SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
SCHEDULE 13E-3/A
RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
AMENDMENT NO. 4
HORSEHEAD RESOURCE DEVELOPMENT COMPANY, INC.
(Name of Issuer and Person Filing Statement)
Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
440699-10-6
(CUSIP Number of Class of Securities)
William M. Quirk, President
Horsehead Resource Development Company, Inc.
110 East 59th Street
New York, New York 10022
(212) 527-3003
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person Filing Statement)
Copy to:
Morris Orens, Esq.
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
(212) 758-9500
This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or rule 13e-3(c)
under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act
of 1933.
c. [x] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [ ].
calculation of filing fee
Transaction Valuation* Amount of Filing Fee
$26,660,450 $5,332.09
*Based upon purchase of 4,636,600 shares at $5.75 per share.
[x] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
Amount previously paid: $2,014.34
Form or registration no.: SC13E4
Filing party: Horsehead Resource Development Company, Inc.
Date filed: May 16, 1996, June 14, 1996, June 24, 1996, June 27, 1996
<PAGE>
This Amendment No. 4 dated June 28, 1996 amends and supplements the
Rule 13E-3 Transaction Statement (the "Schedule 13E-3") filed with the
Securities and Exchange Commission on May 16, 1996 and amended on June 14,
1996, June 24, 1996 and June 27, 1996 by Horsehead Resource Development
Company, Inc., a Delaware corporation (the "Company"), relating to the
offer by the Company to purchase up to 4,636,600 shares of its common stock,
par value $.01 per share (the "Shares"), for $5.75 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated May 16, 1996 (the "Offer to Purchase"), as
amended and supplemented by the Supplement thereto, dated June 28, 1996
(the "Supplement") and in the Letter of Transmittal, dated May 16, 1996
(which, as amended from time to time, together constitute the "Offer"),
copies of which have been attached to the Schedule 13E-3 as Exhibits (d)(1),
(d)(2) and (d)(12), respectively. This Amendment No. 4 is being filed
concurrently with Amendment No. 4 to the Statement on Schedule 13E-4 of
the Company.
ITEM 4. TERMS OF THE TRANSACTION.
The information set forth in Item 4(a) of Schedule 13E-3 is hereby
amended and supplemented as follows:
(a) Reference is hereby made to the Supplement, which is herein
incorporated by reference.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information set forth in Item 6(a) of Schedule 13E-3 is hereby
amended and supplemented as follows:
(a) Reference is hereby made to the Supplement, which is herein
incorporated by reference.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
The information set forth in Item 9(a)-(c) of Schedule 13E-3 is
hereby amended and supplemented as follows:
(a)-(c) Reference is hereby made to the Supplement, which is herein
incorporated by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS
WITH REGARD TO THE TRANSACTION.
The information set forth in Item 12(a) of Schedule 13E-3 is hereby
amended and supplemented as follows:
(a) Reference is hereby made to the Supplement, which is herein
incorporated by reference.
<PAGE>
ITEM 16. ADDITIONAL INFORMATION.
The information set forth in Item 16 of Schedule 13E-3 is hereby
amended and supplemented as follows:
Reference is hereby made to the Supplement and press release,
copies of which are attached hereto as Exhibits (d)(12) and (d)(14),
respectively, and are herein incorporated by reference in their entirety.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
(d)(12) Supplement to Offer to Purchase, dated June 28, 1996.
(d)(13) Materials presented to the Board by Bear Stearns on April
30, 1996.
(d)(14) Press Release issued by the Company on June 28, 1996.
(k) Amendment No. 4 to Issuer Tender Offer Statement on Schedule
13E-4.
<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.
HORSEHEAD RESOURCE DEVELOPMENT
COMPANY, INC.
By: /s/ William M. Quirk
William M. Quirk
President
Date: June 28, 1996
<PAGE>
Exhibit No. Description Page No.
(d)(12) Supplement to Offer to Purchase,
dated June 28, 1996
(d)(13) Materials presented to the Board by
Bear Stearns on April 30, 1996
(d)(14) Press Release issued by the Company
on June 28, 1996
(k) Amendment No. 4 to Issuer Tender
Offer Statement on Schedule 13E-4
EXHIBIT (D) (12)
SUPPLEMENT TO OFFER TO PURCHASE
<PAGE>
SUPPLEMENT TO
OFFER TO PURCHASE FOR CASH BY
HORSEHEAD RESOURCE DEVELOPMENT COMPANY, INC. UP TO
4,636,600 SHARES OF ITS COMMON STOCK
AT $5.75 NET PER SHARE
THE OFFER HAS BEEN EXTENDED. THE OFFER AND WITHDRAWAL RIGHTS NOW EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, JULY 12, 1996. THE COMPANY
DOES NOT INTEND TO FURTHER EXTEND THE OFFER.
The information included in this Supplement amends and supplements the
Offer to Purchase dated May 16, 1996 (the "Offer to Purchase") of Horsehead
Resource Development Company, Inc., a Delaware corporation (the "Company").
This Supplement amends the Offer to Purchase (which, together with this
Supplement and the Letter of Transmittal constitute the "Offer") by
increasing the number of Shares to be repurchased in the Offer from
1,751,600 Shares to 4,636,600 Shares, removing the condition that BUS shall
have not tendered any of its Shares and making certain other changes. In
addition, this Supplement provides information regarding recent developments
relating to the Company and amends certain information to reflect the
revised terms of the Offer. Capitalized terms not otherwise defined
herein shall have the meaning set forth in the Offer to Purchase.
The procedure for tendering Shares is set forth in "The Offer -
Procedure for Tendering Shares" in the Offer to Purchase. ALL SHARES THAT
PREVIOUSLY HAVE BEEN PROPERLY TENDERED AND NOT WITHDRAWN REMAIN PROPERLY
TENDERED WITHOUT FURTHER ACTION PURSUANT TO THE OFFER AS AMENDED BY THIS
SUPPLEMENT. Shareholders who have not tendered and desire to do so may
use the enclosed Letter of Transmittal.
-------------------------
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO BUS NOT TENDERING MORE THAN
2,885,000 SHARES PURSUANT TO THE OFFER, AND CERTAIN OTHER CONDITIONS. SEE
SECTION 5 OF THE OFFER TO PURCHASE.
-------------------------
The Shares are traded on the Nasdaq Stock Market's National Market
(the "NNM"). On June 27, 1996, the last reported sale on the day before
the announcement of the terms of this amendment to the Offer on the NNM
was $5.50 per Share. Stockholders are urged to obtain a current market
quotation for the Shares.
UPON TERMINATION OF THE OFFER, THE SHARES WILL CEASE TO BE LISTED ON
THE NNM AND THE COMPANY WILL CEASE TO BE A REPORTING COMPANY UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ACCORDINGLY, NO PUBLIC MARKET
FOR THE SHARES WILL EXIST AFTER THE OFFER. SEE SECTION 13 OF THE OFFER TO
PURCHASE.
-------------------------
THE BOARD OF DIRECTORS OF THE COMPANY BY MAJORITY VOTE HAS
DETERMINED THAT BASED UPON THE OPINION OF THE FINANCIAL ADVISOR OF THE
COMPANY THE OFFER DESCRIBED HEREIN IS FAIR TO, AND IN THE BEST INTERESTS OF,
THE PUBLIC STOCKHOLDERS OF THE COMPANY, AND RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN THE OFFER. SEE
"SPECIAL FACTORS - BACKGROUND OF THE OFFER" OF THE OFFER TO PURCHASE.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION (THE "SEC") NOR HAS THE SEC PASSED UPON
THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR
ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
--------------------------
The Information Agent for the Offer is:
Morrow & Co., Inc.
June 28, 1996
<PAGE>
IMPORTANT
Any stockholder who has previously tendered his Shares need not take
any further action. Any stockholder desiring to tender all or any portion
of such stockholder's Shares and who has not already tendered his Shares
should either (1) complete and sign the Letter of Transmittal or a
facsimile copy thereof 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 Chemical Mellon Shareholder Services, L.L.C., the
depositary for the Offer (the "Depositary"), and either mail or deliver
the certificates for such Shares to the Depositary along with the Letter
of Transmittal or follow the procedure for book-entry transfer set forth
in "The Offer - Procedure for Tendering Shares" in the Offer to Purchase,
or (2) request such stockholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such stockholder.
A stockholder having 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 stockholder
desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for
such 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
Depositary before the expiration of the Offer should tender such Shares by
following the procedure for guaranteed delivery set forth in "The Offer -
Procedure for Tendering Shares" in the Offer to Purchase.
---------------------------
Any questions or requests for assistance may be directed to the
Information Agent at its address and telephone number set forth on the
back cover of this Supplement and requests for additional copies of this
Supplement, the Letter of Transmittal or the Notice of Guaranteed Delivery
may be directed to the Information Agent. Stockholders may also contact
their broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
---------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF
OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE
OFFER OTHER THAN THOSE CONTAINED IN THIS SUPPLEMENT, THE OFFER TO PURCHASE
OR IN THE LETTER OF TRANSMITTAL. IF MADE OR GIVEN, SUCH RECOMMENDATION AND
SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY.
<PAGE>
To the Holders of Common Stock of
Horsehead Resource Development Company, Inc.
The following information amends and supplements the Offer to Purchase
of the Company, pursuant to which the Company is (as amended) offering to
purchase up to 4,636,600 Shares for $5.75 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in this
Supplement, the Offer to Purchase and the Letter of Transmittal.
The Offer is not conditioned upon any minimum number of Shares being
tendered. As amended by this Supplement, the Company has removed, as a
condition to acceptance of Shares pursuant to the Offer, the requirement
that BUS shall not have tendered any of its Shares and will now purchase
up to 4,636,600 Shares pursuant to the Offer (inclusive of 2,885,000
Shares tendered by BUS). The Offer is, however, subject to BUS not
tendering more than 2,885,000 Shares pursuant to the Offer, and to certain
other conditions. See Section 5 of the Offer to Purchase.
The procedure for tendering Shares is set forth in "The Offer -
Procedure for Tendering Shares" in the Offer to Purchase. All Shares that
previously have been properly tendered and not withdrawn remain properly
tendered pursuant to the Offer as amended by this Supplement. Shareholders
who have not tendered and desire to do so may use the enclosed Letter of
Transmittal.
Except as set forth in this Supplement, the terms and conditions
previously set forth in the Offer to Purchase and the Letter of Transmittal
remain applicable in all respects to the Offer. This Supplement should be
read in conjunction with the Offer to Purchase. Stockholders are urged to
read this Supplement, the Offer to Purchase and the Letter of Transmittal
carefully before deciding to tender their Shares.
NUMBER OF SHARES
The number of Shares to be repurchased in the Offer by the Company has
been increased from 1,751,600 Shares to 4,636,600 Shares.
SOURCE AND AMOUNT OF FUNDS
If the Company were to purchase 4,636,600 Shares pursuant to the
Offer at the Purchase Price of $5.75 per Share, the aggregate cost of the
Offer would be approximately $26,660,450. The Company has sufficient
funds on hand to pay for these Shares.
EXTENSION OF THE OFFER
The Offer has been extended and will expire on 5:00 p.m., New York
City time on July 12, 1996 ("Expiration Date"). The Company does not
intend to further extend the Offer.
CONDITIONS OF THE OFFER
The condition set forth in paragraph (c) in "The Offer - Certain
Conditions of the Offer" in the Offer to Purchase is removed, and the
Company will purchase up to 4,636,600 Shares pursuant to the Offer
(inclusive of 2,885,000 Shares tendered by BUS). The Offer is, however,
subject to BUS not tendering more than 2,885,000 Shares pursuant to the
Offer.
REPORT OF FINANCIAL ADVISOR
A copy of the presentation materials used by Bear Stearns as part of
its oral presentation to the Board on April 30, 1996 has been filed as an
exhibit to the Transaction Statement on Schedule
<PAGE>
13E-3 filed with the SEC with respect to the Offer and is available
from the SEC as set forth in "Certain Information Concerning the
Company - Additional Information" in the Offer to Purchase, and will
be made available for inspection and copying at the principal
executive offices of the Company at 110 East 59th Street, New York,
New York 10022 during regular business hours by any interested
stockholder of the Company or his or her representative who has been
so designated in writing.
LITIGATION
On May 16, 1996, the Court held in Horsehead Resource Development
Company, Inc. v. B.U.S. Environmental Services, Inc., et al., Docket No.
95 Civ. 5802, that factual issues precluding dismissal existed as to
Lobbert's controlling interest in shares of the Company and that evidence
submitted was sufficient to demonstrate that there are no currently pending
criminal proceedings.
On June 10, 1996, 42 days after being aware of the Offer and 26
days after the announcement of the Offer, BUS informed HII that it
desired to tender 2,885,000 shares in the Offer. Pursuant to a Shareholder
Agreement, HII had by contract 30 days after this notice by BUS to
decide whether or not to exercise a right of first refusal with respect
to such shares. On June 24, 1996, BUS commenced an action in an attempt
to compel the Company to allow it to tender such Shares despite HII's
clear right of first refusal to purchase the 2,885,000 Shares which BUS
desired to tender. HII has since waived its right of first refusal and,
accordingly, the Company has determined to increase the number of Shares
to be purchased pursuant to the Offer to permit the tender by BUS as
well as all Shares tendered by Public Stockholders. Therefore, The
Company believes that BUS's action has been mooted.
FINANCIAL PROJECTIONS
The Company does not as a matter of course prepare and publicly
disclose projections as to future revenues or earnings. However, in
connection with Bear Stearns' analysis of the fairness of the Offer, at
the request of Bear Stearns certain projections as described below were
prepared by the Company's management and were made available to Bear
Stearns (the "Projections").
The Projections were not prepared with a view to complying with
published guidelines of the American Institute of Certified Public
Accountants or the SEC regarding projections and forecasts and have not
been reviewed by the Company's independent auditors. Therefore, none of
the Company, Bear Stearns or the Board assumes any responsibility
whatsoever for the accuracy of such information. The Projections were
based primarily on the maintenance of business trends and conditions
currently in effect, including maintenance of current zinc prices,
applying actual receipts of hazardous waste from the first quarter of 1996
to 1995's actual quarterly pattern of receipts and maintenance of first
quarter 1996 actual pricing. In addition, because the Projections
are based upon a variety of estimates and assumptions that are inherently
subject to significant business, economic and competitive uncertainties,
many of which are beyond the control of the Company, and upon assumptions
with respect to future business decisions which are subject to change,
there can be no assurance that they will be realized, and actual results
may vary materially from those projected.
The Company does not intend to update or otherwise revise the
Projections to reflect circumstances existing or developments occurring
after the preparation of the Projections. Information concerning the
Projections is included in this Supplement solely because such projections
were provided to Bear Stearns in connection with its rendering of an
opinion with respect to the fairness, from a financial point of view, of
the Offer.
<PAGE>
The Projections should be read in conjunction with the historical
financial statements of the Company set forth in the Offer to Purchase and
in the Company 1995 10-K and the Company March 1996 10-Q.
Horsehead Resource Development Company, Inc.
Summary Projected Financial Information
(Dollars in Thousands, Except Per Share and Ratio Amounts)
Year Ended
December 31, 1996
Income Statement:
Net sales . . . . . . . . . . . . . . . . . . . $88,500
Operating profit. . . . . . . . . . . . . . . . .15,700
Income before income taxes. . . . . . . . . . . .15,700
Income before extraordinary items . . . . . . . . 9,800
Net income. . . . . . . . . . . . . . . . . . . . 9,800
Per share(a):
Net income per common share. . . . . . . . . . . $0.27
Net income per common share
(and common share equivalents). . . . . . . . . . $0.27
Net income per share on a fully
diluted basis . . . . . . . . . . . . . . . . . . $0.27
Ratio of earnings to fixed charges. . . . . . . . .8.5x
(a) Average number of shares of common stock outstanding for the period
is 36,237,500.
Given the difficulty in estimating the Company's future financial results,
Bear Stearns was provided with a range of projected financial results for
the years ending December 31, 1997, 1998 and 1999 based on different trends
in business conditions. The projected financial results for the year ended
December 31, 1997 ranged from net income of $5.3 million, or $0.15 per
share, to $9.8 million, or $0.27 per share and were essentially unchanged
for each of the years ending December 31, 1998 and 1999.
HORSEHEAD RESOURCE DEVELOPMENT
COMPANY, INC.
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and
duly executed, will be accepted. The Letter of Transmittal, certificates
for Shares and any other required documents should be sent or delivered by
each stockholder of the Company or such stockholder's broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one
of its addresses set forth below.
The Depositary for the Offer is:
Chemical Mellon Shareholder Services, L.L.C.
By Mail: By Facsimile Transmission:
P.O. Box 817 (201) 296-4291 or 4293
Midtown Station Confirm by Telephone:
New York, NY 10018 (201) 296-4983
By Hand/Overnight Delivery:
120 Broadway
13th Floor
New York, NY 10271
______________________________________________________
Any questions or requests for assistance or for additional copies of
this Supplement, the Offer to Purchase, the Letter of Transmittal or the
Notice of Guaranteed Delivery may be directed to the Information Agent at
its address and the telephone numbers set forth below. Stockholders may
also contact their broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Offer. To confirm delivery of your
Shares, stockholders are directed to contact the Depositary.
The Information Agent for the Offer is:
Morrow & Co., Inc.
909 Third Avenue
New York, New York 10022
(212) 754-8000 (Call Collect)
or
1-800-662-5200 (Toll Free)
EXHIBIT (D)(13)
MATERIALS OF BEAR STEARNS
<PAGE>
Horsehead Resource Development Company, Inc.
Presentation to the Board of Directors
Horsehead Resource Development Company, Inc.
STRICTLY CONFIDENTIAL
April 30, 1996
BEAR STEARNS
<PAGE>
Horsehead Resource Development Company, Inc.
Transaction Summary
Transaction: Cash tender for all of the 1.7 million
shares of Horsehead Resource Development
Company, Inc. ("HRD" or the "Company")
Common Stock held by the public at $5.75
per share (the "Transaction")
Common Stock Ownership: 36.2 million outstanding shares of common
stock
Ownership breakdown:
Shares %
(MM) Total
--------- ---------
Horsehead Industries Inc. 18.2 50.4%
BUS Environmental Services 16.3 44.8%
Public 1.7 4.8%
--------- ---------
36.2 100.0%
Transaction Rationale: Only 189 common stockholders of record
(below delisting threshold)
Average daily trading volume less than
6,000 shares (last 3 months)
Only 1.7 million shares or $9.6 million of
stock in public float
No active research coverage or institutional
following
Transaction Structure: 13 E-3 Going Private Transaction
Public shares to be repurchased by HRD
through cash tender offer
Delisting of remaining shares following
completion of tender offer
BEAR STEARNS Page 1
<PAGE>
Horsehead Resource Development Company, Inc.
Fairness Opinion Summary and Methodology
BSC Opinion: We believe the proposed Transaction is fair,
from a financial point of view, to the public
shareholders of HRD. In reaching our opinion,
we have considered the following:
Financial Analysis: Detailed analysis and discussions with
management concerning a variety of topics
including:
- historical and projected financial
performance
- recent competitive and regulatory
developments
- key factors affecting financial
performance (zinc prices, EAF dust
receipts and pricing)
Review of Public HRD public filings (10K, 10Q, Proxy, press
Documentation: releases, etc.)
Industry research reports
Discussions with research staff
Industry trade associations and publications
Valuation Methodology: Our opinion is based, in part, on the factors
discussed above together with the following
analyses and considerations:
- historical trading values
- going concern valuation
- publicly traded comparable companies
- relevant mergers and acquisition
transactions
- discounted cash flow analysis
no control premium required
BEAR STEARNS Page 2
<PAGE>
Horsehead Resource Development Company, Inc.
Historical Financial Performance
Key Observations: Since the IPO in June 1990, HRD's operating
performance has been mixed.
Operating earnings peaked at $30.7 million in
1990 and hit a low of $6.1 million in 1991
Operating performance generally affected by changes
in zinc prices and waste processing fees
1995 operating earnings of $26.1 million
represented a decline of 11% versus 1994
Operating earnings in second half of 1995 were
down 31% compared to prior year
First quarter operating earnings expected to be
down by 35%
<TABLE>
Summary Operating Data:
<CAPTION>
1990 1991 1992 1993<F1> 1994<F2> 1995
-------- -------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Service Fees
EAF Receipts (000 Tons) 351 351 368 379 405 388
Service Fee ($/Ton) $78 $103 $128 $144 $151 $151
Product Sales
Zinc Calcine Tons (000) 31 62 82 84 93 89
Average Price per Ton $689 $456 $540 $376 $413 $432
Average Zinc Price ($/lb.) $0.69 $0.51 $0.56 $0.49 $0.45 $0.47
Summary Financial Data:
Revenues $54.7 $71.1 $100.8 $98.2 $103.3 $101.5
EBTIDA 33.9 16.6 35.4 24.3 39.6 36.6
Operating Income 30.7 6.1 23.8 14.6 29.3 26.1
Reported EPS $0.58 $0.16 $0.38 ($0.01) $0.31 $0.45
Adjusted EPS $0.58 $0.16 $0.38 $0.23 $0.48 $0.45
<FN>
<F1>
(a)Excludes $12.9 million in non-recurring charges.
<F2>
(b)Excludes $6.6 million in non-recurring charges.
</FN>
</TABLE>
BEAR STEARNS Page 3
<PAGE>
Horsehead Resource Development Company, Inc.
Financial Projections
Review of management projections for the 1996 - 1999 period.
Base Case for 1996
Major assumptions for 1996 included:
-Zinc prices maintained at the current level for the remainder
of 1996;
-EAF dust receipts projected on the basis of applying actual
receipts from the first quarter of 1996 to 1995's actual
quarterly pattern of receipts;
-Service fee pricing based upon maintenance of first quarter
1996 actual pricing; and
-Reduced pricing for sales of zinc calcine to ZCA of $4 million
based upon yet to be concluded renegotiations with ZCA in
1996.
BEAR STEARNS Page 4
<PAGE>
Horsehead Resource Development Company, Inc.
Financial Projections
<TABLE>
Base Case for 1996
<CAPTION>
1995A 1996E % Change
---------- ---------- --------------
<S> <C> <C> <C>
Revenue Data:
Service Fees
Waste Receipts (000 tons) 405.7 377.4 (7.0%)
Service Fee ($/Ton) $151.0 $145.0 (4.0%)
Product Sales
Zinc Calcine Tons (000) 89.3 86.0 (3.7%)
Avg Zinc Price ($/lb.) $0.47 $0.47 0.0%
Income Statement:
Total Revenue $101.5 $88.5 (13.0%)
Cost of Goods Sold (61.5) (58.9)
---------- ---------- --------------
Gross Profit 40.0 29.5 (26.2%)
S,G&A (11.9) (11.9)
R&D (2.0) (2.0)
---------- ---------- --------------
Operating Profit 26.1 15.7 (39.8%)
Interest Income 2.2 2.1
Interest Expense (2.1) (2.1)
---------- ---------- --------------
Pre-Tax Income 26.1 15.7 (39.8%)
Taxes (9.8) (5.8)
Net Income 16.4 9.8
---------- ---------- --------------
Reported EPS $0.45 $0.27 (40.0%)
Other Data:
EDITDA $36.7 $26.2 (28.6%)
Capital Expenditures 4.1 12.0
</TABLE>
BEAR STEARNS Page 5
<PAGE>
Horsehead Resource Development Company, Inc.
Financial Projections
Management projected several scenarios for the 1996 to 1999 period
which it believes to be within the realm of probable outcomes. The
most conservative and optimistic cases are presented below:
<TABLE>
(1) Optimistic case.
(2) Conservative case.
<CAPTION>
1996 1997 1998 1999
-------------------- ---------------- ----------------- -----------------
(1) (2) (1) (2) (1) (2) (1) (2)
----------- -------- ------- ------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assumptions:
Service Fees
Waste Receipts (000 tons) 400.0 377.4 400.0 377.4 400.0 377.4 400.0 377.4
Process Fee ($/Ton) $145.0 $141.0 $136.0 $136.0 $136.0 $136.0 $136.0 $136.0
Product Sales
Zinc Calcine Tons (000) 90.1 86.0 71.8 67.8 71.8 67.8 71.8 67.8
Avg Zinc Price ($/lb.) $0.47 $0.47 $0.50 $0.50 $0.50 $0.50 $0.50 $0.50
Income Statement:
Total Revenue $98.6 $86.9 $89.5 $80.7 $89.5 $80.8 $89.5 $80.8
Cost of Goods Sold (60.8) (60.0) (60.8) (58.9) (60.4) (58.7) (60.1) (58.5)
----------- -------- ------ ------- -------- ------- -------- --------
Gross Profit 37.9 27.9 28.8 21.8 29.1 22.0 29.5 22.2
S,G&A (11.9) (11.9) (11.9) (11.9) (11.9) (11.9) (11.9) (11.9)
R&D (2.0) (2.0) (2.0) (2.0) (2.0) (2.0) (2.0) (2.0)
----------- -------- ------ ------- -------- ------- -------- --------
Operating Profit 24.0 14.1 14.9 7.9 15.3 8.2 15.6 8.4
Interest Income 2.2 2.1 2.8 2.6 3.2 2.8 3.6 3.1
Interest Expense (2.1) (2.1) (2.1) (2.1) (2.1) (2.1) (2.1) (2.1)
----------- -------- ------ ------- -------- ------- -------- --------
Pre-Tax Income 24.1 14.1 15.5 8.3 16.3 8.8 17.1 9.3
Taxes (8.9) (5.2) (5.8) (3.1) (6.1) (3.3) (6.3) (3.4)
Net Income 15.2 8.9 9.8 5.3 10.3 5.6 10.8 5.9
----------- -------- ------ ------- -------- ------- -------- --------
Reported EPS $0.42 $0.25 $0.27 $0.15 $0.28 $0.15 $0.30 $0.16
Other Data:
EBITDA 34.6 24.6 25.5 18.4 26.5 18.4 25.5 18.4
Capital Expenditures 14.0 12.0 7.0 8.0 7.0 8.0 7.0 8.0
</TABLE>
BEAR STEARNS Page 6
<PAGE>
Horsehead Resource Development Company, Inc.
Key Factors Impacting Financial Performance
We conducted independent analyses on the key factors impacting
financial performance.
- Outlook for zinc prices.
- Outlook for EAF dust generation.
- Outlook for EAF dust service fees.
BEAR STEARNS Page 7
<PAGE>
Horsehead Resource Development Company, Inc.
Outlook for Zinc Prices
Zinc prices have declined sharply from the levels that existed in
1988-1990, the causes of which are attributable to both sluggish
world demand and an excess supply situation created by exports from
the CIS. Recent historical data and the current outlook for zinc
prices is summarized below:
<TABLE>
<CAPTION>
Western World Inventory Inventory Ave Zinc
Consumption Annual Level Weeks LME Price Annual
(tons in 000) % Change (tons in 000) Consumption ($/lb.) % Change
<S> <C> <C> <C> <C> <C> <C>
Actual<F1>
1989 5,190 -1.4% 430.6 4.3 $0.78 NA
1990 5,200 0.2% 393.7 3.9 $0.69 -11.5%
1991 5,387 3.5% 502.2 4.9 $0.51 -24.1%
1992 5,348 -0.7% 860.6 8.4 $0.56 10.8%
1993 5,422 1.4% 1,272.6 12.2 $0.45 -22.4%
1994 5,865 8.2% 1,645.0 14.0 $0.52 30.2%
1995 6,226 6.2% 1,127.0 9.8 $0.47 -10.3%
Projected<F2>
1996 6,266 0.6% 1,367.0 11.4 $0.49 -3.8%
1997 6,493 3.6% 1,229.0 9.9 $0.55 12.2%
1998 6,673 2.8% 1,080.0 8.4 $0.61 10.9%
<FN>
<F1>
(1)Source: International Lead and Zinc Study Group (London).
<F2>
(2)Source: Brook Hunt (London) April 1996.
</FN>
</TABLE>
BEAR STEARNS Page 8
<PAGE>
Horsehead Resource Development Company, Inc.
Outlook for Zinc Prices
The Company's strong sensitivity to zinc prices is illustrated by the
following graph which depicts the level of zinc prices and the
trading price of the Company's common stock.
- - Graph depicting the decline of HRD stock price corresponding
approximately with the decline in the price of zinc -
Since the time of its IPO in 1990 at $14.50 per share (when zinc was
at $0.87 per pound), the Company's stock price has closely tracked the
decline in zinc prices, with a correlation co-efficient of 0.711.
BEAR STEARNS Page 9
<PAGE>
Horsehead Resource Development Company, Inc.
Outlook for EAF Dust Service Fees
- Historically, the Company has competed primarily against
hazardous waste ("Subtitle C") landfills.
- Beginning in 1994, declines in Subtitle C landfill rates
resulted in reduced pricing flexibility for Horsehead with
service fee rates remaining flat at approximately $151 per
ton.
- Subtitle C landfill competitors are offering EAF dust
disposal services at a cost of approximately $120 per ton
versus Horsehead's current average service fee of
approximately $150 per ton.
- In May of 1995, the EPA promulgated a rule making that allows
for the treatment and subsequent disposal in non-hazardous
("Subtitle D") landfills of up to all of the EAF dust
generated in the United States.
- Subtitle D landfill costs are substantially lower than
Subtitle C landfill costs.
<TABLE>
<CAPTION>
Service Fee / Ton EAF Tons Service Fees Operating Profit
-------------------- ------------------- -------------------- -----------------------
Quarter $/Ton % Chg<F1> (000) % Chg* $ Mil % Chg* $ Mil % Chg*
- -------- --------- -------- ------- --------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3Q95 $150.32 (0.0%) 89,568 (13.3%) $13,464 (13.5%) $5,231 (23.7%)
4Q95 148.01 (2.1%) 90,858 (8.8%) 13,448 (10.4%) 5,114 (37.2%)
1Q96 144.44 (6.6%) 95,268 (4.4%) 13,761 (13.4%) $4,500(E) (34.8%)
<FN>
<F1>
* Change vs. Prior Year.
</FN>
</TABLE>
BEAR STEARNS Page 10
<PAGE>
Horsehead Resource Development Company, Inc.
Outlook for EAF Dust Generation
The major sources for EAF dust within the steel industry are
minimills.
- Minimill capacity has doubled since 1986 to 45 million tons
per annum.
- The following table provides a summary of historical steel
industry production:
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Tons of steel (MM) 33.8 35.3 38.5 39.6 40.6
% Change (8.6%) 4.5% 9.1% 2.7% 2.7%
- Minimill capacity is forecasted to expand by as much as another
18.6 million tons by the end of the decade.
</TABLE>
BEAR STEARNS Page 11
<PAGE>
Horsehead Resource Development Company, Inc.
Historical Stock Price Performance
Weekly stock price and traded volume: 1993 - Present
- - HRD stock price graph displaying the daily closing price since
the beginning of 1993 and highlighting the points at which
significant events regarding HRD occurred. -
BEAR STEARNS Page 12
<PAGE>
Horsehead Resource Development Company, Inc.
Historical Stock Price Performance
A tender price of $5.75 exceeds approximately 88% of the traded
volume since 1993 and 81% since 1995.
- - Two bar graphs displaying the distribution of trading volume by
price for 1993 to Present and 1995 to Present, respectively. The
captions for the graphs are
Approximately 88% of traded volume since 1993 has been
below offer price of $5.75 per share
and
Approximately 81% of traded volume since 1995 has been
below offer price of $5.75 per share
BEAR STEARNS Page 13
<PAGE>
Horsehead Resource Development Company, Inc.
Historical Stock Price Performance
HRD versus peer group: Normalized Price Performance 1993 - Present
- - Graph displaying a comparison of HRD stock price performance since
1993 versus REN, ENSO, IMR, DJ Pollution Control Index -
BEAR STEARNS Page 14
<PAGE>
Horsehead Resource Development Company, Inc.
Historical Stock Price Performance
HRD versus peer group: Normalized Price Performance 1995 - Present
- - Graph displaying a comparison of HRD stock price performance
since 1995 versus REN, ENSO, IMR, DJ Pollution Control Index -
BEAR STEARNS Page 15
<PAGE>
Horsehead Resource Development Company, Inc.
Comparable Company Analysis
There are no publicly held companies that we would deem directly
comparable to Horsehead. For purposes of our analysis we selected
comparable companies based upon:
- The company had to be a U.S. publicly held company operating
in the recycling or hazardous waste industries and classified
under SIC codes ranging from 4952 to 4959;
- Availability of adequate financial and stock market data;
- Sales greater than $50 million;
- Companies that principally operated landfills were excluded;
and
- Companies were further screened based on similar customer
base, operating process and exposure to fluctuations in
commodity prices.
- Three companies met the above criteria:
* EnviroSource, Inc. (ENSO) - Leader in metals reclamation
and slag recycling for the
steel and aluminum
industries.
*IMCO Recycling, Inc. (IMR) - Largest independent recycler
of aluminum, beverage cans,
scrap and dross and other
byproducts of aluminum
manufacturing.
* Rollins Environmental Utilizes high temperature
Services, Inc. (REN) - rotary incinerators to
dispose of hazardous wastes.
BEAR STEARNS Page 16
<PAGE>
Horsehead Resource Development Company, Inc.
Comparable Company Analysis
Comparable operating statistics are presented below:
<TABLE>
<CAPTION>
Comparable Companies
--------------------------------
HRD ENSO IMR REN Avg.<F2>
12/95 12/95 12/95 12/95
----------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
LTM Financial Data
Sales $101.5 $264.7 $141.2 $228.9
EBIT 26.1 42.4 20.9 (33.7)
Net Income 16.4 10.5 12.5 (26.2)
Three-Year CAGRs
Sales 0.2% 4.4% 32.9% (3.3%) 18.7
Operating Income 3.1% 17.2% 26.4% NM 21.8%
EPS 5.8% NM 15.4% NM NM
One-Year Growth Rates
Sales (1.8%) 2.0% 39.6% 19.8% 20.5%
Operating Income (10.9%) 6.7% 29.1% NM 14.8%
EPS (6.3%) (15.4%) 26.1% NM NM
EPS Growth Rates
1995A vs. 1994A (6.3%) (15.4%) 26.1% NM NM
1996E vs. 1995A (40.0%)<F1> 27.3% 21.4% NM 24.4%
1997P vs. 1996E (44.4%)<F1> 53.6% 18.4% NM 36.0%
LTM Statistics
Gross Profit Margin 39.4% 25.8% 21.9% 13.1% 20.3%
EBITDA Margin 36.1% 28.7% 21.4% (2.0%) 20.1%
Net Margin 16.2% 4.0% 8.8% (11.4%) 6.4%
Return on Assets 12.7% 9.4% 15.0% (8.1%) 12.2%
<FN>
<F1>
(1)Based on Horsehead's current 1996 estimate.
<F2>
(2)Excludes negative values.
</FN>
</TABLE>
BEAR STEARNS Page 17
<PAGE>
Horsehead Resource Development Company, Inc.
Comparable Company Analysis
Comparable valuation statistics are presented below:
<TABLE>
<CAPTION>
Comparable Companies
------------------------------ Harmonic
HRD<F1> ENSO IMR REN Mean
----------- ---------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Enterprise Value to LTM:
Revenue 1.9x 1.7x 1.9x 1.1x 1.5x
EBITDA 5.2x 6.0x 8.9x NM 7.2x
EBIT 7.4x 10.7x 12.9x NM 11.7x
Enterprise Value to 1996E
Revenue 2.2x 1.7x 1.3x 0.9x 1.2x
EBITDA<F2> 7.3x 5.8x 7.0x 6.8x 6.7x
EBIT 12.3x 9.9x 9.2x 24.9x 12.0x
Price to:
LTM EPS 12.7x 16.7x 20.4 NM 18.3x
CY 1996E Calendar EPS 21.3x<F3> 12.9x 16.8x NM 14.6x
CY 1997P Calendar EPS 38.3x<F3> 8.4x<F4> 14.2x NM 10.6x
<FN>
<F1>
(1) Valuation multiples at tender price of $5.75 per share.
<F2>
(2) Assume 1996 D&A is equal to 1995 D&A for all companies except
ENSO.
<F3>
(3) Based on Horsehead's current 1996 estimate. Based on
Horsehead's Optimistic Scenario, the estimates would be 13.7x
and 22.3x, respectively.
<F4>
(4) 1997P P/E is for fiscal year due to the lack of published
estimated into the 1998 fiscal year.
</FN>
</TABLE>
BEAR STEARNS Page 18
<PAGE>
Horsehead Resource Development Company, Inc.
Precedent Merger and Acquisition Transactions
The number of recent comparable merger and acquisition transactions
in the metals reclamation/hazardous waste industry for which data
is available are limited.
- We have reviewed financial data and transaction multiples
for seven transactions involving companies in the recycling
waste management businesses for which data was available.
- The M&A multiples are based off of the preceding LTM period
which we believe in the case of Horsehead does not
accurately reflect the current value of the business in view
of the rapidly changing industry conditions.
- M&A multiples generally reflect the control premium which
is absent from the transaction.
<TABLE>
<CAPTION>
Precedent M&A Transactions
-------------------------------------
Harmonic
Valuation Multiples HRD<F1> High Low Mean
- -------------------------- ----------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Enterprise Value to LTM:
Revenue 1.9x 1.5x 0.4x 0.7x
EBITDA 5.2x 10.5x 5.6x 7.0x
EBIT 7.4x 17.7x 8.6x 11.9x
Equity Value to LTM:
Net Income 12.7x 27.8x 13.9x 17.4x
<FN>
<F1>
(1) Valuaton multples at tender price of $5.75 per share.
</FN>
</TABLE>
BEAR STEARNS Page 19
<PAGE>
Horsehead Resource Development Company, Inc.
Discounted Cash Flow Analysis
- We used the most optimistic and conservative projections
provided by Horsehead for the dividend stream and projected
net income.
- The terminal values applied to 1999 EBITDA assumed a range of
5.0x (equivalent to the current trading multiple) to 7.0x
(the harmonic mean derived in the precedent transaction
analysis).
- We calculated Horsehead's cost of equity capital using Capital
Asset Pricing Model and added a 2.0% increment to reflect
a small capitalization risk premium. We used the implied
cost of equity to calculate Horsehead's weighted average
cost of capital equal to approximately 13.0%.
<TABLE>
<CAPTION>
Discount Rate
-------------------------------------------------------------------------------------------
EBITDA 11.0% 13.0% 15.0%
Exit ----------------------------- ----------------------------- -----------------------------
Multiple Optimistic Conservative Optimistic Conservative Optimistic Conservative
- ---------- ------------ --------------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
5.0x $4.15 $3.06 $3.94 $2.92 $3.57 $2.66
6.0x $4.61 $3.40 $4.37 $3.23 $3.94 $2.93
7.0x $5.08 $3.73 $4.80 $3.54 $4.32 $3.20
</TABLE>
- At a tender offer price of $5.75, the public stockholders will
receive a premium of 13.2% to the high ($5.08) and 116.2% to
the low ($2.66) of the range.
- We have also performed a DCF analysis assuming HRD's projected
operating performance remains flat with 1995 levels. Using the
same range of discount rates and exit multiples results in per
share values ranging from $4.58 to $6.74 with a midpoint of
$5.73.
BEAR STEARNS Page 20
EXHIBIT (D) (14)
PRESS RELEASE
<PAGE>
Media Contact
(212) 527-3003
HORSEHEAD RESOURCE DEVELOPMENT GOING PRIVATE,
ANNOUNCES AMENDED TENDER OFFER AND FINAL EXTENSION
NEW YORK, NY, June 28, 1996 (NASDAQ-HHRD) Horsehead Resource
Development Co., Inc. (HRD) announced today that it has amended its tender
offer in order to increase the number of shares repurchased. The amended
offer is to repurchase 4,636,600 shares of HRD's common stock, including
all 1,751,600 shares held by its public stockholders and 2,885,000 shares
held by B.U.S Environmental Services, Inc. The offer will now expire on
July 12, 1996 at 5:00 p.m. HRD does not intend to further extend the
offer. As of June 27, 1996 a total of approximately 4,057,000 shares have
been tendered in response to the offer. The purchase price for each share
of common stock is $5.75 per share in cash. The offer is subject to various
terms and conditions described in offering materials that have been
distributed to public stockholders. Chemical Mellon Shareholder Services
L.L.C. is the depositary and Morrow & Co., Inc. is the information agent.
After the repurchase, HRD's shares will no longer be listed on NASDAQ or
registered under the Federal securities laws.
EXHIBIT (K)
AMENDMENT TO ISSUER TENDER OFFER STATEMENT ON SCHEDULE 13e-4
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
SCHEDULE 13E-4/A
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
AMENDMENT NO. 4
HORSEHEAD RESOURCE DEVELOPMENT COMPANY, INC.
(Name of Issuer and Person Filing Statement)
Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
440699-10-6
(CUSIP Number of Class of Securities)
William M. Quirk, President
Horsehead Resource Development Company, Inc.
110 East 59th Street
New York, New York 10022
(212) 527-3003
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person Filing Statement)
Copy to:
Morris Orens, Esq.
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
(212) 758-9500
May 16, 1996
(Date Tender Offer First Published, Sent or Given to Security Holders)
calculation of filing fee
Transaction Valuation* Amount of Filing Fee
$26,660,450 $5,332.09
* Based upon purchase of 4,636,600 shares at $5.75 per share.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)
(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $2,014.34
Form or Registration No.: SC13E4
Filing Party: Horsehead Resource Development Company, Inc.
Date Filed: May 16, 1996, June 14, 1996, June 24, 1996, June 27, 1996
<PAGE>
This Amendment No. 4 dated June 28, 1996 amends and supplements the Issuer
Tender Offer Statement on Schedule 13E-4 ("Schedule 13E-4") filed with the
Securities and Exchange Commission on May 16, 1996 and amended on June 14,
1996, June 24, 1996 and June 27, 1996 by Horsehead Resource Development
Company, Inc., a Delaware corporation (the "Company"), relating to the
Company's offer to purchase up to 4,636,600 shares of its common stock, par
value $.01 per share (the "Shares"), for $5.75 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated May 16, 1996 (the "Offer to Purchase"), as amended
and supplemented by the Supplement thereto, dated June 28, 1996 (the
"Supplement") and in the Letter of Transmittal, dated May 16, 1996 (which,
as amended from time to time, together constitute the "Offer"), copies of
which have been attached to the Schedule 13E-4 as Exhibits (a)(1), (a)(2)
and (a)(12), respectively. This Amendment No. 4 is being filed
concurrently with Amendment No. 4 to the Rule 13E-3 Transaction Statement
of the Company.
ITEM 1. SECURITY AND ISSUER.
The information set forth in Item 1(b) of the Schedule 13E-4 is
hereby amended and supplemented as follows:
(b) Reference is hereby made to the Supplement, which is herein
incorporated by reference.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information set forth in Item 2 of the Schedule 13E-4 is hereby
amended and supplemented as follows:
(a)-(b) Reference is hereby made to the Supplement, which is
herein incorporated by reference.
ITEM 8. ADDITIONAL INFORMATION.
The information set forth in Item 8 of the Schedule 13E-4 is hereby
amended and supplemented as follows:
(e) Reference is hereby made to the Supplement and press release,
copies of which are attached hereto as Exhibits (a)(12) and
(a)(13), respectively, and are herein incorporated by reference
in their entirety.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(12) Supplement to Offer to Purchase, dated June 28, 1996.
(a)(13) Press Release issued by the Company on June 28, 1996.
<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.
HORSEHEAD RESOURCE DEVELOPMENT
COMPANY, INC.
By: /s/ William M. Quirk
William M. Quirk
President
Date: June 28,1996
