SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
July 27, 1994
Illinois Central Corporation
Exact name of registrant as specified in its
charter
Delaware 1-10720
(State or other jurisdiction (Commission File
of incorporation) Number)
13-3545405
(I.R.S. Employer Identification No.)
455 North Cityfront Plaza Drive, Chicago, Illinois
(Address of principal executive offices)
60611-5504
(Zip Code)
Registrant's telephone number, including area code:
(312) 755-7500
Item 5. Other Events
In connection with the previously announced signing of
a letter of intent whereby the Registrant will acquire
Kansas City Southern Industries Inc. filed herein as
Exhibit 99 is the form of the letter of intent.
Item 7. Financial Statements and Exhibits
(a) - N/A
(b) - N/A
(c) Exhibits:
99 Letter of Intent
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf
by the undersigned hereto duly authorized.
ILLINOIS CENTRAL CORPORATION
/s/JOHN V. MULVANEY
John V. Mulvaney
Controller
Date: July 27, 1994
ILLINOIS CENTRAL CORPORATION
AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Sequential
No. Descriptions Page No.
99 Letter of Intent
Exhibit 99
July 18, 1994
Kansas City Southern Industries, Inc.
114 West 11th Street
Kansas City, Missouri 64105
LETTER OF INTENT
Gentlemen:
This letter of intent ("Letter of Intent") confirms the
understanding between Kansas City Southern Industries, Inc.
("KCSI") and Illinois Central Corporation ("Illinois Central")
with regard to the proposed acquisition by Illinois Central of
KCSI, except for businesses, assets and operations that are
not within the businesses, operations, and assets of the
Transportation Services Division ("Transportation Services
Division") of KCSI and certain other non-transportation assets
of KCSI. The proposed acquisition is referred to herein as
the "Transaction".
The terms of the understanding are as follows:
1. The structure of the Transaction will consist of
the merger of KCSI with and into Illinois Central (the
"Merger") immediately following the distribution in the form
of a spin-off dividend to the common shareholders of KCSI of
all of KCSI's equity interest in the businesses constituting
the financial services and information processing operations
and certain non-transportation assets of KCSI (including
KCSI's interests in the Mulberry Western Property, the 10
Central Garage investment and non-transportation assets of
Southern Leasing Corporation). Immediately prior to
consummation of the Merger, Illinois Central shall deliver the
shares of the Illinois Central Railroad to a trustee to be
held pursuant to the terms of a voting trust agreement,
thereby enabling Illinois Central to acquire direct ownership
and control of Kansas City Southern Railway Company ("KCSR").
2. The aggregate consideration for the Transaction
shall consist of (a) .4883 of a share of common stock of
Illinois Central, par value $.001 per share ("Illinois Central
Common Stock"), for each currently outstanding share of common
stock of KCSI, $.01 par value per share ("KCSI Common Stock"),
(b) an amount of cash equal to the aggregate par value of the
outstanding shares of preferred stock of KCSI, $25 dollar par
value, and (c) the assumption of up to $929 million of
indebtedness of the Transportation Services Division
(including approximately $140 million of indebtedness that
could be incurred by KCSI for the purposes set forth in the
letters dated June 24, 1994 and June 29, 1994 from Illinois
Central to the Board of Directors of KCSI (the "Bid Letters").
Illinois Central and KCSI shall in good faith consider the
advisability of a purchase price adjustment based upon changes
in the net worth of the Transportation Services Division or
similar changes. Standard representations and warranties with
respect to KCSI and KCSR shall survive the Merger and the
entity to be spun-off by KCSI as contemplated by paragraph 1
shall remain liable for such representations and warranties,
the exact nature and extent of such representations and
warranties to be negotiated as contemplated by paragraph 3.
3. Each of Illinois Central and KCSI agrees to use
its reasonable best efforts in good faith and on an exclusive
basis to prepare, negotiate and execute definitive agreements
and documents with respect to the Transaction. Subject to the
provisions of paragraph 11, the terms, conditions and
assumptions set forth in the Letter of Intent and the Bid
Letters shall provide the basis upon which Illinois Central
and KCSI shall negotiate with each other as contemplated by
this paragraph 3.
4. Except as required by applicable law, all
information obtained by Illinois Central or KCSI or their
respective affiliates, directors, officers, employees, agents
and representatives shall be kept confidential to the extent
required by, and in accordance with, the provisions of the
confidentiality agreement, dated March 7, 1994, between the
parties.
5. Illinois Central and KCSI shall mutually agree on
the form and content of any public announcement which shall be
made concerning this Letter of Intent or the Transaction and
neither Illinois Central nor KCSI shall make any such public
announcement without the consent of the other, which consent
shall not be unreasonably withheld, provided that (a) Illinois
Central and KCSI agree to publicly announce the execution of
this Letter of Intent by releasing the joint press release
attached hereto as Annex A and (b) nothing herein shall
prohibit Illinois Central or KCSI from making any public
announcement or other disclosure required by law or the policy
of any exchange on which such party's securities are listed,
provided that each party agrees to use its reasonable efforts
to consult with the other before making any such public
announcement or other disclosure.
6. KCSI agrees that during the term of this Letter of
Intent neither it nor any of its subsidiaries nor any of its
officers and directors or the officers and directors of its
subsidiaries shall, and it shall direct and use its best
efforts to cause its representatives (including without
limitation any investment banker, attorney or accountant
retained by it) not to, initiate, solicit or waive standstill
or similar provisions or encourage, directly or indirectly
(including by way furnishing non-public information), or take
any action to facilitate any inquiries or the making or
implementation of any proposal or offer with respect to a
merger, acquisition, consolidation or similar transaction
involving KCSI, or any purchase of the assets or equity
securities of KCSI (excluding its interest in Investors
Fiduciary Trust Company and Argus Health Systems, Inc.)
representing, in the aggregate, consideration of more than
$200 million for all such purchases (any such proposal or
offer being referred to herein as an "Acquisition Proposal")
or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions
with or otherwise cooperate with any person relating to an
Acquisition Proposal, provided that the Board of Directors of
KCSI may furnish or cause to be furnished information and may
participate in such discussions and negotiations through its
representatives if the Board of Directors, after consultation
with and based upon the advise of independent counsel (who may
be its regularly engaged counsel) determines in good faith
that such action is necessary for its Board of Directors to
comply with its fiduciary duties to the KCSI stockholders
under applicable state law provided, further that the Board
shall not take any of the foregoing actions or the actions set
forth in the last sentence of this paragraph 6 until after
reasonable notice to and consultation with Illinois Central
with respect to such action and that such Board of Directors
shall continue to consult with Illinois Central after taking
such action and, in addition, if the Board of Directors
receives an Acquisition Proposal, then KCSI shall promptly
inform Illinois Central of the material terms of such proposal
and the identity of the person making it and whether the
negotiations with respect to such Acquisition Proposal have
commenced or been authorized. KCSI shall immediately cease
and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Nothing
contained in this paragraph 6 shall prohibit KCSI from taking
and disclosing a position with respect to a tender offer by a
third party pursuant to Rules 14d-9 and 14e-2(a) under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and making such disclosures to its stockholders which,
in the reasonable judgment of its Board of Directors, is
required under applicable law.
7. This Letter of Intent may be terminated and the
Transaction may be terminated:
(a) at any time by written agreement of Illinois
Central and KCSI:
(b) at the option of either Illinois Central or
KCSI on or after ninety days
after the date of this Letter of Intent, if by such
date the parties hereto shall not have executed definitive
agreements providing for the Merger and the other
documentation which is necessary to effectuate the parties'
understandings set forth herein; or
(c) at the option of Illinois Central at any
time (i) if KCSI shall have breached the terms of paragraph 6,
(ii) if KCSI shall have commenced or authorized negotiations
with respect to any Acquisition Proposal or recommended an
Acquisition Proposal or (iii) upon the acquisition by a person
or entity, or any group (as defined in the Exchange Act) of
beneficial ownership of 15% or more of the KCSI Common Stock
whether by tender offer or exchange offer or otherwise.
(d) at the option of KCSI if, following a
proposal or offer representing an Acquisition Proposal, the
Board of Directors, after consultation with and based upon the
advise of independent counsel (who may be its regularly
engaged counsel), determines in good faith that such action is
necessary for the Board of Directors to comply with its
fiduciary duties to the KCSI stockholders under applicable
state law.
(e) at the option of Illinois Central if,
following any proposal or offer with respect to merger,
acquisition, consolidation or similar transaction involving,
or any purchase of, more than 15% of the assets or equity
securities of Illinois Central, the Board of Directors after
consultation with and based upon the advise of independent
counsel (who may be its regularly engaged counsel), determines
in good faith that such action is necessary for the Board of
Directors to comply with its fiduciary duties to the Illinois
Central stockholders under applicable state law.
8. Whether or not the parties enter into
definitive agreements with respect to the Transaction, the
parties hereto shall be responsible for all of their own
expenses incurred by them with respect to the investigation
and negotiation of this Letter of Intent and the Transaction.
KCSI represents that it has taken all action necessary so that
the provisions of Section 203 of the Delaware General
Corporation Law will not apply to this Letter of Intent or the
Transaction.
9. Notwithstanding any other provisions of this
Letter of Intent, KCSI agrees that if this Letter of Intent
shall be terminated by (a) either Illinois Central or KCSI
pursuant to paragraph 7(b) and within one year after the date
of such termination a Business Combination (as defined below)
shall have been consummated or KCSI shall have entered into a
definitive agreement providing for a Business Combination, (b)
by Illinois Central pursuant to paragraph 7(c) or (c) by KCSI
pursuant to paragraph 7(d), upon such termination, or in the
case of (a) upon the consummation of such Business Combination
or execution of such definitive agreement, KCSI shall pay to
Illinois Central a termination fee of $25,000,000. For
purposes of this paragraph 9, the term "Business Combination"
shall mean (x) a merger, consolidation, share exchange,
business combination or similar transaction involving KCSI or
the KCSR, (y) a sale, lease, exchange, transfer or other
disposition of 15% or more of the assets of KCSI and its
subsidiaries taken as a whole, in a single transaction or
series of transactions (other than a spin-off dividend to the
common stockholders of KCSI of all of KCSI's equity interest
in the businesses constituting the financial services and
information processing operations), or (z) the acquisition by
a person (excluding the KCSI Employee Stock Ownership Plan) or
entity or any group (as defined in the Exchange Act) of
beneficial ownership of 15% or more of the KCSI Common Stock
whether by tender offer or exchange offer or otherwise
provided that a Business Combination shall not include any
transaction or series of transactions
in which the consideration amounts to less than
$200 million or any disposition by KCSI of its interest in
Investors Fiduciary Trust Company or Argus Health Systems,
Inc. Any payments required to be made pursuant to this
paragraph 9 shall be made as promptly as practicable but not
later than five business days after the event giving rise to
a termination fee. The termination fee provisions as
contemplated by the marked-up merger agreement delivered by
Illinois Central with the June 24, 1994 Bid Letter shall in
substance be incorporated in any definitive agreement between
Illinois Central and KCSI providing for the Merger, including
a termination fee of $50,000,000. In no event shall the
amount payable under this paragraph 9 exceed $25,000,000 or be
payable if Illinois Central terminates this Letter of Intent
pursuant to paragraph 7(c).
10. This Letter of Intent and the agreements
governing the Transaction shall be governed by and construed
in accordance with the laws of the State of Delaware without
regard to conflicts of laws principles thereof.
11. It is understood that this Letter of Intent
merely constitutes a statement of the mutual intentions of
Illinois Central and KCSI with respect to the Transaction,
does not contain all matters upon which agreement must be
reached in order for the Transaction to be consummated and
therefore does not constitute a binding commitment, nor an
offer by either party to enter into a binding commitment, with
respect to the Transaction itself. A binding commitment with
respect to the Transaction shall result only from the
execution of definitive agreements and related documents,
subject to the conditions expressed therein. Notwithstanding
the two preceding sentences of this paragraph 11, the
provisions of paragraphs 3 through 10 are agreed to be fully
binding on each of Illinois Central and KCSI upon the
execution of this Letter of Intent, and the provisions of
paragraphs 4, 5, 8, 9 and 10 shall survive the termination of
this Letter of Intent unless and until they are superseded by
the definitive agreements for the Transaction. This Letter of
Intent may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument.
If the foregoing correctly sets forth your
understanding with respect to the Transaction, please indicate
by executing a copy of this Letter of Intent as provided below
and returning the same to the undersigned.
ILLINOIS CENTRAL CORPORATION
By:
Chairman of the Board
By:
President and Chief Executive Officer
Accepted and agreed to
this 18th day of July, 1994
KANSAS CITY SOUTHERN INDUSTRIES, INC.
By:
President and Chief Executive Officer
