowline laying
technology in the U.K. Judgement was given on January 22, 1999 and January 29,
1999. The disputed patent was held valid. The Company has provided in the
financial statements an amount to cover the estimated liability for Coflexip
S.A. legal costs in the litigation. No provision has been made for damages. The
extent of liability for damages, if any, to Coflexip S.A. for patent
infringement in the U.K. is unknown at this stage.
The Company is a party to various other legal proceedings arising in the
ordinary course of business. The Company believes that none of the matters
covered by such legal proceedings will have a material adverse effect on the
Company's business or financial condition.
The Company's operations are affected by U.S. and foreign environmental
protection laws and regulations. Compliance with such laws and regulations
entails considerable expense, including ship modifications and changes in
operating procedures. The Company believes that compliance with applicable laws
and regulations has not had, nor is such compliance expected to have, a material
adverse effect upon its competitive position, financial condition or results of
operations.
<PAGE>
Notes to Consolidated Financial Statements continued
16 PENSION AND BENEFIT PLANS
Certain of the U.S. and non-U.S. subsidiaries of the Company have
non-contributory pension plans covering substantially all of their shore-based
employees. The most significant plans are defined benefit plans. Benefits are
based on each participant is length of service and compensation. The Company's
policy is to fully fund its liability.
The Company provides pension benefits to ship officers employed by the Company.
Group single premium retirement contracts were purchased whereby all accrued
pension liability through June 30, 1986 was fully funded. It is the Company's
intention to fund its liability under this plan and it is considering various
investment alternatives to do this.
Pension expenses for the Company's defined benefit plans including a retirement
arrangement for one of the Company's directors for the years ended November 30,
1998, 1997, and 1996, consist of the following:
For the years ended November 30,
===============================================================================
(in thousands) 1998 1997 1996
- -------------------------------------------------------------------------------
Service cost--benefits earned during the year $ 6,300 $ 6,020 $ 5,401
Interest cost on benefit obligation 6,494 5,852 5,259
Actual return on assets (6,903) (5,900) (5,772)
Net amortization and deferral 1,814 1,600 2,234
- -------------------------------------------------------------------------------
Net pension expense $ 7,705 $ 7,572 $ 7,122
===============================================================================
The following table sets out the funded status and amounts recognized in the
Company's consolidated balance sheets as of November 30, 1998 and 1997 for the
defined benefit plans and the Directors' retirement arrangements:
As of November 30,
===============================================================================
(in thousands) 1998 1997
- -------------------------------------------------------------------------------
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 80,118 $ 70,660
- -------------------------------------------------------------------------------
Accumulated benefit obligation 83,902 73,747
- -------------------------------------------------------------------------------
Projected benefit obligation 101,635 90,142
Plan assets at fair value
(consisting primarily of
equity, real estate and
other investments) 66,697 60,506
- -------------------------------------------------------------------------------
Projected benefit obligation
in excess of plan assets (34,938) (29,636)
Unrecognized net loss 6,694 4,539
Unrecognized prior service cost 2,348 2,672
Unrecognized transition asset 973 1,109
- -------------------------------------------------------------------------------
Pension liability $ (24,923) $ (21,316)
===============================================================================
The projected obligation of the Company's most significant pension plan
continued to grow in 1998, increasing 16.6%, primarily due to new benefits
accruing and interest costs.
The weighted average assumptions used in determining the funded status of the
pension plans in 1998, 1997, and 1996 were as follows:
For the years ended November 30,
===============================================================================
1998 1997 1996
- -------------------------------------------------------------------------------
Discount rate 6.97% 7.26% 7.21%
Rate of increase in compensation levels 4.30% 4.30% 4.70%
Expected long-term rate of return on assets 8.90% 8.90% 8.70%
===============================================================================
U.S. based employees retiring from the Company on or after attaining age 55 and
who are entitled to pension benefits are eligible to receive post-retirement
health care and dental benefit coverage for themselves and their dependents.
These benefits are subject to deductibles, co-payment provisions and other
limitations. The Company reserves the right to change or terminate the benefits
at any time.
Post-retirement benefit other than pension expense for the years ended November
30, 1998, 1997, and 1996 consisted of the following:
For the years ended November 30,
================================================================================
(in thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
Service cost--benefits earned during the year $293 $292 $285
Interest cost on benefit obligation 439 430 404
Amortization of the unrecognized benefit obligation 192 192 192
- --------------------------------------------------------------------------------
Net other post-retirement benefit expense $924 $914 $881
================================================================================
The following table sets out the funded status and amounts recognized in the
Company's consolidated balance sheets as of November 30, 1998 and 1997,
respectively:
As of November 30,
===============================================================================
(in thousands) 1998 1997
- -------------------------------------------------------------------------------
Accumulated other post-retirement benefit obligation:
Retirees $ 2,154 $ 2,074
Fully eligible participants 967 1,010
Other active participants 3,915 3,549
- -------------------------------------------------------------------------------
7,036 6,633
Fair value of plan assets -- --
- -------------------------------------------------------------------------------
Accumulated benefit obligation
in excess of fair value of plan assets (7,036) (6,633)
Unrecognized net loss (71) 163
Unrecognized prior service cost 84 98
Unrecognized transition asset 2,488 2,666
- -------------------------------------------------------------------------------
Accrued post-retirement benefit obligation $(4,535) $(3,706)
===============================================================================
<PAGE>
The calculation of the funded status for 1998 assumes a 7% discount rate and a
medical trend rate of increase over the prior year of 9% in the first year
declining at 1% per year to an ultimate rate of 6%. Raising health care gross
eligible charges trends by 1% will increase the aggregate of service cost and
interest cost by approximately $0.05 million and increase the accumulated other
post-retirement benefit obligation by approximately $0.5 million.
17 CAPITAL STOCK, FOUNDER'S SHARES AND DIVIDENDS DECLARED
Founder's shares vote on an equal basis with Common shares and as a separate
class of stock when voting on certain matters requiring a majority of both
classes of stock. The Class B shares are not entitled to vote in matters
requiring shareholder action.
Under the Articles, holders of Common shares, Class B shares and Founder's
shares participate in annual dividends, if any are declared by the Company, in
the following order of priority: (i) ten percent of the stated value thereof
(i.e., $0.10 per share) to Class B shares as the preferred dividend; (ii) $0.005
per share to Founder's shares and Common shares equally; (iii) $0.095 per share
to Common shares; and (iv) thereafter, Common shares and Class B shares
participate equally in all further amounts.
Under the Articles, in the event of a liquidation, all debts and obligations of
the Company must first be paid and thereafter all remaining assets of the
Company are paid to the holders of Common shares, Class B shares, and Founder's
shares in the following order of priority: (i) Class B shares to the extent, if
any, of declared but unpaid dividends on such shares, and thereafter rateably to
the full aggregate issuance price thereof; (ii) Common shares rateably to the
extent of the stated value thereof (i.e. $1.00 per share); (iii) Common shares
and Founder's shares participate equally up to $0.05 per share; (iv) Common
shares rateably to the full aggregate issue price thereof; and (v) thereafter,
Common shares and Class B shares participate equally in all remaining assets.
Class B shares being non-voting shares shall also be entitled to such other
priorities and preferences concerning unpaid dividends for past years as shall
be provided by applicable law.
As of November 30, 1998, 7,809,328 Founder's shares had been issued to Mr.
Stolt-Nielsen. Additional Founder's shares are issuable to holders of
outstanding Founder's shares without consideration, in quantities sufficient to
maintain a ratio of Common shares to Founder's shares of 4 to 1. Pursuant to
Luxembourg law, Founder's shares are not considered to represent capital of
SNSA. Accordingly, no stated values for these shares are included in the
accompanying consolidated balance sheets.
The Company increased its treasury stock holding in 1998 by 320,000 Common
shares and 159,300 Class B shares.
In November 1998 the Board of Directors approved an interim dividend of $0.25
per Common and Class B share, and $0.005 per Founder's share. The dividend was
paid in December 1998.
The Company anticipates, subject to approval at the Annual General Meeting, that
a final dividend for 1998 of $0.125 per Common Share and Class B Share will be
paid in May 1999.
18 STOCK OPTION PLAN
During 1987, the Company adopted the 1987 Stock Option Plan (the "1987 Plan")
under which 2,660,000 Common shares and 1,330,000 Class B shares were reserved
for future issuance. No further grants will be issued under the 1987 Plan.
During 1997, the Company adopted the 1997 Stock Option Plan (the "1997 Plan")
under which 5,180,000 Common shares, 5,180,000 Class B shares, or any
combination thereof not exceeding 5,180,000 shares, were reserved for future
issuance.
Options granted under both Plans may be exercisable for periods of up to ten
years at an exercise price not less than the fair market value per share at the
date of the grant. Options vest 25% on the first anniversary of the grant date,
with an additional 25% vesting on each subsequent anniversary. The Company
accounts for the Plans under APB Opinion No. 25, under which no compensation
cost has been recognized. Had compensation cost for all stock option grants
between 1996 and 1998 been determined consistent with SFAS No. 123, the
Company's net income and earnings per share would be reduced to the following
pro forma amounts:
For the years ended November 30,
================================================================================
1998 1997
- --------------------------------------------------------------------------------
Net Income:
As Reported $ 96,275 $237,109
Pro Forma 93,785 235,304
Basic EPS:
As Reported $ 1.76 $ 4.34
Pro Forma 1.71 4.31
Diluted EPS:
As Reported $ 1.75 $ 4.28
Pro Forma 1.71 4.25
================================================================================
The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts. SFAS No. 123 does not apply to awards prior to
fiscal year 1996, and additional awards in future years are anticipated.
<PAGE>
Notes to Consolidated Financial Statements continued
The following table reflects activity under the Plans for the years ended
November 30, 1998 and 1997:
For the years ended November 30,
================================================================================
1998 1997
------------------- -------------------
Weighted Weighted
average average
exercise exercise
Common Shares Shares price Shares price
- --------------------------------------------------------------------------------
Outstanding at
beginning of
year 1,164,563 $14.43 1,324,683 $13.33
Granted 419,200 20.13 211,350 16.73
Exercised (39,863) 11.48 (363,645) 11.71
Canceled (29,125) 17.63 (7,825) 16.18
- --------------------------------------------------------------------------------
Outstanding at
end of year 1,514,775 $16.02 1,164,563 $14.43
================================================================================
Exercisable at
end of year 761,005 $13.26 550,738 $12.46
================================================================================
Weighted average
fair value of
options granted $ 6.82 $ 9.12
================================================================================
For the years ended November 30,
================================================================================
1998 1997
------------------- -------------------
Weighted Weighted
average average
exercise exercise
Class B Shares Shares price Shares price
- --------------------------------------------------------------------------------
Outstanding at
beginning of
year 670,430 $14.89 651,848 $13.26
Granted -- -- 205,350 17.29
Exercised (20,166) 11.60 (181,334) 11.69
Canceled (16,881) 17.23 (5,434) 16.41
Outstanding at
end of year 633,383 $14.93 670,430 $14.89
- --------------------------------------------------------------------------------
Exercisable at end
of year 400,013 $13.49 273,869 $12.43
================================================================================
Weighted average
fair value of
options granted $ -- $ 7.51
===============================================================================
The fair value of each stock option grant is estimated as of the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions:
================================================================================
1998 1997
--------------- ----------------
Common Class B Common Class B
- --------------------------------------------------------------------------------
Risk-free interest rates 5.7% -- 6.0% 6.0%
Expected lives (years) 6.0 -- 6.5 6.8
Expected volatility 31.6% -- 51.0% 31.0%
Expected dividend yields 2.0% -- 1.0% 1.0%
================================================================================
The following table summarizes information about stock options outstanding as of
November 30, 1998:
<TABLE>
<CAPTION>
====================================================================================================================
Options outstanding Options exercisable
---------------------------------------------- --------------------------------
Weighted
Number average Weighted Number Weighted
outstanding remaining average exercisable average
Range of exercise at Nov. 30, contractual exercise at Nov. 30, exercise
prices 1998 life (years) price 1998 price
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common shares
$20.125 - 22.500 418,400 9.07 $20.14 625 $22.50
$14.500 - 19.083 547,900 6.37 17.71 274,105 17.35
$ 8.500 - 13.167 548,475 4.94 11.19 486,275 10.94
- --------------------------------------------------------------------------------------------------------------------
1,514,775 6.60 $16.02 761,005 $13.26
====================================================================================================================
Class B shares
$19.083 - 22.125 131,375 7.09 $19.14 64,050 $19.11
$14.500 - 17.500 227,762 6.58 17.00 92,742 16.28
$ 8.500 - 13.167 274,246 4.94 11.19 243,221 10.94
- --------------------------------------------------------------------------------------------------------------------
633,383 5.98 $14.93 400,013 $13.49
====================================================================================================================
</TABLE>
19 RELATED PARTY TRANSACTIONS
During 1997, the Company held a 25% ownership interest in Maryland Marine, Inc.
("Maryland Marine"), a chemical barging company which operated chemical/liquid
barges in the U.S. inland and intracoastal waterways. A director of SNSA owned a
majority interest in and served as Chairman and Chief Executive Officer of
Maryland Marine. The Company had accounted for this investment in the financial
statements in accordance with the equity method up to November 21, 1997 when the
company sold its interest in Maryland Marine, at its fair market value, to the
director of SNSA. He, in turn, sold Maryland Marine to a non-related
corporation.
During 1997, Maryland Marine leased barges to the Company pursuant to several
lease agreements which required the Company to make lease payments through 2002.
As a consequence of the sale of the Company's interest in Maryland Marine, these
lease agreements were canceled.
Aggregate amounts paid to Maryland Marine, during the period in which the
Company held an ownership interest, including minimum non-cancelable payments
due under the above lease agreements, were, $12.0 million and $12.8 million
during the years ended November 30, 1997 and 1996, respectively.
20 RESTRICTIONS ON PAYMENT OF DIVIDENDS
On an annual basis, Luxembourg law requires an appropriation of an amount equal
to at least 5% of SNSA's unconsolidated net profits, if any, to a "legal
reserve" within shareholders' equity, until such reserve equals 10% of the
issued share capital of SNSA. This reserve is not available for dividend
distribution. SNSA's Capital stock and Founder's shares have no par value.
Accordingly SNSA has assigned a stated value per Common and Class B share of
$1.00. As of November 30, 1998 this legal reserve amounted to approximately $6.2
million based on Common and Class B shares issued on that date. Advance
divi-
<PAGE>
dends can be declared, up to three times in any fiscal year (at the end of the
second, third and fourth quarters) by the Board of Directors; however, they can
only be paid after the prior year's financial statements have been approved by
SNSA's shareholders, and after a determination as to the adequacy of amounts
available to pay such dividends has been made by its independent statutory
auditors in Luxembourg. Final dividends are declared by the shareholders once
per year at the Annual General Meeting; both advance and final dividends can be
paid out of any SNSA earnings, retained or current, as well as paid-in surplus,
subject to shareholder approval. Luxembourg law also limits the payment of stock
dividends to the extent sufficient surplus exists to provide for the related
increase in stated capital.
As of November 30, 1998, the most restrictive covenant within the Company's loan
agreements limits SNSA dividend payments to 40% of consolidated net income, as
defined, for the previous four fiscal quarters.
21 FOREIGN EXCHANGE CONTRACTS AND SWAP AGREEMENTS
All of the Company's derivative activities are over the counter instruments
entered into with major financial institutions for hedging the Company's
committed exposures or firm commitments with major financial credit
institutions. All of the Company's derivative instruments are straightforward
foreign exchange forward and option contracts, and commodity and interest rate
swaps, which subject the Company to a minimum level of exposure risk. The
Company does not consider that it has a material exposure to credit risk from
third parties failing to perform according to the terms of hedge instruments.
The following foreign exchange contracts, maturing through April 2000, were
outstanding as of November 30, 1998:
================================================================================
(in thousands) Purchase Sell
- --------------------------------------------------------------------------------
Norwegian kroner 323,006
Singapore dollars 4,923
Canadian dollars 12,600
British pounds sterling 3,000
Australian dollars 2,100
German marks 5,700
Netherland guilders 51
French francs 49,550
Japanese yen 726,465
Belgian francs 191,091
Italian lire 28,208,000
================================================================================
The U.S. dollar equivalent of the currencies which the Company had contracted to
purchase was $86.1 million and to sell was $14.3 million as of November 30,
1998.
The following estimated fair value amounts of the Company's financial
instruments have been determined by the Company, using appropriate market
information and valuation methodologies. Considerable judgement is required to
develop these estimates of fair value, thus the estimates provided herein are
not necessarily indicative of the amounts that could be realized in a current
market exchange:
As of November 30, 1998
================================================================================
Carrying Fair
(in millions) amount value
- --------------------------------------------------------------------------------
Financial assets:
Cash and cash equivalents $37.8 $37.8
Financial liabilities:
Loans payable to banks 17.6 17.6
Long-term debt and related currency
and interest rate swaps 1,128.9 1,180.9
Off balance sheet financial instruments:
Foreign exchange forward contracts -- 1.3
================================================================================
The carrying amount of cash and cash equivalents and loans payable to banks are
a reasonable estimate of their fair value. The estimated value of the Company's
long-term debt is based on interest rates as of November 30, 1998 using debt
instruments of similar risk. The fair values of the Company's foreign exchange
contracts are based on their estimated termination values as of November 30,
1998.
<PAGE>
STOLT-NIELSEN S. A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------------------- ---------------------------------
Aug 31, 1999 Aug 31, 1998 Aug 31, 1999 Aug 31, 1998
(Unaudited) (Unaudited) (a) (Unaudited) (Unaudited) (a)
------------ --------------- ------------- ---------------
<S> <C> <C> <C> <C>
STATEMENTS OF INCOME
Net operating revenue:
Stolt-Nielsen Transportation Group:
Tankers $ 155,980 $ 164,158 $ 459,426 $ 499,107
Tank Containers 53,027 53,308 148,490 163,864
Terminals 13,729 13,796 40,448 40,389
Stolt Comex Seaway 184,051 179,069 491,300 425,881
Stolt Sea Farm 69,007 68,036 195,121 165,172
------------ --------------- ------------- --------------
TOTAL NET OPERATING REVENUE 475,794 478,367 1,334,785 1,294,413
============ =============== ============= ==============
Gross profit:
Stolt-Nielsen Transportation Group:
Tankers 23,804 27,677 66,669 95,004
Tank Containers 11,227 12,400 31,012 41,589
Terminals 4,649 4,614 14,954 12,953
Stolt Comex Seaway 30,645 38,556 63,807 75,633
Stolt Sea Farm 12,355 10,197 31,811 21,752
------------ --------------- ------------- --------------
TOTAL GROSS PROFIT 82,680 93,444 208,253 246,931
Equity in net income of non-consolidated joint ventures 3,462 7,130 7,672 14,748
Administrative and general expense (41,657) (40,297) (122,920) (113,613)
------------ --------------- ------------- --------------
TOTAL INCOME FROM OPERATIONS 44,485 60,277 93,005 148,066
ANALYSIS OF TOTAL INCOME FROM OPERATIONS:
Stolt-Nielsen Transportation Group:
Tankers 9,276 13,380 22,862 54,487
Tank Containers 4,923 5,480 12,642 22,127
Terminals 3,054 2,332 10,072 5,801
Stolt Comex Seaway 19,528 33,569 29,364 57,280
Stolt Sea Farm 7,704 5,516 18,065 8,371
------------ --------------- ------------- --------------
Total 44,485 60,277 93,005 148,066
Non-operating income/(expense):
Interest expense, net (16,964) (12,492) (48,804) (38,214)
Foreign currency exchange (loss)/gain, net 53 536 1,895 107
Minority interests (7,405) (14,442) (9,775) (27,188)
Other (b) 1,909 1,733 5,862 18,149
------------ --------------- ------------- --------------
INCOME BEFORE TAX 22,078 35,612 42,183 100,920
Income tax provision (8,361) (11,839) (10,687) (18,361)
------------ --------------- ------------- --------------
NET INCOME $ 13,717 $ 23,773 $ 31,496 $ 82,559
============ =============== ============= ==============
PER SHARE DATA
Net income per share:
Basic $ 0.25 $ 0.43 $ 0.58 $ 1.51
Diluted $ 0.25 $ 0.43 $ 0.57 $ 1.50
------------ --------------- ------------- --------------
Weighted average number of Common and
Class B shares and equivalents outstanding:
Basic 54,534 54,765 54,516 54,741
Diluted 54,959 55,058 54,943 55,133
------------ --------------- ------------- --------------
SELECTED CASHFLOW DATA
Capital expenditures (cash basis) $ 42,576 $ 302,753 $ 243,660 $ 472,512
Depreciation and amortization (excluding
drydocking) $ 39,425 $ 33,718 $ 116,342 $ 94,885
</TABLE>
(a) The net income for the three months and nine months ended August
31,1998 has been restated to include adjustments of ($298) and $346,
respectively, arising from the change in the accounting policy for
drydocking made by a subsidiary of the Company. This change in policy
was effective at December 1, 1997 and restates the Gross profit,
Minority interest, Other non-operating expense and income tax
provision.
(b) The figures for the nine months ended August 31, 1999 include a
one-time gain of $3,783 resulting from sale of tank containers. The
figures for the nine months ended August 31, 1998 include one-time
gains arising from an insurance settlement of $10,208 and from the sale
of other assets of $2,156.
<PAGE>
STOLT-NIELSEN S. A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN US DOLLAR THOUSANDS)
<TABLE>
<CAPTION>
Aug 31, November 30, Aug 31,
1999 1998 1998
------------- ------------- ---------------
(Unaudited) (Audited) (a) (Unaudited) (b)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 67,395 $ 37,776 $ 26,003
Trade receivables, net 309,767 336,019 348,661
Other current assets 241,345 251,498 289,932
------------- ------------- ---------------
TOTAL CURRENT ASSETS 618,507 625,293 664,596
Fixed assets, net of accumulated depreciation 2,073,171 2,083,512 1,992,708
Other non-current assets 335,252 299,320 276,821
------------- ------------- ---------------
TOTAL ASSETS $ 3,026,930 $ 3,008,125 $ 2,934,125
============= ============= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Loans payable to banks $ 8,860 $ 17,645 $ 31,866
Current portion of long-term debt 75,280 71,634 73,271
Accounts payable and accrued liabilities 393,860 403,575 426,086
------------- ------------- ---------------
TOTAL CURRENT LIABILITIES 478,000 492,854 531,223
Long-term debt 1,089,151 1,057,313 998,322
Other non-current liabilities (c) 333,438 325,591 299,576
------------- ------------- ---------------
TOTAL CURRENT AND NON-CURRENT LIABILITIES 1,900,589 1,875,758 1,829,121
------------- ------------- ---------------
Capital stock and Founder's shares 62,243 62,191 62,190
Paid-in surplus 347,531 347,019 347,014
Retained earnings 895,629 884,615 870,898
Cumulative translation adjustments (45,038) (27,434) (41,147)
Treasury stock (134,024) (134,024) (133,951)
------------- ------------- ---------------
SHAREHOLDERS' EQUITY 1,126,341 1,132,367 1,105,004
------------- ------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,026,930 $ 3,008,125 $ 2,934,125
============= ============= ===============
Total interest-bearing debt net of cash and cash equivalents: $ 1,105,896 $ 1,108,816 $ 1,077,456
------------- ------------- ---------------
</TABLE>
(a) Reflects reclassifications and adjustments subsequently made to figures
included in the Quarter 4 1998 press release dated February 2, 1999.
(b) Quarter 3 1998 has been restated to include a gain of $346, arising
from the change in the accounting policy for drydocking made by a
subsidiary of the Company. This change in policy was effective at
December 1, 1997 and restates Accounts payable and accrued liabilities,
Other non-current liabilities and Retained earnings.
(c) Other non-current liabilities includes minority interest in Stolt Comex
Seaway S.A. of $223,570, $231,622 and $218,844 at August 31, 1999,
November 30, 1998 and August 31, 1998, respectively.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------------------- ---------------------------------
Aug 31, 1999 Aug 31, 1998 Aug 31, 1999 Aug 31, 1998
(Unaudited) (Unaudited) (a) (Unaudited) (Unaudited) (a)
------------ --------------- ------------- ---------------
<S> <C> <C> <C> <C>
Net operating revenue:
Stolt-Nielsen Transportation Group:
Tankers $ 155,980 $ 164,158 $ 459,426 $ 499,107
Tank Containers 53,027 53,308 148,490 163,864
Terminals 13,729 13,796 40,448 40,389
Stolt Comex Seaway 184,051 179,069 491,300 425,881
Stolt Sea Farm 69,007 68,036 195,121 165,172
------------ --------------- ------------- --------------
TOTAL NET OPERATING REVENUE 475,794 478,367 1,334,785 1,294,413
============ =============== ============= ==============
Gross profit:
Stolt-Nielsen Transportation Group:
Tankers 23,804 27,677 66,669 95,004
Tank Containers 11,227 12,400 31,012 41,589
Terminals 4,649 4,614 14,954 12,953
Stolt Comex Seaway 30,645 38,556 63,807 75,633
Stolt Sea Form 12,355 10,197 31,811 21,752
------------ --------------- ------------- --------------
TOTAL GROSS PROFIT 82,680 93,444 208,253 246,931
Equity in net income of non-consolidated joint ventures 3,462 7,130 7,672 14,748
Administrative and general expense (41,657) (40,297) (122,920) (113,613)
------------ --------------- ------------- --------------
TOTAL INCOME FROM OPERATIONS 44,485 60,277 93,005 148,066
ANALYSIS OF TOTAL INCOME FROM OPERATIONS:
Stolt-Nielsen Transportation Group:
Tankers 9,276 13,380 22,862 54,487
Tank Containers 4,923 5,480 12,642 22,127
Terminals 3,054 2,332 10,072 5,801
Stolt Comex Seaway 19,528 33,569 29,364 57,280
Stolt Sea Farm 7,704 5,516 18,065 8,371
------------ --------------- ------------- --------------
Total 44,485 60,277 93,005 148,066
Non-operating income/(expense):
Interest expense, net (16,964) (12,492) (48,804) (38,214)
Foreign currency exchange (loss)/gain, net 53 536 1,895 107
Minority interests (7,405) (14,442) (9,775) (27,188)
Other (b) 1,909 1,733 5,862 18,149
------------ --------------- ------------- --------------
INCOME BEFORE TAX 22,078 35,612 42,183 100,920
Income tax provision (8,361) (11,839) (10,687) (18,361)
------------ --------------- ------------- --------------
NET INCOME $ 13,717 $ 23,773 $ 31,496 $ 82,559
============ =============== ============= ==============
PER SHARE DATA
Net income per share:
Basic $ 0.25 $ 0.43 $ 0.58 $ 1.51
Diluted $ 0.25 $ 0.43 $ 0.57 $ 1.50
------------ --------------- ------------- --------------
Weighted average number of Common and
Class B shares and equivalents outstanding:
Basic 54,534 54,765 54,516 54,741
Diluted 54,959 55,058 54,943 55,133
------------ --------------- ------------- --------------
SELECTED CASH FLOW DATA
Capital expenditures (cash basis) $ 42,576 $ 302,753 $ 243,660 $ 472,512
Depreciation and amortization (exceding
drydocking) $ 39,425 $ 33,718 $ 116,342 $ 94,885
</TABLE>
(a) The net income for the three months and nine months ended August
31,1998 has been restated to include adjustments of ($298) and $346,
respectively, arising from the change in the accounting policy for
drydocking made by a subsidiary of the Company. This change in policy
was effective at December 1, 1997 and restates the Gross profit,
Minority interest, Other non-operating expense and Income tax
provision.
(b) The figures for the nine months ended August 31, 1999 include a
one-time gain of $3,783 resulting from sale of tank containers. The
figures for the nine months ended August 31, 1998 include one-time
gains arising from an insurance settlement of $10,208 and from the sale
of other assets of $2,156.
<PAGE>
STOLT-NIELSEN S. A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN US DOLLAR THOUSANDS)
<TABLE>
<CAPTION>
Aug 31, November 30, Aug 31,
1999 1998 1998
------------- ------------- ---------------
(Unaudited) (Audited) (a) (Unaudited) (b)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 67,395 $ 37,776 $ 26,003
Trade receivables, net 309,767 336,019 348,661
Other current assets 241,345 251,498 289,932
------------- ------------- ---------------
TOTAL CURRENT ASSETS 618,507 625,293 664,596
Fixed assets, net of accumulated depreciation 2,073,171 2,083,512 1,992,708
Other non-current assets 335,252 299,320 276,821
------------- ------------- ---------------
TOTAL ASSETS $ 3,026,930 $ 3,008,125 $ 2,934,125
============= ============= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Loans payable to banks $ 8,860 $ 17,645 $ 31,866
Current portion of long-term debt 75,280 71,634 73,271
Accounts payable and accrued liabilities 393,860 403,575 426,086
------------- ------------- ---------------
TOTAL CURRENT LIABILITIES 478,000 492,854 531,223
Long-term debt 1,089,151 1,057,313 998,322
Other non-current liabilities (c) 333,438 325,591 299,576
------------- ------------- ---------------
TOTAL CURRENT AND NON-CURRENT LIABILITIES 1,900,589 1,875,758 1,829,121
------------- ------------- ---------------
Capital stock and Founder's shares 62,243 62,191 62,190
Paid-in surplus 347,531 347,019 347,014
Retained earnings 895,629 884,615 870,898
Cumulative translation adjustments (45,038) (27,434) (41,147)
Treasury stock (134,024) (134,024) (133,951)
------------- ------------- ---------------
SHAREHOLDERS' EQUITY 1,126,341 1,132,367 1,105,004
------------- ------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,026,930 $ 3,008,125 $ 2,934,125
============= ============= ===============
Total interest-bearing debt net of cash and cash equivalents: $ 1,105,896 $ 1,108,816 $ 1,077,456
------------- ------------- ---------------
</TABLE>
(a) Reflects reclassifications and adjustments subsequently made to figures
included in the Quarter 4 1998 press release dated February 2, 1999.
(b) Quarter 3 1998 has been restated to include a gain of $346, arising
from the change in the accounting policy for drydocking made by a
subsidiary of the Company. This change in policy was effective at
December 1, 1997 and restates Accounts payable and accrued liabilities,
Other non-current liabilities and Retained earnings.
(c) Other non-current liabilities includes minority interest in Stolt Comex
Seaway S.A. of $223,570, $231,622 and $218,844 at August 31, 1999,
November 30, 1998 and August 31, 1998, respectively.
<PAGE>
STOLT-NIELSEN S. A. AND SUBSIDIARIES
UNAUDITED OPERATING YARDSTICKS
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
TANKERS DIVISION:
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JOINT SERVICE SAILED-IN TIME-CHARTER INDEX - ACTUAL
1997 1.19 1.19 1.22 1.13
1998 1.07 1.10 1.01 0.94
1999 0.91 0.93 0.94 n/a
VOLUME OF CARGO CARRIED - MILLIONS OF TONNES
JOINT SERVICE FLEET:
1997 3.0 2.8 3.2 2.9
1998 3.2 3.5 3.2 3.2
1999 2.9 3.4 3.5 n/a
REGIONAL FLEETS:
1997 2.0 2.0 2.2 2.6
1998 1.8 2.0 2.0 2.0
1999 2.1 2.0 2.2 n/a
OPERATING DAYS
JOINT SERVICE FLEET:
1997 5,141 5,320 5,488 5,587
1998 5,946 6,433 6,503 6,706
1999 6,375 6,441 6,354 n/a
REGIONAL FLEETS:
1997 6,007 6,099 6,151 7,329
1998 5,461 5,619 5,641 5,575
1999 5,694 5,656 5,819 n/a
AVERAGE NUMBER OF SHIPS OPERATED IN THE PERIOD
JOINT SERVICE FLEET:
1997 57 58 60 61
1998 66 70 71 74
1999 69 70 70 n/a
REGIONAL FLEETS:
1997 67 66 67 81
1998 61 61 61 61
1999 62 61 64 n/a
</TABLE>
Notes:
(a) Joint Service and Regional fleet statistics include those for
time-chartered ships
(b) Regional fleet statistics include total joint venture activity and all
cargo carried on behalf of the Joint Service
(c) Regional fleet statistics include the results of both the Northern
Europe and US Gulf barging activities
(d) In the 4th quarter of 1997, the Company divested 26 non-strategic
petroleum barges which operated in the US Gulf
<TABLE>
<CAPTION>
TANK CONTAINER DIVISION:
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TANK CONTAINERS OPERATED AND LEASED AT END OF PERIOD
1997 10,495 12,016 12,355 12,829
1998 13,077 13,273 13,599 13,751
1999 12,098 12,450 13,010 n/a
TANK CONTAINER UTILIZATION - %
1997 73.4% 71.8% 68.7% 71.5%
1998 69.8% 69.1% 62.4% 64.6%
1999 63.2% 66.8% 69.8% n/a
</TABLE>
Note:
(a) Tank containers operated and leased at end of Quarter 1 1999 has been
restated to include additional tanks managed on behalf of third
parties.
<TABLE>
<CAPTION>
TERMINALS DIVISION:
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVERAGE MARKETABLE SHELL BARREL CAPACITY (MILLIONS OF BARRELS)
1997 4.49 4.49 4.71 4.71
1998 4.76 4.80 4.80 4.90
1999 4.90 4.92 4.96 n/a
TANK CAPACITY UTILIZATION - %
1997 75.9% 86.4% 77.6% 81.8%
1998 89.6% 91.8% 91.2% 91.0%
1999 92.8% 90.7% 87.3% n/a
</TABLE>
