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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION
14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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HITOX CORPORATION OF AMERICA
(Name of Subject Company)
HITOX CORPORATION OF AMERICA
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.25 PER SHARE
(Title of Class of Securities)
433658101
(CUSIP Number of Class of Securities)
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WILLIAM B. HAYES
ACTING CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD OF DIRECTORS
HITOX CORPORATION OF AMERICA
722 Burleson Street
Corpus Christi, Texas 78402
(512) 882-5175
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement)
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With a Copy To:
Mark D. Wigder, Esq.
Jenkens & Gilchrist, a Professional Corporation
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
(214) 855-4500
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This Amendment No. 1 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 filed on April 5, 1999
(as amended and supplemented, the "Schedule 14D-9") relating to the unsolicited
tender offer by Paulson Acquisition, LLC, a Delaware limited liability company
("Paulson Acquisition") , to purchase up to 1,000,000 of the Shares currently
outstanding (the "Publicly Held Shares) at $2.50 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated March 23, 1999 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, together with the Offer to Purchase, as each has
been and may hereafter be amended and supplemented from time to time,
constitutes the "Paulson Offer"). Unless otherwise indicated, all capitalized
terms used but not defined herein shall have the meaning assigned to them in the
Schedule 14D-9.
Paulson Acquisition is a wholly-owned limited liability company of the
Paulson Ranch, Ltd., a Texas limited partnership ("Paulson Ranch"). The general
partner of Paulson Ranch is Paulson Ranch Management, L.L.C., a Texas limited
liability company ("Paulson Ranch Management"). The members of Paulson Ranch
Management are Mr. Bernard A. Paulson ("Mr. Paulson") and his wife. The Paulson
Offer is disclosed in a Tender Offer Statement on Schedule 14D-1 dated March 23,
1999, as amended on April 2 and April 8, 1999 (and as may be amended and
supplemented from time to time, the "Schedule 14D-1"), which has been filed with
the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended, and the rules promulgated by the
Commission thereunder. As set forth in Schedule 14D-1, the address of the
principal executive offices of Paulson Acquisition is c/o Founders Equity Group,
Inc., 2602 McKinney Avenue, Suite 220, Dallas, Texas 75204.
ITEM 4. THE SOLICITATION OR RECOMMENDATION. Item 4 of the Schedule 14D-9 is
amended and supplemented as follows:
(a) RECOMMENDATION THAT STOCKHOLDERS DO NOT TENDER.
On April 15, 1999, the Company received a new and revised proposal (the
"Revised Zemex Proposal") from Zemex Corporation ("Zemex") offering to acquire
all of the Company's outstanding shares for $3.00 per share in cash. If approved
by the Company's Board of Directors and the special committee thereof formed to
consider such proposal, the proposed transaction would be effected by a merger
of the Company with a subsidiary of Zemex. In the merger, the Company's
stockholders would receive $3.00 in cash for each share of Hitox common stock.
If approved by the Company's Board and the special committee, the transaction
would require approval of the Company's stockholders and satisfaction of other
customary conditions. The special committee intends to hire a financial adviser
to assist it in considering the Revised Zemex Proposal. The Revised Zemex
Proposal contains a number of conditions, including Zemex's satisfaction with
the results of its due diligence investigation of the Company, the negotiation
and execution of an acquisition agreement that is acceptable to the parties, and
receipt by Zemex of agreements from stockholders of the Company affiliated with
existing directors to vote their shares in favor of the transaction.
POSITION OF THE COMPANY. At a meeting of the special committee held on
April 16, 1999, the special committee voted to disapprove the Paulson Offer and
to recommend that the Public Stockholders refuse to tender their shares in the
Paulson Offer. Stockholders who have previously tendered their shares have the
right to withdraw such shares. To exercise such withdrawal rights, stockholders
should contact Mr. Paulson's information agent, Founder's Equity Group, Inc. at
2602 McKinney Avenue, Suite 220, Dallas, Texas 75204 (telephone: 1-888-858-7303)
on or before April 19, 1999.
The special committee had previously requested that Mr. Paulson amend
his Offer to Purchase to include certain forward-looking information relating to
the Company requested by the Board. On April 8, 1999, Mr. Paulson filed the
information requested by the special committee with the SEC in an amendment to
his filing on Schedule 14D-1. Each stockholder may obtain copies of such
information at the SEC's Website, www.sec.gov or from Founder's Equity Group,
Inc., Mr. Paulson's information agent, at 2602 McKinney Avenue, Suite 220,
Dallas, Texas 75204 (telephone 1-888-858- 7303). On April 15, 1999, Mr. Paulson
issued a press release, similarly noting such filing and the availability of
such information. The special committee is satisfied with the scope of the
information so filed and with the manner of its dissemination.
(b) REASONS FOR THE CHANGE IN POSITION WITH RESPECT TO THE PAULSON OFFER
The special committee has withdrawn the Company's previous neutral
position with respect to the Paulson Offer, and has agreed to recommend that the
Public Stockholders refuse to tender their shares in the Paulson Offer.
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This recommendation was based on the receipt of the Revised Zemex
Proposal which would provide $3.00 per share to all stockholders, as contrasted
with the $2.50 per share offered by Mr. Paulson for 1,000,000 of the Company's
Shares.
The special committee noted, in particular, that Mr. Paulson's offer
was not only for a lower price, but was for only part of the outstanding Shares.
A fully subscribed Paulson Offer would substantially reduce the public float in
the Company's shares, possibly resulting in an illiquid market for the remaining
stockholders who chose not to tender.
The special committee also took into consideration that the Revised
Zemex Proposal might possibly not be consummated, and consequently, a risk
exists that stockholders who fail to tender in the Paulson Offer may nonetheless
not realize the purchase price contemplated by the Revised Zemex Proposal.
However, in light of the higher price provided by the Revised Zemex Proposal, as
contrasted by the Paulson Proposal, and the risk of illiquidity that might
result with respect to the public trading in the Company's shares if the Paulson
Offer is fully subscribed, the special committee determined that the Revised
Zemex Proposal was more favorable and the Company's stockholders should refuse
to tender their Shares in the Paulson Offer. There is no assurance that the
Revised Zemex Proposal will be consummated, and stockholders should take such
uncertainty into consideration in assessing the Paulson Offer.
The special committee is now comprised of Messrs. William B. Hayes,
Christopher J. McGougan, Kevin S. Moore and Michael A. Nicolais. All of such
members are non-management directors, except that Mr. Hayes assumed the position
of acting Chief Executive Officer folowing Mr. Paulson's stepping down from that
position shortly following commencement of the Paulson Offer. Mr. Robert J.
Cresci has withdrawn from the special committee, and did not participate or vote
in respect of the deliberations of the special committee and its determination
to change the Company's position with respect to the Paulson Offer.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 1 to the Statement
is true, complete and correct.
Dated: April 16, 1999
HITOX CORPORATION OF AMERICA
By: /s/ William B. Hayes
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Name: William B. Hayes
Title: Acting Chief Executive Officer
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