THE COMMITTEE TO REVITALIZE DOMINION BRIDGE
SUPPLEMENTAL CONSENT SOLICITATION MATERIALS DATED JULY 2, 1997
To The Holders of Common Stock of Dominion Bridge Corporation:
The following information amends and supplements the Definitive Consent
Solicitation Statement dated June 23, 1997 (the "Consent Solicitation"), as
supplemented by this Supplement, dated July 2, 1997 (the "Supplement"), of the
Committee to Revitalize Dominion Bridge (the "Committee").
Except as otherwise set forth in this Supplement, the terms and
conditions previously set forth in the Consent Solicitation remain applicable in
all respects and this Supplement should be read in conjunction with the Consent
Solicitation. Unless the context requires otherwise, terms not defined herein
have the meanings ascribed to them in the Consent Solicitation.
I. PLAN FOR DOMINION BRIDGE
On July 2, 1997 the Committee issued its plan for the Company, as set
forth in the following press release:
COMMITTEE TO REVITALIZE DOMINION BRIDGE CORPORATION
PROPOSES ISSUANCE OF $2.5O PER SHARE
OF CONTINGENT VALUE RIGHTS
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New York -- July 2, 1997 -- The Committee to Revitalize
Dominion Bridge Corporation announced that it is meeting today, Wednesday, July
2, with Legg Mason Wood Walker, the financial advisor to the Board of Directors
of Dominion Bridge Corporation (NASDAQ: DBCO), to present the following
three-part proposal to begin maximizing the short and long term stockholder
value in Dominion Bridge. The Committee's solicitation of shareholders commenced
last week with the mailing of its consent statement and white consent card. The
Committee's proposal requires a majority of shareholders of Dominion Bridge
approving its consent solicitation.
o SUBSTANTIALLY INCREASE NEW BUSINESS BY ACQUIRING FIRST KEY
PROJECT TECHNOLOGIES, INC. This international engineering and construction
management firm is headquartered in Toronto, Canada and was recently formed by
former industry executives of Bennett & Wright and Bracknell Corporation. It
currently has a backlog of over US $600 million, with projects in Canada and
internationally. Mr. Ken Mariash, the Committee's President and CEO, stated:
"Over the next twelve months, this group is projected to generate revenues of US
$150 million with pre-tax profits exceeding US $12 million. Additionally, the
acquisition would bring an additional US $50 million of fabrication work to
Dominion Bridge's Lachine (Montreal) facility, which current management
describes as a major source of current operating losses. With completion of this
acquisition, Dominion Bridge's consolidated backlog of work in hand would exceed
US $1 billion."
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The Committee's members are currently negotiating an
acquisition agreement with the principals of First Key Project Technologies that
the Committee believes would be additive to Dominion Bridge's earnings. The
acquisition agreement would be assigned to Dominion Bridge following a change in
control.
o RATIONALIZE THE MCCONNELL DOWELL INVESTMENT THROUGH A
PROPOSAL TO ACQUIRE THE ENTIRE SUBSIDIARY. This would serve two key corporate
goals. First, it would provide access to larger infrastructure projects in both
North America and the Asia-Pacific region, so that the strengths of the Canadian
divisions and MDC can be jointly marketed for the greater benefit of the entire
Dominion Bridge family. Second, it would consolidate and rationalize Dominion
Bridge's cash flow situation and make capital-raising more efficient and less
costly.
o ISSUE $2.50 PER SHARE OF CONTINGENT VALUE RIGHTS TO CURRENT
STOCKHOLDERS. As tangible evidence of the Committee's confidence that its
management team can significantly increase stockholder value in the coming
years, the economic centerpiece of the Committee's plan for stockholders is the
proposal that Dominion Bridge would issue to each current stockholder a
contingent value right (CVR) for $2.50 per share. This type of security has been
used in recent years by companies such as Viacom and Dow Chemical.
Mr. John Kuhns, the Committee's chairman, stated: "The
Committee's CVR proposal is aimed at countering the Company's accusation that
the Committee is engaged in a "cheap takeover". The CVRs would explicitly
provide that the Company could not be sold or merged while the CVRs are
outstanding unless stockholders receive at least the $2.50 per share value
ascribed to the rights. We view this feature as an important protection for
ensuring that current stockholders are able to obtain a full and fair value for
their investment in Dominion Bridge, notwithstanding the Company's poor
performance under current management."
As utilized here by Dominion Bridge, the CVRs would contain
the following terms:
- EXERCISE DATE: 18 months after the change of control in senior
management and the Board of Directors which is advocated by
the Committee. At the Company's option, the exercise date
could be extended to 24 months after the change in control.
- EXERCISE PRICE: $2.50 per share if the exercise date is 18
months after the change of control; or $3.00 per share is the
exercise date is extended to 24 months.
- PAYMENT TO CVR HOLDER: The difference, if any, between the
$2.50 or $3.00 exercise price and the highest trading price
achieved in any ten trading day period from the issuance date
until the exercise date. Credit would be given for the value
of any dividends or distributions to stockholders during that
period.
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- MERGER OR SALE OF DOMINION BRIDGE: The Company could not
merge, be acquired or sell substantially all its assets before
the exercise date without paying stockholders the value of the
CVRs.
- FORM OF PAYMENT: Cash, notes, preferred and/or common stock of
the Company having a value equal to the payment amount. If the
payment is not cash, the securities to be issued must be
registered for public trading.
- TRADING MARKET: The CVRs would be distributed to all current
stockholders, and would be registered for public trading. In
this manner, stockholders could obtain value for their CVRs
either by selling them in the open market or waiting until
after the exercise date. There can be no assurance, however,
as to the value which may be actually obtained at any
particular time under such scenarios.
The Committee believes that it is capable of managing Dominion
Bridge in a manner which will significantly increase stockholder value --
through acquisitions, cost controls, new business and the restoration of
management credibility. In its meeting with Legg Mason, the Committee is
presenting its projections of the Company's performance if the Committee's
program is implemented.
Mr. John Kuhns, the Committee's chairman, stated: "Rather than
rely solely on the promise that the Committee's projections can be attained, the
issuance of CVRs is being proposed by the Committee in order to give the Board
of Directors comfort that they can obtain a contractual and tangible right to
achieve a minimum, pre-fixed value for stockholders' investment, which
incidentally would be at a substantial premium to the current market price."
If the Committee's CVR proposal is endorsed by Legg Mason and
the Board of Directors, the Committee would withdraw its consent solicitation
and work with the Board to ensure the prompt issuance of the CVRs and a smooth
transition in senior management and Board representation. The Company, under its
new management, would then proceed with the other elements of the Committee's
plan, including the proposed acquisitions of First Key Technologies and the
balance of MDC.
The Committee's proposal is available for consideration by
Legg Mason and the Board of Directors until 5:00 p.m. on Monday, July 14, 1997,
at which point it will expire. During this period, however, the Committee will
continue to vigorously pursue its consent solicitation effort to replace the
Company's senior management. Stockholders are urged to sign and return the
Committee's white consent card, and to disregard the Company's green revocation
card.
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II. REFINANCING
As noted on page 5 of the Consent Statement under the heading
"Reasons for the Committee's Solicitation -- Why Replace the Officers, Not the
Board of Directors," the replacement of the Company's officers would give rise
to a technical default under the Company's loan agreements. However, in the
Committee's opinion (based on discussions with the financial institutions which
typically provide or arrange for debt financing), it should be able to either
promptly refinance that debt or negotiate a waiver. At this time, the Committee
does not have any formal oral or written commitment to refinance such debt and,
accordingly, there can be no assurance that the Committee will be able to
refinance or obtain a waiver.
III. MANAGEMENT OF THE COMPANY AFTER SUCCESSFUL COMPLETION OF THE CONSENT
As noted on page 17 of the Consent Statement, under the
heading "The Proposal - - Repealing the Old Bylaws and Adopting the New Bylaws
- -- Bylaws Relating to Officers", the Committee intends to have the Chairman
proposed by it (Mr. Kuhns) delegate to the President and Chief Executive Officer
proposed by it (Mr. Mariash) virtually all of the day-to-day operating decisions
in managing the Company. In order to avoid any misunderstanding as to whether
that delegation could be revoked, Mr. Kuhns has agreed with Mr. Mariash that as
the Chief Executive Officer, Mr. Mariash shall have the ultimate decision on all
management issues in the event of a disagreement, although the two would work
together to first mutually resolve any issues. Upon adoption of the New Bylaws,
Mr. Kuhns intends to promptly formalize this understanding as a binding
agreement of the Company.
IV. LEGAL PROCEEDINGS
On July 2, 1997 the Federal district court in Wilmington,
Delaware for the second time rejected the Company's motion for expedited
discovery and hearing in connection with the Company's counterclaims against the
Committee. In its order, based on a telephonic hearing and written materials
submitted by the Committee and the Company summarizing their views, the court
noted that "[it] is not convinced that the disclosure issues suggested by
[Dominion Bridge] require resolution outside the normal course of ongoing
litigation between the parties."
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V. INFORMATIONAL MEETING
The Committee is planning to hold its second informational
meeting for stockholders on Wednesday, July 16, 1997 at the Harvard Club in New
York City. Additional details will be forthcoming shortly. As previously noted
in the Consent Statement, the Committee has set Friday, July 18, 1997 as the
goal for submission of written consents.
VI. WEB SITE
The Committee has set up a web page at www.k4.com/dbcommittee.
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If your shares of Common Stock are held in the name of a bank or
brokerage firm, only that firm can execute a written consent card on
your behalf. Please contact the person responsible for your account and
instruct them to execute a WHITE written consent card as soon possible.
If you have questions or need assistance in voting your shares, please
contact the firm assisting us in the solicitation of written consents:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
TOLL FREE: 1-800-223-2064
BANKS & BROKERS CALL: 212-440-9800
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