<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
SCHEDULE 14D-9/A
(AMENDMENT NO. 7)
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
________________
THE LOEWEN GROUP INC.
(Name of Subject Company)
THE LOEWEN GROUP INC.
(Name of Person(s) Filing Statement)
COMMON SHARES, WITHOUT PAR VALUE
(AND ASSOCIATED SHARE PURCHASE RIGHTS)
6.00% CUMULATIVE REDEEMABLE CONVERTIBLE FIRST
PREFERRED SHARES, SERIES C, WITHOUT PAR VALUE
(Title of Class of Securities)
54042L100
54042L407
(CUSIP Number of Class of Securities)
________________
Peter S. Hyndman
Vice President, Law and Corporate Secretary
The Loewen Group Inc.
4126 Norland Avenue
Burnaby, British Columbia
Canada V5G 3S8
(604)299-9321
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement)
WITH A COPY TO:
Lyle G. Ganske, Esq.
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
(216) 586-3939
================================================================================
<PAGE>
This statement amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9, as amended (the "Schedule 14D-9") of The Loewen
Group Inc., a corporation incorporated under the laws of British Columbia,
Canada (the "Company"), initially filed with the Securities and Exchange
Commission (the "Commission") on October 10, 1996, with respect to the proposed
exchange offers (the "Second SCI Proposal") announced on October 2, 1996, and
disclosed in a Registration Statement on Form S-4, as amended (the "Registration
Statement") initially filed with the Commission on October 3, 1996, by New
Service Corporation International, a Delaware corporation ("New SCI"), and SCI
Holdings Canada, Inc., a company incorporated under the laws of British
Columbia, Canada ("Canadian SCI"), each a wholly owned direct or indirect
subsidiary of Service Corporation International, a Texas Corporation ("SCI").
The proposed exchange offers contemplated by the Second SCI Proposal have not
yet commenced.
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Schedule 14D-9.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Item 8 is amended and supplemented hereby by inserting the following
at the end of the sixth paragraph (after insertion of all prior amendments) of
Item 8(a):
A copy of the order of the United States District Court for the
Eastern District of New York, dated December 11, 1996, granting the Company's
motion for expedited discovery is included as Exhibit 54 to this Schedule 14D-9
and is incorporated herein by reference.
Item 8 is amended and supplemented hereby by inserting the following
new paragraph after the sixth paragraph (after insertion of the amendment
described above and all prior amendments) of Item 8(a):
On December 11, 1996, SCI filed its answer to the amended complaint of
the Company, LGII, and Ridge Chapels, Inc. A copy of SCI's answer is included as
Exhibit 55 to this Schedule 14D-9 and is incorporated herein by reference. In
its answer, SCI asserts counterclaims substantially similar to the claims made
against the Company in SCI's action, which was dismissed on November 29, 1996,
filed in the United States District Court for the Southern District of Texas,
except that SCI has not reasserted as counterclaims its claims relating to its
allegation that the Company lacks standing to bring a federal antitrust action
against SCI (although in its answer SCI does assert as an affirmative defense
that the Company lacks standing). The Company believes that SCI's counterclaims
are without merit and intends to contest the counterclaims vigorously.
1
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Except for Exhibits 54 and 55 which are filed herewith, the following
Exhibits were previously filed with the Schedule 14D-9:
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<S> <C>
Exhibit 1 -- Letter from L. William Heiligbrodt to Raymond L. Loewen, dated September 17, 1996.
Exhibit 2 -- Letter from L. William Heiligbrodt to Raymond L. Loewen, dated September 18, 1996.
Exhibit 3 -- Letter to Shareholders from Raymond L. Loewen, dated September 24, 1996.
Exhibit 4 -- Letter to L. William Heiligbrodt from Raymond L. Loewen, dated September 24, 1996.
Exhibit 5 -- [Intentionally omitted].
Exhibit 6 -- Press Release issued by Loewen, dated September 17, 1996.
Exhibit 7 -- [Intentionally omitted].
Exhibit 8 -- Press Release issued by Loewen, dated September 24, 1996.
Exhibit 9 -- Press Release issued by Loewen, dated September 27, 1996.
Exhibit 10 -- Press Release issued by Loewen, dated October 1, 1996.
Exhibit 11 -- Press Release issued by SCI, dated October 2, 1996.
Exhibit 12 -- Press Release issued by Loewen, dated October 2, 1996.
Exhibit 13* -- Press Release issued by Loewen, dated October 10, 1996.
Exhibit 14 -- Complaint in KRIM V. BAGNELL, ET AL. (Superior Court of the State of California).
Exhibit 15 -- First Amended Complaint in SERVICE CORPORATION INTERNATIONAL V. THE
LOEWEN GROUP INC. (United States District Court for the Southern District of Texas).
Exhibit 16 -- Complaint in THE LOEWEN GROUP INC. V. SERVICE CORPORATION
INTERNATIONAL, ET AL. (United States District Court for the Eastern District of New York).
Exhibit 17* -- Opinion letter of Smith Barney Inc. to Loewen Board of Directors, dated October 10, 1996.
Exhibit 18* -- Opinion letter of Nesbitt Burns Inc. to Loewen Board of Directors, dated October 10, 1996.
Exhibit 19 -- Pages 15 - 20 and 32 - 34 of The Loewen Group Inc. Proxy Statement, dated April 9, 1996.
Exhibit 20 -- The Loewen Group Inc. Employee Stock Option Plan (United States).
Exhibit 21 -- The Loewen Group Inc. Employee Stock Option Plan (Canada).
Exhibit 22 -- Form of The Loewen Group Inc. Employee Stock Option Plan Agreement (Directors of
Loewen Group International, Inc.).
Exhibit 23 -- Form of The Loewen Group Inc. Employee Stock Option Plan Agreement (Directors of
subsidiaries).
Exhibit 24 -- Form of The Loewen Group Inc. Employee Stock Option Plan Agreement (employees).
Exhibit 25 -- The Loewen Group Inc. Employee Share Purchase Plan (United States).
Exhibit 26 -- The Loewen Group Inc. Employee Share Purchase Plan (Canada).
</TABLE>
2
<PAGE>
<TABLE>
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Exhibit 27 -- The Loewen Group Inc. 1994 Management Equity Investment Plan.
Exhibit 28 -- Form of The Loewen Group Inc. 1994 Management Equity Investment Plan Investment
Option Agreement.
Exhibit 29 -- The Loewen Group Inc. Supplement to 1994 Management Equity Investment Plan.
Exhibit 30 -- The Loewen Group Inc. Addendum to 1994 Management Equity Investment Plan.
Exhibit 31 -- Form of The Loewen Group Inc. Management Equity Investment Plan Borrowing
Agreement.
Exhibit 32 -- Form of The Loewen Group Inc. Management Equity Investment Plan Executive
Agreement.
Exhibit 33 -- Form of The Loewen Group Inc. Management Equity Investment Plan 1994 Exchangeable
Floating Rate Debenture due July 15, 2001.
Exhibit 34 -- The Loewen Group Inc. 1994 Outside Director Compensation Plan.
Exhibit 35 -- The Loewen Group Inc. Employee Stock Bonus Plan.
Exhibit 36 -- The Loewen Group Inc. Shareholder Protection Rights Plan Agreement and Amendments.
Exhibit 37 -- Employment Agreement with Timothy R. Hogenkamp.
Exhibit 38 -- [Intentionally omitted].
Exhibit 39 -- Form of Indemnification Agreement with Outside Directors.
Exhibit 40 -- Form of Indemnification Agreement with Officers.
Exhibit 41 -- Form of The Loewen Group Inc. Severance Agreement.
Exhibit 42 -- The Loewen Group Inc. Severance Pay Plan.
Exhibit 43* -- Letter to Shareholders from Raymond L. Loewen, dated October 10, 1996.
Exhibit 44 -- Press Release issued by Loewen, dated October 14, 1996.
Exhibit 45 -- Press Release issued by Loewen, dated October 17, 1996.
Exhibit 46 -- Press Release issued by Loewen, dated October 20, 1996.
Exhibit 47 -- Press Release issued by Loewen, dated November 1, 1996.
Exhibit 48 -- Press Release issued by Loewen, dated November 3, 1996.
Exhibit 49 -- Memorandum Opinion dated November 27, 1996 (United States District Court for the
Southern District of Texas).
Exhibit 50 -- Press Release issued by Loewen, dated December 1, 1996.
Exhibit 51 -- Form of The Loewen Group Inc. Regional Executive Severance Agreement.
Exhibit 52 -- Form of The Loewen Group Inc. Consultant Severance Agreement.
Exhibit 53 -- Press Release issued by Loewen, dated December 11, 1996.
</TABLE>
3
<PAGE>
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Exhibit 54 -- Order for Expedited Discovery dated December 11, 1996
(United States District Court for the Eastern District of New York).
Exhibit 55 -- Answer in THE LOEWEN GROUP INC. V. SERVICE CORPORATION INTERNATIONAL, ET AL.
(United States District Court for the Eastern District of New York).
- -------------------------
</TABLE>
* Exhibits distributed to Shareholders.
4
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Schedule 14D-9 is true, complete
and correct.
THE LOEWEN GROUP INC.
By: /s/ Peter S. Hyndman
-----------------------------------
Name: Peter S. Hyndman
Title: Vice President, Law and
Corporate Secretary
Dated: December 16, 1996
<PAGE>
EXHIBIT 54
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
- ----------------------------------------
)
THE LOEWEN GROUP INC., et al., ) Civil Action No.
)
) 96 CIV 5004 (FB) (JLC)
)
Plaintiffs, )
v. )
) ORDER FOR
SERVICE CORPORATION ) EXPEDITED DISCOVERY
INTERNATIONAL, INC., et al., ) -------------------
)
Defendants. )
)
- ----------------------------------------
Upon consideration of the submissions and arguments of counsel at the
conference before the Court on December 10, 1996, the transcript of the
conference before Judge Block on December 4, 1996 and related proceedings, and
for good cause shown,
IT IS HEREBY ORDERED that expedited discovery on Plaintiffs' motion for
Preliminary Injunction shall proceed. Schedules for document productions,
depositions, expert and other discovery are to be set on an expedited basis
independent of proceedings before the Federal Trade Commission, with completion
of discovery to occur not later than February 28, 1997.
FURTHER ORDERED that counsel are to confer with respect to agreement on
the scheduling of discovery by December 13, 1996, and are to advise the Court.
<PAGE>
A further conference concerning disputes, if any, on the scope of expedited
discovery is scheduled for January 7, 1997 at 4:00 p.m., with letter submissions
to be made by counsel to the Court in advance of the conference.
Dated: Brooklyn, New York
December 11th , 1996
------
SO ORDERED:
/s/ John L. Caden
- ---------------------------------
US Magistrate Judge John L. Caden
<PAGE>
EXHIBIT 55
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
- ------------------------------------x
:
THE LOEWEN GROUP INC., LOEWEN :
GROUP INTERNATIONAL, INC., and :
RIDGE CHAPELS, INC., :
:
Plaintiffs, :
:
v. : No. CV 96-5004 (FB)
:
SERVICE CORPORATION INTERNATIONAL, :
INC., EQUITY CORPORATION :
INTERNATIONAL, INC., NEW SERVICE :
CORPORATION INTERNATIONAL, INC., :
and SCI HOLDINGS CANADA, INC., :
:
Defendants. :
:
AND :
:
SERVICE CORPORATION INTERNATIONAL, :
INC., NEW SERVICE CORPORATION :
INTERNATIONAL, INC., and :
SCI HOLDINGS CANADA, INC., :
:
Counterclaim-Plaintiffs, :
:
v. :
:
THE LOEWEN GROUP INC., :
LOEWEN GROUP INC., and :
LOEWEN GROUP INTERNATIONAL, INC., :
:
Counterclaim-Defendant. :
- ------------------------------------x
ANSWER OF THE SCI DEFENDANTS TO VERIFIED
FIRST AMENDED COMPLAINT AND COUNTERCLAIMS
-----------------------------------------
Defendants Service Corporation International ("SCI"), New Service
Corporation International, and SCI Holdings Canada, Inc., by their undersigned
attorneys, hereby answer the Verified First Amended Complaint, and counterclaim
against plaintiffs The Loewen Group, Inc. and Loewen Group International, Inc.,
as follows:
<PAGE>
1. Deny the allegations of paragraph 1 of the Verified First Amended
Complaint, except admit that plaintiffs seek injunctive relief and admit that
plaintiffs purport to bring claims under, and to base subject matter
jurisdiction upon, the statutes cited therein.
2. Admit the allegations of paragraph 2 of the Verified First
Amended Complaint.
3. Admit the allegations of paragraph 3 of the Verified First
Amended Complaint, except deny knowledge or information sufficient to form a
belief as to the truth of the allegation that The Loewen Group Inc. directly or
indirectly owns 100 percent of the stock of Loewen Group International, Inc.
4. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 4 of the Verified First Amended
Complaint, except admit that The Loewen Group Inc. is the second largest owner
and operator of funeral homes, cemeteries, and crematoria in the United States.
5. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 5 of the Verified First Amended
Complaint.
6. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 6 of the Verified First Amended
Complaint.
7. Admit the allegations of paragraph 7 of the Verified First
Amended Complaint.
8. Admit the allegations of paragraph 8 of the Verified First
Amended Complaint, except deny that no principal
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<PAGE>
place of business has yet been established for New Service Corporation
International and aver that New Service Corporation International's principal
executive offices are located at 1929 Allen Parkway, Houston, Texas 77019.
9. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 9 of the Verified First Amended
Complaint, except admit that SCI Canada Holdings, Inc. is a wholly owned
subsidiary of New Service Corporation International, incorporated under the laws
of British Columbia; deny that no principal place of business has yet been
established for SCI Canada Holdings, Inc.; and aver that SCI Holdings Canada
Inc.'s principal executive offices are located at 3789 Royal Oak Avenue,
Burnaby, British Columbia V5G 3MI.
10. Admit the allegations of paragraph 10 of the Verified First
Amended Complaint, except deny that New Service Corporation International has no
assets; and deny that New SCI was formed for the sole purpose of effecting SCI's
acquisition of TLGI.
11. Deny the allegations of paragraph 11 of the Verified First
Amended Complaint, except admit that SCI, through subsidiaries, is the largest
owner and operator of funeral homes, cemeteries, and crematoria in the United
States; respectfully refer the Court to SCI's 1995 Annual Report for the
contents thereof; aver that SCI, through subsidiaries, owned and operated 2,832
funeral homes, 331 cemeteries, and 146 crematoria throughout the world as of
June 30, 1996; and aver that SCI,
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<PAGE>
through subsidiaries, owned and operated 981 funeral homes and 317 cemeteries in
the United States as of June 30, 1996.
12. Deny the allegations of paragraph 12 of the Verified First
Amended Complaint, except admit that SCI, through subsidiaries, owns and
operates funeral homes, cemeteries, and crematoria throughout the world; admit
that SCI is directing its exchange offer to shareholders of The Loewen Group
Inc.; and respectfully refer the Court to SCI's 1995 Annual Report for the
contents thereof.
13. Deny the allegations of paragraph 13 of the Verified First
Amended Complaint.
14. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 14 of the Verified First Amended
Complaint, except admit that Equity Corporation International is a corporation
organized under the laws of the State of Delaware with its principal place of
business at 415 South First Street, Suite 210, Lufkin, Texas 75901 and admit
that Equity Corporation International is the fourth largest publicly traded
death care company in the United States.
15. Deny the allegations of paragraph 15 of the Verified First
Amended Complaint, except admit that SCI owns approximately 42 percent of Equity
Corporation International; admit that T. Craig Benson is a director of SCI and
ECI; and admit that Thomas R. McDade has appeared as counsel for SCI in a
lawsuit in the U.S. District Court for the Southern District of Texas and
respectfully refer the Court to the September 21, 1996
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<PAGE>
New York Times article and the Business Week article for the contents thereof.
- -------------- -------------
16. Deny the allegations of paragraph 16 of the Verified First
Amended Complaint.
17. Deny the allegations of paragraph 17 of the Verified First
Amended Complaint.
18. Deny the allegations of paragraph 18 of the Verified First
Amended Complaint, except admit that SCI has announced its intention to launch a
stock-for-stock exchange offer, pursuant to which it will offer to acquire all
of the stock of The Loewen Group Inc.; admit that, upon consummation of such
exchange offer, New Service Corporation International and SCI Holdings Canada,
Inc. will issue stock to be exchanged for shares of The Loewen Group Inc.; admit
that, upon consummation of such exchange offer, SCI Holdings Canada, Inc. will
own all of the shares tendered to SCI Holdings Canada, Inc.; and admit that, by
this lawsuit, plaintiffs seek injunctive relief.
19. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 19 of the Verified First Amended
Complaint, except admit that the FTC had opened an inquiry into whether SCI's
proposed acquisition of The Loewen Group Inc. will have anti-competitive effects
in selected local areas; admit that enforcement agencies in the states mentioned
therein are conducting similar investigations; and aver that such inquiries are
routine in matters of this sort.
20. Deny the allegations of paragraph 20 of the Verified First
Amended Complaint, except admit that funeral
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<PAGE>
services include some or all of a group of services provided upon the death of
an individual; admit that such services may include the removal of the body from
the place of death, the body's embalming or other preparation, making available
a place for visitation and viewing and for the conduct of a funeral service, and
the arrangement for conveyance of the body to a cemetery or crematorium for
final disposition; and admit that providers of funeral services are regulated by
federal and state agencies.
21. Deny the allegations of paragraph 21 of the Verified First
Amended Complaint.
22. Deny the allegations of paragraph 22 of the Verified First
Amended Complaint.
23. Deny the allegations of paragraph 23 of the Verified First
Amended Complaint.
24. Deny the allegations of paragraph 24 of the Verified First
Amended Complaint, except deny knowledge or information sufficient to form a
belief as to the truth of the allegation that Americans spent over $7 billion on
funeral services in 1995 and that the average adult funeral today costs
approximately $4,000, excluding cemetery charges.
25. Deny the allegations of paragraph 25 of the Verified First
Amended Complaint, except admit that many funeral homes in the United States are
owned by an individual or family or by a small group of individuals.
26. Admit the allegations of paragraph 26 of the Verified First
Amended Complaint.
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<PAGE>
27. Deny the allegations of paragraph 27 of the Verified First
Amended Complaint, except admit that many funerals are arranged on an at-need
basis.
28. Deny the allegations of paragraph 28 of the Verified First
Amended Complaint, except admit that consumers of at-need funeral services
initiate the transaction when the need arises.
29. Admit the allegations of paragraph 29 of the Verified First
Amended Complaint.
30. Deny the allegations of paragraph 30 of the Verified First
Amended Complaint, except admit that by making purchases on a pre-need basis
consumers are able to avoid making death care plans at the time of need.
31. Deny the allegations of paragraph 31 of the Verified First
Amended Complaint, except admit that funeral services are typically purchased on
a pre-need basis by the person whose death will necessitate such services and
admit that, by purchasing funeral services on a pre-need basis, a consumer is
able to select the desired service and merchandise in advance, at prices that
are established at the time of selection.
32. Deny the allegations of paragraph 32 of the Verified First
Amended Complaint, except admit that pre-need purchases are often made in
response to solicitations by providers and admit that such purchases are funded
by the creation of a trust account or the purchase of an insurance policy or
annuity.
-7-
<PAGE>
33. Deny the allegations of paragraph 33 of the Verified First
Amended Complaint.
34. Deny the allegations of paragraph 34 of the Verified First
Amended Complaint and respectfully refer the Court to SCI's 1995 Form 10-K and
1995 Annual Report for the contents thereof.
35. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 35 of the Verified First Amended
Complaint.
36. Deny the allegations of paragraph 36 of the Verified First
Amended Complaint.
37. Deny the allegations of paragraph 37 of the Verified First
Amended Complaint, except admit that many firms are engaged in the sale of
funeral services on a pre-need basis in Los Angeles County, California, Houston,
Texas, and Southeastern Florida.
38. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 38 of the Verified First Amended
Complaint.
39. Deny the allegations of paragraph 39 of the Verified First
Amended Complaint, except admit that competition in various aspects of the
funeral and cemetery businesses takes place in local areas.
40. Deny the allegations of paragraph 40 of the Verified First
Amended Complaint.
41. Deny the allegations of paragraph 41 of the Verified First
Amended Complaint, except admit that funeral homes
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<PAGE>
acquired by SCI, The Loewen Group Inc., and other firms frequently retain their
pre-acquisition names and market under local names rather than their "chain"
names.
42. Deny the allegations of paragraph 42 of the Verified First
Amended Complaint, except admit that the identities of the many potential
interested purchasers varies from location to location, and that factors such as
local real estate prices effect the prices paid for funeral homes and
cemeteries.
43. Deny the allegations of paragraph 43 of the Verified First
Amended Complaint, except respectfully refer the Court to SCI's 1995 Annual
Report and Equity Corporation International's Form 10-K for the contents
thereof.
44. Deny the allegations of paragraph 44 of the Verified First
Amended Complaint.
45. Deny the allegations of paragraph 45 of the Verified First
Amended Complaint.
46. Deny the allegations of paragraph 46 of the Verified First
Amended Complaint.
47. Deny the allegations of paragraph 47 of the Verified First
Amended Complaint.
48. Deny the allegations of paragraph 48 of the Verified First
Amended Complaint.
49. Deny the allegations of paragraph 49 of the Verified First
Amended Complaint.
50. Deny the allegations of paragraph 50 of the Verified First
Amended Complaint, except admit that SCI and The
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<PAGE>
Loewen Group Inc. are the two largest of the many individuals and corporate
entities who seek to purchase funeral homes and cemeteries.
51. Deny the allegations of paragraph 51 of the Verified First
Amended Complaint, except admit that efficiencies can be achieved by operating
more than one funeral home in an area.
52. Deny the allegations of paragraph 52 of the Verified First
Amended Complaint, except admit that owning more than one funeral home in an
area can produce efficiencies in embalming services, purchasing, the use of
vehicles, and administration and support functions.
53. Deny the allegations of paragraph 53 of the Verified First
Amended Complaint.
54. Deny the allegations of paragraph 54 of the Verified First
Amended Complaint, except admit that SCI acquired 1,263 funeral homes, 99
cemeteries, and 30 crematoria throughout the world in 1995.
55. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 55 of the Verified First Amended
Complaint.
56. Deny the allegations of paragraph 56 of the Verified First
Amended Complaint.
57. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 57 of the Verified First Amended
Complaint, except admit that Stewart
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<PAGE>
Enterprises, Inc. is the third largest owner and operator of funeral homes and
cemeteries in the United States.
58. Deny the allegations of paragraph 58 of the Verified First
Amended Complaint, except admit that SCI owns approximately 42 percent of Equity
Corporation International; admit that Equity Corporation International is the
fourth largest owner and operator of funeral homes and cemeteries in the United
States; and deny knowledge or information sufficient to form a belief as to the
truth of the allegation that Equity Corporation International owns approximately
150 properties in the United States.
59. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 59 of the Verified First Amended
Complaint, except admit that Carriage Funeral Services is the fifth largest
operator of funeral homes and cemeteries in the United States.
60. Deny the allegations of paragraph 60 of the Verified First
Amended Complaint, except admit that SCI acquired Gibraltar Mausoleum
Corporation in 1995.
61. Deny the allegations of paragraph 61 of the Verified First
Amended Complaint.
62. Deny the allegations of paragraph 62 of the Verified First
Amended Complaint, except admit that SCI competes with The Loewen Group Inc.,
among many others, for the acquisition of funeral homes and cemetery properties.
63. Deny the allegations of paragraph 63 of the Verified First
Amended Complaint, except admit that SCI and The
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<PAGE>
Loewen Group Inc. both submitted bids to acquire Rose Hills Memorial Park and
Rose Hills Mortuary.
64. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 64 of the Verified First Amended
Complaint.
65. Deny the allegations of paragraph 65 of the verified First
Amended Complaint.
66. Deny the allegations of paragraph 66 of the verified First
Amended Complaint.
67. Deny knowledge or information sufficient to form a belief as to
the truth of the allegations of paragraph 67 of the Verified First Amended
Complaint.
68. Deny the allegations of paragraph 68 of the Verified First
Amended Complaint.
69. Deny the allegations of paragraph 69 of the Verified First
Amended Complaint, except admit that The Loewen Group Inc. and many other
entities are potential competitors of SCI in numerous local areas.
70. Deny the allegations of paragraph 70 of the Verified First
Amended Complaint.
71. Repeat and reallege paragraphs 1 through 70 above as though fully
set forth herein.
72. Deny the allegations of paragraph 72 of the Verified First
Amended Complaint.
73. Repeat and reallege paragraphs 1 through 72 above as though fully
set forth herein.
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<PAGE>
74. Deny the allegations of paragraph 74 of the Verified First
Amended Complaint.
75. Deny the allegations of paragraph 75 of the Verified First
Amended Complaint.
76. Deny the allegations of paragraph 76 of the Verified First
Amended Complaint.
77. Deny the allegations of paragraph 77 of the Verified First
Amended Complaint.
78. Deny the allegations of paragraph 78 of the Verified First
Amended Complaint.
* * *
FOR A FIRST DEFENSE
-------------------
79. The Verified First Amended Complaint fails to state a claim upon
which relief can be granted.
FOR A SECOND DEFENSE
--------------------
80. Plaintiffs have not suffered and are not threatened with
antitrust injury, and therefore lack standing to assert the claims that they
purport to assert.
FOR A THIRD DEFENSE
-------------------
81. This Court lacks personal jurisdiction over Equity Corporation
International, which is a necessary and indispensable party to this action. The
Verified First Amended Complaint is accordingly subject to dismissal in its
entirety.
FOR A FOURTH DEFENSE
--------------------
82. Venue in this District is improper.
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<PAGE>
FOR A FIFTH DEFENSE
-------------------
83. This is an inconvenient forum for the litigation of plaintiffs'
claims. The Verified First Amended Complaint is accordingly subject to
dismissal under the doctrine of forum non conveniens or transfer pursuant to 28
U.S.C. (S) 1404(a).
FOR A SIXTH DEFENSE
-------------------
84. The filing of the Verified First Amended Complaint in this
District constitutes impermissible forum shopping.
FOR A SEVENTH DEFENSE
---------------------
85. Plaintiffs' claims are barred by unclean hands, estoppel, and
related doctrines, because they have not been brought in good faith. The claims
have been brought for the sole purpose of preventing a takeover of The Loewen
Group Inc. and entrenching Raymond L. Loewen in his position as chairman and
chief executive of The Loewen Group Inc., not for the purpose of redressing any
cognizable injury under the antitrust laws. This is an improper use of those
laws.
COUNTERCLAIMS
-------------
86. These Counterclaims under Federal Rule of Civil Procedure 13(a)
against The Loewen Group Inc. ("Loewen"), Loewen Group, Inc., and Loewen Group
International, Inc. (collectively "counterclaim defendants") arise out of the
transactions and occurrences that are the basis for counterclaim defendants'
complaint.
87. Counterclaim plaintiff SCI is a Texas corporation with its
principal place of business in Houston, Texas. SCI,
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<PAGE>
through its direct and indirect subsidiaries, is an owner and operator of
funeral homes, cemeteries, and crematoria.
88. Counterclaim defendant The Loewen Group Inc. is a British
Columbia (Canada) corporation with its principal executive offices in Burnaby,
British Columbia.
89. Counterclaim defendant Loewen Group, Inc. is a Kentucky
corporation.
90. Counterclaim defendant Loewen Group International, Inc. is a
Delaware corporation.
SCI's Offer to Acquire Loewen Stock
-----------------------------------
91. On September 17, 1996, SCI proposed to Loewen a combination of
the two companies by means of a stock-for-stock exchange that would value
Loewen's stock at $43 per share -- a value approximately 49% above the price of
Loewen stock the month before the offer was announced.
92. On September 24, 1996, Loewen's Chairman, Raymond L. Loewen,
wrote to SCI, stating that the Loewen board had rejected SCI's offer and
contending that Loewen shareholders would receive "maximize[d]" value for their
investment through implementation of Loewen's "long-term business as an
independent company" rather than through acceptance of SCI's offer.
93. Following the rejection of its proposal, on October 1, 1996, the
SCI Board of Directors authorized the commencement of an exchange offer for all
outstanding shares of Loewen at an exchange ratio that would value Loewen stock
at $45.00 per share.
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<PAGE>
94. On October 3, 1996, SCI filed with the Securities and Exchange
Commission a registration statement with respect to the proposed Tender Offer.
The registration statement, which is currently under review, sets forth the
terms of the proposed Tender Offer, the price offered, the duration of the offer
and the percentage of outstanding Loewen shares sought. SCI is precluded from
commencing its Tender Offer until the registration statement becomes effective
under the Securities Act of 1933 (as amended).
95. The proposed Tender Offer was anticipated by the counterclaim
defendants and Loewen shareholders as a result of SCI's letter to Loewen dated
September 17, 1996, which was publicly announced on September 17, 1996.
Loewen's Action Forming The Basis Of The Suit
---------------------------------------------
96. Not content to allow its shareholders to decide for themselves
whether to participate in SCI's Tender Offer for Thoewen stock, Loewen has
embarked upon a concerted effort to thwart, through prohibited and illegal
means, SCI's consummation of a business combination with Loewen. As part of
this illegal conduct, Loewen has purposefully and intentionally omitted material
information about certain recently announced transactions in order to
artificially inflate the price of its stock. Loewen has also attempted to
discredit SCI and its business practices through the dissemination of
misleading, false and malicious remarks regarding SCI's business practices.
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<PAGE>
Loewen has engaged in a pattern and practice of
failing to disclose material information regarding
its most recent business dealings in an effort
to artificially inflate the price of its stock
--------------------------------------------------
97. In its press releases and other public statements, Loewen has
engaged in a pattern and practice of failing to disclose material information
regarding its most recent business dealings in an effort to artificially inflate
the price of its stock.
98. Such pattern and practice began no later than August 29, 1996,
when Loewen issued a press release containing glowing descriptions of the
acquisition of Prime Succession Inc. ("Prime Succession") by a joint venture
between Loewen and Blackstone Capital Partners II Merchant Banking Fund L.P.
("Blackstone"). The press release disclosed that Loewen received a call option
to purchase Blackstone's interest in Prime Succession after four years, but did
not disclose the exercise price of this option. Moreover, the press release
disclosed that Blackstone received a put option entitling Blackstone to force
Loewen to purchase Blackstone's interest in Prime Succession at a formula price,
but failed to disclose the method of determining the exercise price of the put
option and the exercise date of the put option. Such information was necessary
for Loewen shareholders to assess whether the acquisition of Prime Succession
actually will increase Loewen's value. Although disclosures were eventually
made in response to a lawsuit SCI commenced in the United States District Court
for the Southern District of Texas, Loewen knowingly made such material
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<PAGE>
misstatements and omissions in order to inflate artificially the price of its
stock.
99. On September 20, 1996, Loewen and Blackstone issued a second
press release stating that the parties had begun a new venture and had entered
into a definitive agreement to acquire the cemetery and mortuary operations and
assets of The Rose Hills Memorial Park Association and Roses, Inc. ("Rose
Hills") for $240 million. In the September 20 press release and in other
statements to the press, Loewen consistently has touted its acquisition of Rose
Hills, indicating that such acquisition will enhance substantially its earnings
per share and long-term value to Loewen shareholders.
100. In the press release and in a subsequent unrelated filing with
the Securities and Exchange Commission, Loewen has disclosed that Loewen has a
call option to purchase Blackstone's equity interest in Rose Hills after four
years, and Blackstone has a put option to force Loewen to purchase Blackstone's
interest in Rose Hills after six years. Although Loewen has disclosed some
general features of these options, neither the exercise price for these options,
nor the method of determining the exercise price in the future, has been
disclosed. Such information is necessary for Loewen shareholders to assess
whether the acquisition of Rose Hills actually will increase Loewen's value.
Consequently, such descriptions of the Rose Hills acquisition contain material
misstatements and omissions, and were made knowingly by Loewen to inflate
artificially the price of its stock in connection with the proposed Tender Offer
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<PAGE>
and to rally the support of its shareholders in opposition to the offer.
101. Loewen also has consistently referred to the Rose Hills
acquisition as an example of Loewen's value and financial strength and has
indicated that the promise of this acquisition should lead Loewen shareholders
to reject the proposed Tender Offer. Such statements include statements made by
Mr. Loewen to the Dow Jones News Service and on a national broadcast of CNBC on
October 2, 1996, in response to and in connection with SCT's announcement that
it intended to commence the Tender Offer. The press releases and other public
statements regarding these transactions are intentionally misleading as to the
value of this transaction to Loewen and do not contain material information
regarding important aspects of the transaction.
Loewen's Misrepresentations Regarding SCI
-----------------------------------------
102. Loewen has also sought wrongfully to thwart SCI's proposed offer
by intentionally misrepresenting the business practices of SCI. On September
21, 1996, The Report on Business quoted Mr. Loewen as saying: "It would be very
----------------------
hard for me to sell to a company that has a history of slashing and burning."
He has referred to SCI in a manner designed to depict SCI as a cold, mirthless
scavenger. These comments have been made with the express intent of vilifying
SCI in the eyes of Loewen's shareholders and the market in general in the hopes
of rallying shareholders to reject the Tender Offer.
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<PAGE>
Injury to SCI
-------------
103. Loewen's actions have injured and continue to threaten to injure
SCI. Loewen's misstatements and omissions as to the terms of the Rose Hills
acquisition, and delayed disclosures as to the terms of the Prime Succession
acquisition, were made in connection with the proposed Tender Offer and are
damaging because they artificially inflate the price of Loewen's stock and give
Loewen's shareholders a false belief that their stock is worth more than it
actually is. Mr. Loewen's misstatements about SCI's business practices were
also made in connection with the proposed Tender Offer and are damaging because
they provide Loewen's shareholders with a distorted and negative view of SCI's
business practices and management and the business prospects of a combined
SCI/Loewen. As a result, Loewen's shareholders may reject SCI's proposed Tender
Offer based on such misstatements and omissions.
FIRST COUNTERCLAIM FOR VIOLATION
OF SECTION 14(e) OF THE EXCHANGE ACT
------------------------------------
104. SCI repeats and realleges the allegations in paragraphs 86
through 103 as if fully set forth herein.
105. Section 14(e) of the Securities Exchange Act of 1934, 15 U.S.C.
(S) 78n(e), makes it "unlawful for any person to make any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made, in the light of the circumstances under which they are made,
not misleading, or to engage in any fraudulent, deceptive, or manipulative acts
or practices in connection with any tender offer or request or invitation for
tenders, or any solicitation
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<PAGE>
of security holders in opposition to or in favor of any such offer, request or
invitation."
106. The counterclaim defendants have violated Section 14(e) by
making materially misleading statements about the financial prospects of Loewen
in connection with SCI's proposed exchange offer for Loewen stock.
107. Loewen also has violated Section 14(e) as a result of its
negative comments regarding the business practices of SCI. Loewen's president
has made repeated comments to the press that SCI "has a history of slashing and
burning," and that SCI is perceived within the death care industry as a heavy-
handed, authoritian company. These comments are unfounded, deceptive, malicious
and materially misleading.
108. Counterclaim plaintiffs have no adequate remedy at law.
SECOND COUNTERCLAIM FOR TORTIOUS
INTERFERENCE WITH PROSPECTIVE BUSINESS RELATIONS
------------------------------------------------
109. SCI repeats and realleges allegations in paragraphs 86 through
108 as if fully set forth herein.
110. Loewen's actions and efforts have been designed to thwart or
hamper, through prohibited and illegal means, SCI's consummation of reasonably
probable stock purchases from individual Loewen stockholders. These actions
have not been taken for the purpose of enhancing the real value of Loewen
shares, but rather to inflate artificially the price of Loewen stock, and thus
entrench the position and prestige of Mr. Loewen and Loewen management.
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<PAGE>
111. Loewen's actions and statements were made knowingly and with the
intent to interfere with the prospective business relations between SCI and
individual Loewen stockholders.
112. Loewen can offer no legal justification for its actions.
113. SCI has been damaged the counterclaim defendants' tortious
interference with SCI's prospective business relations with individual Loewen
stockholders.
WHEREFORE, counterclaim plaintiff SCI seeks judgment as follows:
A. Dismissing the Amended Complaint in this action with prejudice and
with costs.
B. Preliminary and permanently enjoining the counterclaim defendants
from violating Section 14(e) of the Securities Exchange Act of 1934;
C. Awarding SCI damages for the counterclaim defendants' tortious
interference with SCI prospective business relations;
D. Awarding plaintiff its costs of suit, including reasonable
attorneys' fees; and
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E. Granting plaintiff such other and further relief as the Court may
deem just and proper.
Dated: December 11, 1996
New York, New York
WACHTELL, LIPTON, ROSEN & KATZ
By: /s/ Marc Wolinsky
----------------------------
Marc Wolinsky (MW-1750)
51 West 52nd Street
New York, New York 10019
(212) 403-1000
Attorneys for Defendant and
Counterclaim Plaintiff Service
Corporation International, and
Defendants New Service Corporation
International and SCI Holdings
Canada, Inc.
Of Counsel:
Bernard W. Nussbaum
Marc Wolinsky
Lawrence Gerschwer
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
(212) 403-1000
John L. Hill, Jr.
Jess H. Hall, Jr.
D. Mitchell McFarland
Harold K. Watson
Jeff Weems
James E. Essig
Liddell, Sapp, Zivley,
Hill & LaBoon, L.L.P.
3400 Texas Commerce Tower
Houston, Texas 77002
(713) 226-1200
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CERTIFICATE OF SERVICE
----------------------
This is to certify that on December 11, 1996, I have caused a copy of
the Answer of the SCI Defendants to Verified First Amended Complaint and
Counterclaims to be served by hand delivery upon the following:
Michael J. Templeton, Esq.
Jones Day Reavis & Pogue
599 Lexington Avenue
New York, NY 10022
Attorneys for Plaintiffs
Sheldon H. Elsen, Esq.
Orans, Elsen & Lupert
1 Rockefeller Plaza
New York, NY 10020
Attorneys for Defendant
Equity Corporation International
/s/ Lawrence Gerschwer
----------------------------
Lawrence Gerschwer
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