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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934)
---------------------
Tescorp, Inc.
(Name of the Issuer)
Tescorp Acquisition Corporation
Supercanal Holding S.A.
(Name of Persons Filing Statement)
Common Stock, par value $.02 per share
(Title of class of securities)
881584106 - Common Stock
(CUSIP number of class of securities)
Daniel Eduardo Vila
Chairman
Tescorp Acquisition Corporation
c/o Supercanal Holding S.A.
Godoy Cruz 316
Mendoza, Province of Mendoza
Argentina 5500
54-61-295125
(Name, address and telephone number of person authorized to receive notices and
communications on behalf of persons filing statement)
---------------------
with a copy to:
David W. Bernstein, Esq.
Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
Telephone: (212) 878-8342
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
Exchange 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
/ / 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: $11,896 Filing Party: Tescorp Acquisition
Corporation Supercanal
Holding S.A.
Form or Registration No.: 14D-1 Date Filed: December 8, 1997
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Item 1. Issuer and Class of Security Subject to the Transaction
(a) The issuer of the class of equity security which is the subject
of the Rule 13e-3 transaction is Tescorp, Inc., a Texas corporation (the
"Company"). The address of the Company's principal executive offices is 327
Congress Avenue, Suite 200, Austin, Texas 78701.
(b) The title of the securities which are the subject of the Rule
13e-3 transaction is common stock, par value $.02 per share ("Common Stock").
The number of shares of Common Stock which were outstanding on December 5, 1997
was 19,223,456 shares. The approximate number of holders of record of the
Common Stock on November 14, 1997 was 336.
(c) The principal market in which the Common Stock is traded is the
Nasdaq SmallCap Market. The information in Section 12 ("Price Range of Shares")
of the Supplemented Offer to Purchase which is Exhibit (d)(2) to this Statement
(the "Offer to Purchase") is incorporated by reference.
(d) Insofar as Tescorp Acquisition Corporation (the "Purchaser") and
Supercanal Holding S.A. (the "Parent") are aware, the Company has not paid any
dividends during the past two years with respect to its Common Stock. The
Amended Stock Purchase and Merger Agreement dated as of November 26, 1997 (the
"Merger Agreement") among the Purchaser, the Parent and the Company prohibits
the Company from paying, without the Purchaser's consent, any dividends prior to
the merger of the Purchaser and the Company contemplated by the Merger Agreement
(the "Merger), other than required dividends on preferred stock.
(e) Insofar as the Purchaser and the Parent are aware, the Company
has not made an underwritten public offering of its Common Stock for cash during
the past three years which was registered under the Securities Act of 1933 or
exempt from registration pursuant to Regulation A.
(f) The Company has not, insofar as the Purchaser or the Parent are
aware, purchased any of its Common Stock since December 5, 1997, the day on
which the Purchaser acquired 31% of the outstanding Common Stock and a
representative of the Parent became a director of the Company, which is the
earliest time at which either the Purchaser or the Parent became an affiliate of
the Company.
Item 2. Identity and Background.
(a)-(d); (g) This Statement is being filed by the Purchaser and the
Parent. The information set forth in Section 14 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase and Schedule I to
it is incorporated by reference.
(e) and (f) During the last five years, neither the Purchaser nor the
Parent, nor, to the best of the knowledge of the Purchaser or the Parent, any
persons controlling the Purchaser or the Parent, or any of the persons listed on
Schedule I to the Offer to Purchase, (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, Federal or state securities laws or finding any violation
of such laws.
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Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
(a)-(b) The information set forth in Section 1 ("Background of the
Offer; Contacts with the Company"), Section 2 ("Purpose of the Offer and the
Proposed Merger; Plans for the Company") and Section 16 ("The Merger") of the
Offer to Purchase is incorporated by reference.
Item 4. Terms of the Transaction.
(a) The information set forth in the Introduction, Section 2
("Purpose of the Offer and the Proposed Merger; Plans for the Company"), Section
7 ("Terms of the Offer"), Section 8 ("Acceptance for Payment and Payment for
Shares"), Section 10 ("Withdrawal Rights"), Section 11 ("Conditions of the
Offer") and Section 16 ("The Merger") of the Offer to Purchase are incorporated
by reference.
(b) There is no term or arrangement concerning the Rule 13e-3
transaction relating to any securityholder of the Company which is not identical
to that relating to other holders of the same class of securities of the
Company, except that the Purchaser will not receive any payment as a result of
the Merger with regard to Common Stock it owns.
Item 5. Plans or Proposals of the Company or Affiliate.
(a)-(e) The information set forth in Section 2 ("Purpose of the
Offer and the Proposed Merger; Plans for the Company") of the Offer to Purchase
is incorporated by reference.
(f)-(g) The information set forth in Section 4 ("Certain Effects of
the Transaction") of the Offer to Purchase is incorporated by reference.
Item 6. Source and Amount of Funds or Other Consideration.
(a) The information set forth in Section 15 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated by reference.
(b) The Purchaser and the Parent estimate that the total cost of the
Stock Purchase, the Offer and the Merger, in addition to the amount paid for
Common Stock and 8% Preferred Stock, will be approximately $2,750,000,
consisting of legal fees of $350,000, printing costs of $140,000, investment
banking fees (including fees of the Dealer Managers) of $2,250,000, and
miscellaneous costs of $10,000. The Purchaser or the Parent will pay these
costs. In addition, if the conditions to the Offer are fulfilled, the Purchaser
will be obligated to pay the expenses of the Company, which the Purchaser
estimates will exceed $2,300,000. These costs will be paid primarily with
borrowings under the Loan Document described in Section 15 ("Sources and Amount
of Funds") of the Offer to Purchase.
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(c)-(d) The information set forth in Section 15 ("Sources and
Amount of Funds") of the Offer to Purchase is incorporated by reference.
Item 7. Purposes, Alternatives, Reasons and Effects
(a)-(d) The information set forth in Section 1 ("Background of the
Offer; Contacts with the Company"), Section 2 ("Purpose of the Offer and the
Proposed Merger; Plans for the Company"), Section 3 ("Certain Federal Income Tax
Consequences") and Section 4 ("Certain Effects of the Transactions") of the
Offer to Purchase is incorporated by reference.
Item 8. Fairness of the Transaction.
(a) The Purchaser and the Parent believe that the Offer and the
Merger, which will follow the Offer if the Offer is successful, are fair to
unaffiliated securityholders of the Company. This belief is based primarily on
the fact that the $4.50 per share which the Purchaser is offering for the Common
Stock in the Offer, and which holders of Common Stock will receive as a result
of the Merger if the Offer is successful, exceeds the highest price at which the
Common Stock traded at any time during 1997, and is 33% higher than the last
sale price of the Common Stock reported on the Nasdaq SmallCap Market on
September 15, 1997, the last full day of trading prior to public announcement of
execution of the original Stock Purchase and Merger Agreement between the
Purchaser and the Company (the "Original Merger Agreement"). In addition, the
total price the Purchaser and the Parent will pay to acquire the Company in its
entirety is at the high end of the range of prices per subscriber which is being
paid to acquire cable system operators in Argentina, where all the Company's
operations are conducted. Also, the amount the Purchaser and the Parent will
pay to acquire the Company (not including the amount paid by the Purchaser on
December 5, 1997 to acquire approximately 31% of its Common Stock) will be more
than twice the total stockholder's equity of the Company at September 30, 1997,
and the per share amount which will be paid to holders of Common Stock will be
more than four and one-half times the per share stockholders equity available to
holders of Common Stock on September 30, 1997. Further, almost three months
elapsed between the time execution of the Original Merger Agreement was
announced to the public and the time the Purchaser acquired 31% of the common
stock of the Company. Insofar as the Purchaser and the Parent are aware, no
proposals have been made since then by any other persons to acquire the Company
for an amount at least as great which will be paid by the Purchaser and the
Parent (or at any other price), despite the fact that the Original Merger
Agreement and the Merger Agreement permitted the Company to terminate the
Original Merger Agreement or the Merger Agreement if, before the Purchaser
completed the purchase of Common Stock, the Company received an unsolicited
proposal regarding a transaction which the Company's Board of Directors
determined to be more favorable to the holders of the Common Stock and the 8%
Preferred Stock than the transactions under the Original Merger Agreement or the
Merger Agreement, and even after that stock purchase, the Company could
terminate the Merger Agreement if someone commenced a tender offer for all the
Common Stock and all the 8% Preferred Stock which the Company's Board of
Directors, determined to be more favorable to the Company's stockholders than
the Offer and the Merger.
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(b) The Merger must be approved by the holders of at least 66 2/3% of
the outstanding Common Stock and the holders of at least 66 2/3% of the
outstanding 8% Preferred Stock. Because of that, it is a condition to the
Purchaser's obligation to accept shares which are tendered in response to the
Offer that a number of shares be tendered and not withdrawn which, together with
the Common Stock already owned by the Purchaser, totals at least 66 2/3% of the
outstanding Common Stock and 66 2/3% of the outstanding 8% Preferred Stock. In
order for that condition to be fulfilled, at least 52% of the Common Stock which
the Purchaser does not own, and at least 66 2/3% of the 8% Preferred Stock, will
have to be tendered in response to the Tender Offer. If the Purchaser waives
that condition, then a sufficient number of shares not owned by the Purchaser
will have to be voted in favor of the Merger to cause the merger to be approved
by holders of 66 2/3% of the outstanding Common Stock and 66 2/3% of the
outstanding 8% Preferred Stock. Accordingly, holders of at least 52% of the
shares of Common Stock not owned by the Purchaser, and holders of at least 66
2/3% of the outstanding shares of 8% Preferred Stock, will have to either tender
their shares in response to the Offer or vote in favor of the Merger, in order
for the Parent to acquire the Company in its entirety.
(c) No representative of the Purchaser or of the Parent was a
director of the Company when either the Original Merger Agreement or the Amended
Merger Agreement was negotiated. However, it is the understanding of the
Purchaser and the Parent that none of the directors who were not employees of
the Company retained an unaffiliated representative to act solely on behalf of
the unaffiliated securityholders for the purpose of negotiating the terms of the
Original or the Amended Merger Agreement and/or preparing a report concerning
the fairness of the transactions which are the subject of the Original or the
Amended Merger Agreement. However, because neither the Purchaser nor the Parent
became an affiliate of the Company until after the Amended Merger Agreement was
executed, the opinion of Arnhold and S. Bleichroeder & Co. as to the fairness of
the Offer and the Merger was, in effect, an opinion of an unaffiliated
representative acting solely on behalf of unaffiliated securityholders.
(d) No representative of the Purchaser or the Parent was a director
of the Company when either the Original Merger Agreement or the Amended Merger
Agreement was approved by the directors of the Company. However, the Company's
mailing to its stockholders regarding the Offer states that the Board of
Directors of the Company had unanimously approved the Offer and the Merger
Agreement, both in its original form and as amended. Therefore, the Purchaser
and the Parent believe that the Original Merger Agreement and the Merger
Agreement each was approved by a majority of the directors of the Company who
are not employees of the Company.
(e) Not applicable.
(f) Not applicable.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
Neither the Purchaser nor the Parent has received a report, opinion or
appraisal from an outside party which is materially related to the Offer or the
Merger, including, but not
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limited to, any such report, opinion or appraisal relating to the consideration
or the fairness of the consideration being offered to holders of Common Stock or
the fairness of the transaction to the Company, to the Purchaser or the Parent
or to holders of Common Stock or other securities of the Company who are not
affiliates of the Company. The Company did obtain an opinion of Arnhold and S.
Bleichroeder & Co. to the effect that the consideration to be received by the
holders of Common Stock and 8% Preferred Stock in the Offer and in the Merger is
fair to such holders from a financial point of view.
Item 10. Interest in Securities of the Subject Company.
(a) The information set forth in the Introduction and Section 14
("Certain Information Concerning the Purchaser and Parent") of the Offer to
Purchase is incorporated by reference.
(b) The information set forth in Section 14 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase is incorporated
by reference.
Item 11. Contracts, Arrangements or Understanding With Respect to the Company's
Securities.
The information set forth in Section 1 ("Background of the Offer;
Contacts with the Company"), Section 2 ("Purpose of the Offer and Proposed
Merger; Plans for the Company") and Section 16 ("The Merger") of the Offer to
Purchase is incorporated by reference.
Item 12. Present Intention and Recommendation of Certain Persons With Regard to
the Transaction.
(a) Jack R. Crosby, the Chairman of the Board and Chief Executive
Officer of the Company, has tendered 134,460 shares of Common Stock in response
to the Offer. Jack Gray, Jr., the President and Chief Operating Officer, and a
Director, of the Company, has tendered 254,972 shares of Common Stock in
response to the Offer. Winston J. Churchill, a director of the Company,
separately, together with his wife, and as trustee of the Winston J. Churchill,
Jr. retirement plan, has tendered a total of 364,065 shares of Common Stock and
1,250 shares of 8% Preferred Stock in response to the Offer. J. Kelly Elliott,
a director of the Company, has tendered 1,394 shares of Common Stock in response
to the Offer. Lee A. Lahourcade, a director of the Company, has tendered 1,880
shares of Common Stock in response to the Offer. Neil R. Austrian, Jr., Senior
Vice President and the Chief Financial Officer of the Company, has tendered
4,200 shares of Common Stock in response to the Offer. John D. Becker, the
Controller of the Company, has tendered 500 shares of Common Stock in response
to the Offer. Each of these officers and directors of the Company has` he right
to withdraw those shares until the Offer expires and the shares are accepted and
paid for. There are no contracts which require any officers or directors of the
Company to tender shares and there are no contracts which prevent any of the
officers or directors of the Company from withdrawing shares which already have
been tendered.
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(b) The Company's mailing to its stockholders regarding the Offer
states that the Board of Directors of the Company unanimously approved the Offer
and the Merger and recommended that shareholders of the Company accept the Offer
and tender their shares pursuant to the Offer. Jack R. Crosby, the Chairman of
the Board and Chief Executive Officer of the Company, and Jack S. Gray, Jr., the
President and Chief Operating Officer of the Company, both are directors of the
Company.
Item 13. Other Provisions of the Transaction.
(a) The information in Section 16 ("The Merger") of the Offer to
Purchase under the subcaption "Appraisal Rights" is incorporated by reference.
See also Exhibit (f) to this Transaction Statement.
(b) No provision has been made by the Purchaser or the Parent, and
insofar as the Purchaser and the Parent are aware, no provision has been made by
the Company, in connection with the Offer or the Merger to allow unaffiliated
securityholders to obtain access to the corporate files of the Company or of the
Purchaser or the Parent or to obtain counsel or appraisal services at the
expense of the Company or the Purchaser or the Parent.
(c) Not applicable.
Item 14. Financial Information.
(a) The financial information contained in the Company's Annual
Report on Form 10-K SB for the year ended March 31, 1997 and its Quarterly
Reports on Form 10-Q for the periods ended June 30, 1997 and September 30, 1997
is incorporated by reference. In addition, the information contained in Section
14 ("Certain Information Concerning the Company") of the Offer to Purchase,
under the subcaption "Selected Consolidated Financial Information," is
incorporated by reference. Based upon the 13,206,515 shares of Common Stock
which were outstanding at September 30, 1997, after giving effect to the
liquidation preference of the 8% Preferred Stock ($13,925,000) and the
liquidation preference of the Series 1990 10% Convertible Preferred Stock of the
Company ($3,456,500), the book value of the Company available to holders of
Common Stock at September 30, 1997 was $.96 per share of Common Stock.
(b) The Purchaser and the Parent do not believe pro forma data is
material with regard to the Tender Offer or the Merger.
Item 15. Persons and Assets Employed, Retained, or Utilized.
(a) No officer, employee, class of employees or corporate asset of
the Company has been or is proposed to be employed, availed of or utilized by
the Purchaser or the Parent in connection with the Offer or the Merger, except
to the extent that, in order to comply with requirements of the Securities
Exchange Act of 1934, officers and employees of the Company have
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been required to prepare a filing on Schedule 14D-9 with regard to the Offer and
amendments to that filing, and except to the extent that officers or employees
of the Company may participate in preparation of a proxy statement or
information statement relating to the Merger, if one is required. The Purchaser
and the Parent understand that officers of the Company personally urged
stockholders to tender shares in response to the Offer. However, they were not
required to do that.
(b) The information set forth in the Introduction and Section 21
("Fees and Expenses") of the Offer to Purchase is incorporated by reference.
Item 16. Additional Information.
The Purchaser and the Parent do not believe any additional information
is necessary to make the statements made above in light of the circumstances
under which they are made, not materially misleading.
Item 17. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.
The information set forth in the Introduction and Section 1
("Background of the Offer; Contacts with the Company"), Section 2 ("Purpose of
the Offer and the Proposed Merger; Plans for the Company") and Section 15
("Certain Information about the Company") of the Offer to Purchase is
incorporated herein by reference.
Item 19. Material to be Filed as Exhibits.
(a) Note Purchase Agreement among the Parent and the other Companies
named or referred to therein, as issuers, the financial institutions party
thereto, as purchasers, ING Baring (U.S.) Securities, Inc., as Arranger, ING
Baring (U.S.) Capital Corporation, as Administrative Agent and Collateral Agent
and the Bank of New York, as Registrar.(1)
(b) Fairness opinion of Arnhold & S. Bleichroeder & Co.(2)
(c) Not applicable.
(d) (1) Offer to Purchase, dated December 8, 1997.(1)
____________________
(1) Incorporated by reference to the Schedule 14D-1 filed by the Purchaser and
the Parent on December 8, 1997.
(2) Incorporated by reference to the Schedule 14D-9 filed by Tescorp, Inc. on
December 8, 1997 and the Schedule 14D-9A (Amendment No. 1) filed by
Tescorp, Inc. on December 24, 1997.
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(2) Supplemented Offer to Purchase, dated January 13, 1998.
(3) Letters of Transmittal.(1)
(4) Notice of Guaranteed Delivery.(1)
(5) Letter from the Dealer Managers to Brokers, Dealers,
Commercial Banks, Trust Companies and other Nominees.(1)
(6) Letter to clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and other Nominees.(1)
(7) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.(1)
(8) Summary Advertisement as published on December 8, 1997.(1)
(9) Text of Press Release, dated December 5, 1997, issued by the
Parent.(1)
(10) Text of Press Release, dated January 12, 1998, issued by the
Parent.
(e) Description of Rights.
(f) None.
__________________
(1) Incorporated by reference to the Schedule 14D-1 filed by the Purchaser and
the Parent on December 8, 1997.
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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.
Dated: January 13, 1998
TESCORP ACQUISITION CORPORATION
By: /s/ Alfredo L. Vila
------------------------------
Name: Alfredo L. Vila
Title: President
SUPERCANAL HOLDING, S.A.
By: /s/ Alfredo L. Vila
-------------------------------
Name: Alfredo L. Vila
Title: Vice Chairman
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SUPPLEMENTED OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND SERIES 1995 8% CONVERTIBLE PREFERRED STOCK
of
TESCORP, INC.
by
TESCORP ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY
of
SUPERCANAL HOLDING S.A.
for
$4.50 PER SHARE OF COMMON STOCK
and
$144 PLUS ACCRUED DIVIDENDS FOR EACH SHARE
OF SERIES 1995 8% CONVERTIBLE PREFERRED STOCK
NET IN CASH
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, FEBRUARY 5, 1998, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON (1) THERE BEING VALIDLY TENDERED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION TIME A NUMBER OF SHARES OF COMMON STOCK
("COMMON SHARES") OF TESCORP, INC. (THE "COMPANY"), WHICH, WHEN ADDED TO THE
COMMON SHARES ALREADY OWNED BY TESCORP ACQUISITION CORPORATION (THE
"PURCHASER"), CONSTITUTES MORE THAN TWO-THIRDS OF THE TOTAL NUMBER OF
OUTSTANDING COMMON SHARES, (2) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN
PRIOR TO THE EXPIRATION TIME A NUMBER OF SHARES OF SERIES 1995 8% CONVERTIBLE
PREFERRED STOCK ("8% PREFERRED SHARES") WHICH, WHEN ADDED TO THE 8% PREFERRED
SHARES ALREADY OWNED BY THE PURCHASER, CONSTITUTES MORE THAN TWO-THIRDS OF THE
TOTAL NUMBER OF OUTSTANDING 8% PREFERRED SHARES ON A FULLY DILUTED BASIS, AND
(3) SATISFACTION OF CERTAIN OTHER CONDITIONS. SEE SECTION 15.
THIS OFFER IS BEING MADE IN ACCORDANCE WITH AN AMENDED STOCK PURCHASE AND
MERGER AGREEMENT (THE "MERGER AGREEMENT"), DATED AS OF NOVEMBER 26, 1997,
BETWEEN THE COMPANY AND THE PURCHASER. THE BOARD OF DIRECTORS OF THE COMPANY (1)
HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND A MERGER OF THE COMPANY AND THE
PURCHASER (THE "MERGER"), IN WHICH SUPERCANAL HOLDING S.A., THE PARENT OF THE
PURCHASER, WILL BECOME THE SOLE STOCKHOLDER OF THE MERGED COMPANY AND THE
STOCKHOLDERS OF THE COMPANY WILL RECEIVE THE SAME AMOUNT OF CASH PER COMMON
SHARE AND PER 8% PREFERRED SHARE AS IS PAID FOR SHARES PURCHASED THROUGH THE
OFFER, (2) HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO
AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS AND (3) RECOMMENDS THAT
HOLDERS OF THE COMMON SHARES AND 8% PREFERRED SHARES (COLLECTIVELY, "SHARES")
TENDER THEIR SHARES IN RESPONSE TO THE OFFER.
------------------------
This Supplemented Offer to Purchase (a) contains information which was not
included in the original Offer to Purchase dated December 8, 1997 and (b)
reflects an extension of the Expiration Time of the offer to 12:00 Midnight, New
York City time, on February 5, 1998, unless the Offer is extended further. THERE
HAS NOT BEEN A CHANGE IN THE CONSIDERATION OFFERED FOR COMMON SHARES OR 8%
PREFERRED SHARES. By the original January 9, 1998 Expiration Time of the Offer,
12,985,621 Common Shares and 109,000 8% Preferred Shares had been tendered.
This, together with the Common Shares the Purchaser already owned, would have
constituted 96.2% of the outstanding Common Shares and 78.1% of the outstanding
8% Preferred Shares.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION 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 DEALER MANAGERS FOR THE OFFER ARE:
ING BARINGS FURMAN SELZ
January 13, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
INTRODUCTION............................................................................................... 1
SPECIAL FACTORS............................................................................................ 3
1. Background of the Offer; Contacts with the Company............................................ 3
2. Purpose of the Offer and the Proposed Merger; Plans for the Company........................... 5
3. Certain Federal Income Tax Consequences....................................................... 6
4. Certain Effects of the Transaction............................................................ 7
5. Fairness of the Transaction................................................................... 8
6. Reports, Opinions, Appraisals and Certain Negotiations........................................ 9
THE TENDER OFFER........................................................................................... 10
7. Terms of the Offer............................................................................ 10
8. Acceptance for Payment and Payment for Shares................................................. 11
9. Procedures for Tendering Shares............................................................... 12
10. Withdrawal Rights............................................................................. 15
11. Conditions of the Offer....................................................................... 16
12. Price Range of Shares......................................................................... 17
13. Certain Information Concerning the Company.................................................... 17
14. Certain Information Concerning The Purchaser and Parent....................................... 19
15. Source and Amount of Funds.................................................................... 20
16. The Merger.................................................................................... 21
17. Dividends and Distributions................................................................... 24
18. Certain Legal Matters; Regulatory Approvals................................................... 24
19. Fees and Expenses............................................................................. 25
20. Miscellaneous................................................................................. 25
SCHEDULE I................................................................................................. I-1
SCHEDULE II................................................................................................ II-1
</TABLE>
IMPORTANT
Any stockholder who wishes to tender Shares should complete and sign a
Letter of Transmittal (or a facsimile of one) in accordance with the
instructions set forth in the Letter of Transmittal and (A) mail or deliver it,
together with the certificate(s) representing the tendered Shares (the "Share
Certificates") and any other required documents, to the Depositary named on the
back cover of this Supplemented Offer to Purchase or (B) tender the Shares using
the procedures for book-entry transfer described in Section 9. A stockholder
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact the broker, dealer, commercial bank,
trust company or other nominee if the stockholder wishes to tender Shares.
A stockholder who wishes to tender Shares but whose certificates are not
immediately available, or who cannot comply with the procedures for book-entry
transfer described in this Supplemented Offer to Purchase on a timely basis, may
tender the Shares by following the procedures for guaranteed delivery described
in Section 9.
Questions and requests for assistance, or for additional copies of this
Supplemented Offer to Purchase, the Letter of Transmittal or other tender offer
materials, may be directed to the Information Agent or the Dealer Managers
(named on the back cover of this Supplemented Offer to Purchase) at their
respective addresses and telephone numbers set forth on the back cover. Holders
of Shares may also contact brokers, dealers or banks for additional copies of
this Supplemented Offer to Purchase, the Letter of Transmittal or other tender
offer material.
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TO THE HOLDERS OF SHARES OF COMMON STOCK, PAR VALUE $.02 PER SHARE, AND THE
HOLDERS OF SERIES 1995 8% CONVERTIBLE PREFERRED STOCK, OF TESCORP, INC.:
INTRODUCTION
Tescorp Acquisition Corporation (the "Purchaser"), a Delaware corporation
and a wholly owned subsidiary of Supercanal Holding S.A. ("Parent"), an
Argentine corporation, hereby offers to purchase (i) all the outstanding shares
of common stock, par value $0.02 per share ("Common Shares"), of Tescorp, Inc.
(the "Company"), a Texas corporation, for $4.50 per Common Share, net to the
seller in cash, and (ii) all the outstanding shares of Series 1995 8%
Convertible Preferred Stock ("8% Preferred Shares") of the Company for $144 per
share plus accrued dividends from the last date on which dividends were paid to
the Expiration Time (as defined below), net to the seller in cash (collectively
the Common Shares and the 8% Preferred Shares are referred to as the "Shares"
and the $4.50 per share price and the $144 per share price plus accrued
dividends which the Purchaser is offering to pay are referred to as the
"purchase prices"), upon the terms and subject to the conditions set forth in
this Supplemented Offer to Purchase and in the related Letters of Transmittal
(which together, as amended from time to time, constitute the "Offer").
The Offer is being made in accordance with an Amended Stock Purchase and
Merger Agreement (the "Merger Agreement") dated as of November 26, 1997 between
the Purchaser and the Company. The Merger Agreement contemplates that (i) the
Purchaser would purchase from the Company 6,006,006 Common Shares for $3.33 per
share (the "Stock Purchase"), (ii) not later than December 5, 1997, the Company
would announce the Offer and (iii) if the Purchaser purchases at least a number
of Common Shares and 8% Preferred Shares which, together with the shares already
owned by the Purchaser (which will include the 6,006,006 Common Shares purchased
by the Purchaser in the Stock Purchase), constitutes at least two thirds of the
outstanding Common Shares and two-thirds of the outstanding 8% Preferred Shares,
and the other conditions set forth in the Merger Agreement are satisfied or
waived, the Purchaser will take all steps in its power to cause the Purchaser to
be merged into the Company in a transaction in which Supercanal Holding S.A.,
the sole stockholder of the Purchaser, will become the sole stockholder of the
corporation which survives the Merger and all the stockholders of the Company
other than the Purchaser will receive cash in the same amount per Common Share
and per 8% Preferred Share as is paid for Shares purchased through the Offer.
Under the Merger Agreement, if a tender offer is commenced by someone other than
the Purchaser for all the outstanding Common Shares and 8% Preferred Shares
which the Company's Board of Directors determines to be superior to the Offer
and which the Board of Directors resolves to accept or to recommend to the
Company's stockholders, the Company may terminate the Merger Agreement by paying
the Purchaser $5 million.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes as a result of the sale of shares to the
Purchaser in response to the Offer.
Any tendering stockholder who fails to complete and sign the Substitute Form
W-9 included in the Letter of Transmittal may be subject to a required backup
Federal income tax withholding of 31% of the gross proceeds payable to the
stockholder or other payee pursuant to the Offer. See Sections 3 and 9. The
Purchaser will pay all charges and expenses of Furman Selz LLC and ING Baring
(U.S.) Securities, Inc. as Dealer Managers (the "Dealer Managers"), The Bank of
New York, as Depositary (the "Depositary"), and Morrow & Co., Inc., as
Information Agent (the "Information Agent"), incurred in connection with the
Offer. See Section 19.
THE BOARD OF DIRECTORS OF THE COMPANY (1) HAS APPROVED THE OFFER AND THE
MERGER WHICH WILL FOLLOW THE OFFER IF THE OFFER IS SUCCESSFULLY COMPLETED AND
THE SHAREHOLDERS OF THE COMPANY APPROVE THE MERGER, (2) HAS DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER EACH IS FAIR TO AND IN THE BEST INTERESTS OF
THE COMPANY'S STOCKHOLDERS, AND (3) RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER.
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THE MINIMUM CONDITION. The Offer is subject to a number of conditions,
including the Minimum Condition. See Section 17. The Minimum Condition requires
that (i) the number of Common Shares tendered and not withdrawn before the
Expiration Time, when added to the number of Common Shares already owned by the
Purchaser, constitute more than two-thirds of the total number of outstanding
Common Shares and (ii) the number of 8% Preferred Shares validly tendered and
not withdrawn before the Expiration Time, when added to the number of 8%
Preferred Shares already owned by the Purchaser, constitute more than two-thirds
of the total number of outstanding 8% Preferred Shares. The Company has informed
the Purchaser that as of December 5, 1997, there were 19,223,456 outstanding
Common Shares and 139,250 outstanding 8% Preferred Shares. The Purchaser owned
6,006,006 (approximately 31%) of those Common Shares. On that date, there also
were 3,060,470 Common Shares reserved for issuance on exercise of outstanding
options and warrants. The Shares owned by the Purchaser were acquired from the
Company in the Stock Purchase, which took place under the Merger Agreement on
December 5, 1997.
By the close of business on January 9, 1998, (i) there were 19,745,863
outstanding Common Shares, (ii) 12,985,621 Common Shares had been tendered in
response to the Offer (which, together with the 6,006,006 Common Shares already
owned by the Purchaser, constituted 96.2% of the outstanding Common Shares) and
(iii) 109,000 8% Preferred Shares (78.1% of the outstanding 8% Preferred Shares)
had been tendered in response to the Offer. Tendered shares may be withdrawn
until the extended Expiration Time of the Offer. See Section 10, "Withdrawal
Rights."
Other conditions to consummation of the Offer are described in Section 11.
The Purchaser expressly reserves the right, in its sole discretion, to waive any
of the conditions to the Offer. See Section 11.
THIS SUPPLEMENTED OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
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SPECIAL FACTORS
1. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. The initial
discussions of a possible transaction between Parent and the Company took place
at a meeting in October 1996 between senior officers of the Company and
representatives of Integra Financial Services L.L.C ("Integra"), an advisor to
Parent. These initial discussions, and additional discussions through March
1997, focused on the high degree of consolidation in the Argentine CATV industry
which was taking place, and the advisability of combining the operations of
Parent and the Company in view of that consolidation.
In April 1997, there were discussions about a merger of the Company and
Parent, in which shareholders of the Company would receive shares of Parent.
Extensive discussions were held, and draft agreements were prepared. However,
the merger would have required approval of the shareholders of both companies. A
shareholder of Parent, which had the ability to preclude Parent from carrying
out the merger, stated it would not approve a merger. Because of that,
discussions of a merger were dropped.
Early in August 1997, discussions of a transaction between Parent and the
Company were revived. Parent was represented in these discussions by Integra,
ING Baring (U.S.) Securities, Inc. ("ING Baring Securities") and Smith Barney &
Co., Inc. ("Smith Barney"). The Company was represented in these discussions by
its senior officers and by Arnhold and S. Bleicholder & Co. ("Bleicholder"). By
mid-August, Parent and the Company each brought attorneys into the discussions,
and agreements began to be drafted.
From mid-August to mid-September, there were nearly daily discussions of a
transaction between Parent and the Company. Initially, the discussions related
to a purchase by Parent from the Company of what would have been approximately
45% of the outstanding Common Shares and 30% of the outstanding 8% Preferred
Shares for approximately $39 million, followed by a merger of the Company into a
subsidiary of Parent in which the stockholders of the Company would have
received $4.53 per Common Share and $144.96 per 8% Preferred Share. However, at
Parent's suggestion, it was decided that the transaction would take place in
three steps, with a tender offer for the Common Shares and 8% Preferred Shares
between the initial stock purchase and the merger.
A principal issue during the discussions was a desire of the Company to be
sure Parent would not become unable to complete a transaction either (i) because
it did not have adequate funds or (ii) because its shareholders would not permit
the transaction to proceed. With regard to the first concern, ING Baring (US)
Capital Corporation ("ING Baring Capital") delivered a letter to the Company
stating that ING Baring Capital had obtained internal credit approval for a
senior secured credit facility in an aggregate principal amount sufficient to
conclude the transactions being discussed, but the disbursement of that facility
was subject to the negotiation, execution and delivery of definitive
documentation satisfactory to ING Baring Capital and its counsel, which would
contain, among other things, customary covenants, conditions precedent and
security arrangements (including financial covenants on a pro forma basis
concerning the combined operations of Parent and the Company). With regard to
the second concern, the stockholders of Parent all stated they approved of the
transaction.
On September 16, 1997, the Purchaser (a wholly-owned subsidiary of Parent)
and the Company signed a Stock Purchase and Merger Agreement (the "Original
Merger Agreement") in which they agreed that (i) the Purchaser would purchase
10,790,000 Common Shares (which would be approximately 45% of the outstanding
Common Shares) for $35,930,700 ($3.33 per share) and would purchase 60,750 8%
Preferred Shares (which would be 30% of the outstanding 8% Preferred Shares) for
$6,075,000 ($100 per share), (ii) shortly after completion of that stock
purchase, the Purchaser would make a tender offer for all the outstanding Common
Shares and 8% Preferred Shares for $4.50 per Common Share and $144 per 8%
Preferred Share (plus an amount equal to accrued dividends on the 8% Preferred
Shares), and (iii) if the tender offer resulted in the Purchaser's owning at
least two-thirds of the outstanding Common Shares and two-thirds of the
outstanding 8% Preferred Shares (which would enable the Purchaser to approve a
merger between the Company and itself even if no other Tescorp shareholders
voted in favor of the merger), the
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Company and the Purchaser would be merged in a transaction in which Parent would
become the sole shareholder of the merged company and the former Tescorp
shareholders who had not tendered their shares would receive $4.50 per Common
Share and $144 per 8% Preferred Share plus accrued dividends, unless they sought
to obtain appraisal of their shares in accordance with Articles 5.11 through
5.13 of the Texas Business Corporation Act. The price to be paid was reduced
from $4.53 to $4.50 per Common Share and from $144.96 to $144 per 8% Preferred
Share, because it was determined that the price which would have to be paid in
order to induce holders of minority interests in Tescorp joint ventures to sell
those interests to the Purchaser or an affiliate would be higher than had been
anticipated. The Original Merger Agreement required that before the Purchaser
purchased the 10,790,000 Common Shares and the 60,750 8% Preferred Shares, three
designees of the Purchaser would be elected to the Company's Board of Directors.
When the Original Merger Agreement was signed, the Purchaser gave the Company a
$5,000,000 deposit, to be applied against the purchase price of the 10,790,000
Common Shares and the 60,750 8% Preferred Shares.
After the Original Merger Agreement was signed, required filings were made
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the waiting periods required by that Act were terminated. Also, agreements
between Parent and various financial institutions, including ING Bank N.V.,
which included the financing required for the transaction contemplated by the
Original Merger Agreement were drafted. However, before those financing
agreements were signed, it was realized that the purchase by the Purchaser of
45% of the Common Shares and 30% of the 8% Preferred Shares would not result in
the Company's financial statements being included in Parent's consolidated
financial statements, and therefore, that step of the transaction would cause
Parent to be in violation of financial ratio covenants which would be in the
financing agreements.
On November 5, 1997, representatives of Parent informed the principal
executive officers of the Company that, because of requirements of Parent's
expected lending agreements, Parent and the Purchaser would not be able to carry
out the transaction as contemplated by the Original Merger Agreement.
Discussions ensued, and on December 5, 1997 the Purchaser and the Company
entered into an Amended Stock Purchase and Merger Agreement (the "Merger
Agreement"). The principal difference between the Merger Agreement and the
Original Merger Agreement is that under the Merger Agreement, the initial step
was the purchase by the Purchaser of 6,006,006 Common Shares for $20,000,000
(including $5,000,000 paid through application of the deposit given when the
Original Merger Agreement was signed), rather than the purchase of 10,790,000
Common Shares and 60,750 8% Preferred Shares for $42,005,700 which had been
contemplated by the Original Merger Agreement. Because this initial transaction
would be smaller than had been contemplated in the Original Merger Agreement,
provisions were added to the Merger Agreement which were intended to insure that
the proceeds of the initial transaction would give the Company the cash it
needed for specified transactions (including a debt repayment due in February
1998) and the number of directors of the Company the Purchaser could designate
was reduced from three to one.
In accordance with the Merger Agreement, on December 5, 1997, (i) the
Purchaser purchased a total of 6,006,006 Common Shares for $20,000,000 ($3.33
per share), of which $15 million was paid in cash and the balance was paid by
permitting the Company to keep the $5 million deposit which the Purchaser had
given to the Company when the Original Merger Agreement was signed, and (ii) the
Offer was announced. The Merger Agreement required that materials relating to
the Offer be sent to the Company's stockholders, and requires that if the
Purchaser increases its ownership to at least two-thirds of the outstanding
Common Shares and obtains at least two- thirds of the outstanding 8% Preferred
Shares through the Offer (i.e., the Minimum Condition is satisfied), the merger
contemplated by the Merger Agreement will take place. The Merger Agreement is
described under the caption "The Merger Agreement."
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2. PURPOSE OF THE OFFER AND THE PROPOSED MERGER; PLANS FOR THE COMPANY.
PURPOSE. The purpose of the Stock Purchase, the Offer and the Merger is to
enable Parent to acquire all the outstanding stock of the Company. The Offer is
the second step in this effort. In the Stock Purchase, Parent, through the
Purchaser, acquired approximately 31% of the outstanding Common Shares. If the
Purchaser accepts Shares tendered in response to the Offer, the Purchaser's (and
indirectly Parent's) ownership of Common Shares and 8% Preferred Shares will
increase by the number of Shares purchased through the Offer. The purpose of the
Merger will be to enable Parent to become the owner of all the outstanding stock
of the Company.
If the Purchaser purchases through the offer at least the minimum number of
Common Shares and 8% Preferred Shares required to satisfy the Minimum Condition,
Parent will be required by the Merger Agreement to carry out the Merger. If
Purchaser purchases the shares which are properly tendered in response to the
Offer, but those shares do not increase the Purchaser's holdings sufficiently to
satisfy the Minimum Condition, neither Parent nor the Company will be
contractually obligated to carry out the Merger. However, unless the Loan
Agreement is modified, the Purchaser will not be permitted to waive the Minimum
Condition (or any other condition to its obligation to accept and pay for the
Shares which are tendered in response to the Offer).
If, because one or more of the conditions to the Purchaser's obligation to
accept Shares which are tendered in response to the Offer is not fulfilled, the
Purchaser does not purchase the Shares which are tendered in response to the
Offer, the Company will have the option, which it may exercise at any time on or
before December 5, 1998 (the first anniversary of the date on which the Stock
Purchase was completed), to repurchase all the stock the Purchaser acquired
through the Stock Purchase for the price the Purchaser paid for it. If, however,
the Purchaser purchases all the Shares which are tendered in response to the
Tender Offer, even though it is not required to do so, the Company will not have
the option to repurchase the stock the Purchaser acquired through the Stock
Purchase.
The Purchaser is also required to purchase, at or before the Effective Time
of the Merger, the minority interests in some cable television systems of which
the Company is the majority owner, except to the extent the current owners of
the minority interests will not sell them for prices specified in the Merger
Agreement. The Purchaser also is required to purchase two local cable systems
which were the subject of options held by the Company, if the owners of these
systems will sell them on the terms provided in the options. There is no
provision of the Merger Agreement giving the Company the right, or the
obligation, to purchase the minority interests or the two cable systems from the
Purchaser if the Purchaser purchases them but the Merger does not take place.
If Parent acquires all the stock of the Company, Parent will include the
Company's cable systems in Parent's network of Argentine cable systems. If that
occurs, Parent may make changes in the way those cable systems are operated, in
the corporate structure of those cable systems or in their personnel. Parent
also may liquidate the Company so Parent or another subsidiary of Parent will be
the sole owner of the Argentine cable systems currently owned or operated by the
Company. Except as described, neither the Purchaser nor Parent has any current
plans or proposals that would relate to, or result in, any extraordinary
corporate transaction involving the Company, such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries, a sale or transfer
of a material amount of assets of the Company or any of its subsidiaries, any
changes in the Company's capitalization or dividend policy or any other material
change in the Company's business, corporate structure or personnel.
In accordance with the Merger Agreement, effective December 5, 1997, Daniel
Vila, was elected to the Company's Board of Directors. The Company is required
to use its best efforts to cause Daniel Vila, or if he becomes unable to serve,
another designee of the Purchaser reasonably acceptable to the Company, to be
elected at all subsequent meetings of the Company's stockholders at which
directors are elected. If (i) at any time the Purchaser and its affiliates
(including Parent) cease to own at least 15% of the outstanding Common Shares,
or (ii) the Purchaser breaches or fails to fulfill in a material respect any of
its obligations
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under the Merger Agreement within 10 days after written notice of the failure
from the Company, the Purchaser must cause Daniel Vila or whoever else may be
its designee to resign.
ACQUISITION PROPOSALS. The Company may not, and may not authorize its
officers, directors, employees or agents to, enter into any discussions or take
any other steps, a likely result of which might be to cause someone other than
the Purchaser or Parent to (i) solicit tenders of stock of the Company or
otherwise seek to acquire 5% or more of either the Common Shares or the 8%
Preferred Shares, other than with a view to tendering those Shares in response
to the Offer, (ii) acquire all or a substantial portion of the assets of the
Company and its subsidiaries (whether through acquisitions of assets,
acquisitions of stock of subsidiaries or both), or (iii) otherwise acquire the
Company or a substantial portion of its assets if the Minimum Condition is not
met or if the Company's stockholders do not approve the Merger. The Company is
required to notify the Purchaser if the Company learns that anyone is
contemplating soliciting tenders of its stock, acquiring 5% or more of its
outstanding stock, acquiring all or a substantial portion of its assets and
those of its subsidiaries or otherwise offering to acquire the Company or its
assets if the Minimum Condition is not met or if its stockholders do not approve
the Merger, and to provide the Purchaser with any additional information it
obtains regarding the contemplated solicitation of tenders, acquisition of stock
or assets or other acquisition offer.
If there is an unsolicited tender offer from someone other than the
Purchaser which the Company's Board of Directors determines, in good faith and
after consultation with the Company's independent financial advisor, (i) would
result in the holders of the Common Shares receiving consideration with a fair
value of more than $5.00 per share and the holders of the 8% Preferred shares
receiving consideration with a fair value of more than $160 per share, and (ii)
is more favorable both to the holders of the Common Shares than the transactions
under the Merger Agreement and to the holders of the 8% Preferred Shares the
Company may terminate the Merger Agreement by paying the Purchaser $5 million.
See Section 13.
3. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following summary is a general discussion of certain of the expected
Federal income tax consequences of the Offer. The summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), and published
regulations, rulings and judicial decisions in effect at the date of this
Supplemented Offer to Purchase, all of which are subject to change. The summary
does not discuss all aspects of Federal income taxation that may be relevant to
a particular holder in light of his or her personal circumstances or to certain
types of holders subject to special treatment under the Federal income tax laws,
such as life insurance companies, financial institutions, tax-exempt
organizations and non-U.S. persons. The following summary may not be applicable
with respect to Shares acquired through exercise of employee stock options or
otherwise as compensation. It also does not discuss any aspects of state or
local tax laws or of tax laws of jurisdictions outside the United States of
America.
THE DESCRIPTION OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW IS FOR
GENERAL INFORMATION ONLY. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO
THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE SALE OF THEIR SHARES, INCLUDING
THE APPLICATION OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS AND POSSIBLE
CHANGES IN TAX LAWS.
Sales of Shares in response to the Offer will be taxable transactions for
Federal income tax purposes, and may also be taxable transactions under
applicable state, local, foreign and other tax laws. For Federal income tax
purposes, a tendering stockholder will generally recognize gain or loss equal to
the difference between the amount of cash received by the stockholder upon sale
of the Shares and the aggregate tax basis in the Shares which are sold. Under
present law, gain or loss will be calculated separately for each block of Shares
tendered and purchased pursuant to the Offer.
If tendered Shares are held by a tendering stockholder as capital assets,
gain or loss recognized by the tendering stockholder will be capital gain or
loss, which will be long-term capital gain or loss if the
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tendering stockholder's holding period for the Shares exceeds one year.
Long-term capital gains recognized by a tendering individual stockholder will
generally be taxed at a maximum Federal marginal tax rate of 28% as to Shares
held between 12 and 18 months and 20% as to shares held more than 18 months.
Long-term capital gains recognized by a tendering corporate stockholder will be
taxed at a maximum Federal marginal tax rate of 35%.
A stockholder (other than certain exempt stockholders, including all
corporations and certain foreign individuals) who tenders Shares may be subject
to 31% backup withholding unless the stockholder provides its taxpayer
identification number ("TIN") and certifies that the TIN is correct or properly
certifies that it is awaiting a TIN. This should be done by completing and
signing the substitute Form W-9 included as part of the Letter of Transmittal. A
stockholder that does not furnish its TIN also may be subject to a penalty
imposed by the IRS.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from each payment to that stockholder. Backup withholding is not
an additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
4. CERTAIN EFFECTS OF THE TRANSACTION.
NASDAQ. The purchase of the Shares tendered in response to the Offer will
reduce the number of Common Shares that might otherwise trade publicly and could
reduce the number of holders of Common Shares, which could adversely affect the
liquidity and market value of the remaining Common Shares held by the public.
Depending upon the number of Common Shares purchased pursuant to the Offer, the
Common Shares may no longer meet the standards for continued inclusion in the
NASDAQ Small-Cap Market, which require that an issuer have at least 200,000
publicly held shares with a market value of at least $1,000,000, held by at
least 400 shareholders or 300 shareholders of round lots. If these standards are
not met, the Common Shares might nevertheless continue to be quoted in the
over-the-counter "additional list" or in one of the "local lists," but if the
number of holders of the Common Shares falls below 300, or if the number of
publicly held Common Shares falls below 100,000 or there are not at least two
registered and active market makers for the Common Shares, the Common Shares
would no longer be "qualified" for NASDAQ reporting and NASDAQ would cease to
provide any quotations. Shares held directly or indirectly by directors,
officers or beneficial owners of more than 10% of the Common Shares (which would
include the Purchaser) are not considered as being publicly held for this
purpose. If the Common Shares are no longer eligible for NASDAQ quotation,
quotations might still be available from other sources. The extent of the public
market for the Shares and the availability of quotations would, however, depend
on the remaining number of holders of Common Shares, the interest of securities
firms in maintaining a market in the Common Shares, the possible termination of
registration under the Exchange Act, as described below, and other factors.
According to the Company, as of November 14, 1997, there were approximately 336
holders of record of Common Shares and approximately 1,460 beneficial owners of
Common Shares and as of December 5, 1997, there were 19,223,456 Common Shares
outstanding, of which 6,006,006 were owned by the Purchaser. By January 9, 1998,
there were only 754,236 Common Shares which were not owned by the Purchaser and
had not been tendered in response to the Offer. However, tendered shares can be
withdrawn until the Expiration Time.
EXCHANGE ACT REGISTRATION. The Common Shares are currently registered under
the Exchange Act. That registration may be terminated upon application of the
Company to the Securities and Exchange Commission if the Common Shares are not
listed on a national securities exchange or quoted on NASDAQ and there are fewer
than 300 record holders of the Common Shares. The termination of registration of
the Common Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to holders of Common Shares
and to the Commission and would
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make certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act, the requirement of
furnishing a proxy statement in connection with stockholders' meetings pursuant
to Section 14(a) of the Exchange Act, and the requirements of Rule 13e-3 under
the Exchange Act with respect to "going-private" transactions, no longer
applicable to the Company. See Section 18. In addition, "affiliates" of the
Company and persons holding "restricted securities" of the Company may be
deprived of the ability to dispose of those securities pursuant to Rule 144
under the Securities Act. If registration of the Common Shares under the
Exchange Act were terminated, the Common Shares would no longer be eligible for
quotation on NASDAQ. The Purchaser intends to seek to cause the Company to make
an application for termination of registration of the Common Shares under the
Exchange Act as soon after consummation of the Offer as the requirements for
termination of the registration of the Common Shares are met. If few or none of
the Common Shares which were tendered by the original Expiration Time of the
Offer are withdrawn, the Company may be able to terminate the registration of
the Common Shares under the Exchange Act before stockholder action is taken
regarding the Merger. If the registration of the Common Shares under the
Exchange Act is terminated before stockholder action is taken regarding the
Merger (i) if the Merger requires a solicitation of proxies, the proxy
solicitation materials will not be subject to the Commission's proxy rules, and
(ii) if no solicitation of proxies is necessary, the Company will not be subject
to a requirement of the Commission's proxy rules that it distribute an
Information Statement which complies with those rules before the Merger takes
place.
5. FAIRNESS OF THE TRANSACTION. The Purchaser and the Parent believe that
the Offer and the Merger, which will follow the Offer if it is successful, are
fair to holders of Common Shares who are not affiliated with the Purchaser, the
Parent or the Company. This belief is based primarily on the fact that the $4.50
per share which the Purchaser is offering for the Common Shares in the Offer,
and which holders of Common Shares will receive as a result of the Merger if the
Offer is successful, exceeds the highest price at which the Common Shares traded
at any time during 1997, and is 33% higher than the last sale price of the
Common Shares reported on the Nasdaq SmallCap Market on September 15, 1997, the
last full day of trading prior to public announcement of execution of the
Original Merger Agreement. Similarly, the $144 per share which the Purchaser is
offering for the 8% Preferred Shares, and which holders of 8% Preferred Shares
will receive as a result of the Merger, exceeds the highest price which could
have been obtained at any time during 1997 for the 32 Common Shares into which
each 8% Preferred Share may be converted. In addition, the total price the
Purchaser and Parent will pay to acquire the Company in its entirety is at the
high end of the range of prices per subscriber which is being paid to acquire
cable system operators in Argentina, where all the Company's operations are
conducted. Also, the amount the Purchaser and the Parent will pay to acquire the
Company (not including the amount paid by the Purchaser on December 5, 1997 to
acquire approximately 31% of its Common Shares) will be more than twice the
total stockholder's equity of the Company at September 30, 1997, the per share
amount which will be paid to holders of Common Shares will be more than four and
one-half times the per share stockholders equity available to holders of Common
Shares on September 30, 1997, and the per share amount which will be paid to
holders of 8% Preferred Shares will be 1.44 times the liquidation preference of
an 8% Preferred Share. Further, almost three months elapsed between the time
execution of the Original Merger Agreement was announced to the public, and the
time the Purchaser acquired 31% of the common stock of the Company. Insofar as
the Purchaser and the Parent are aware, no proposals have been made since then
by any other persons to acquire the Company for an amount at least as great as
that which will be paid by the Purchaser and the Parent (or at any other price),
despite the fact that the Original Merger Agreement and the Merger Agreement
permitted the Company to terminate the Original Merger Agreement or the Merger
Agreement if, before the Purchaser completed the purchase of Common Shares, the
Company received an unsolicited proposal regarding a transaction which the
Company's Board of Directors determined to be more favorable to the holders of
the Common Shares and the 8% Preferred Shares than the transactions under the
Original Merger Agreement, and even after that Purchase of Common Shares the
Company could terminate the Merger Agreement if someone commenced a tender offer
which the Company's Board
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of Directors determined to be more favorable to the Company's stockholders than
the Offer and the Merger.
The Merger must be approved by the holders of at least 66 2/3% of the
outstanding Common Shares and the holders of at least 66 2/3% of the outstanding
8% Preferred Shares. Because of that, it is a condition to the Purchaser's
obligation to accept shares which are tendered in response to the Offer that a
number of shares be tendered and not withdrawn, which, together with the Common
Shares already owned by the Purchaser, totals at least 66 2/3% of the
outstanding Common Shares and 66 2/3% of the outstanding 8% Preferred Shares. In
order for that condition to be fulfilled, at least 52% of the Common Shares
which the Purchaser does not own, and at least 66 2/3% of the 8% Preferred
Shares, will have to be tendered in response to the Tender Offer and not
withdrawn. If the Purchaser waives that condition, then a sufficient number of
shares not owned by the Purchaser will have to be voted in favor of the Merger
to cause the merger to be approved by holders of 66 2/3% of the outstanding
Common Shares and 66 2/3% of the outstanding 8% Preferred Shares. Accordingly,
holders of at least 52% of the shares of Common Shares not owned by the
Purchaser, and holders of at least 66 2/3% of the outstanding shares of 8%
Preferred Shares, will have to either sell their shares to the Purchaser in
response to the Offer or vote in favor of the Merger, in order for the Parent to
acquire the Company in its entirety. By January 9, 1998, 96.2% of the
outstanding Common Shares had been tendered or were already owned by the
Purchaser and 79.1% of the outstanding 8% Preferred Shares had been tendered.
No representative of the Purchaser or of the Parent was a director of the
Company when either the Original Merger Agreement or the Merger Agreement was
negotiated. However, it is the understanding of the Purchaser and the Parent
that none of the directors who were not employees of the Company retained an
unaffiliated representative to act solely on behalf of the unaffiliated
securityholders for the purpose of negotiating the terms of the Original Merger
Agreement or the Merger Agreement and/or preparing a report concerning the
fairness of the transactions which are the subject of the Original Merger
Agreement or the Merger Agreement. However, Arnhold and S. Bleichroeder gave an
opinion to the entire Board of Directors regarding the fairness of the Offer and
the Merger. See Item 6. Because neither the Purchaser nor the Parent had any
affiliation with the Company until after the Merger Agreement was executed, the
opinion of Arnhold and S. Bleichroeder & Co. as to the fairness of the Offer and
the Merger was, in effect, an opinion of an unaffiliated representative acting
solely on behalf of unaffiliated securityholders.
The Company's mailing to its stockholders regarding the Offer states that
the Board of Directors of the Company unanimously approved the Offer and the
Merger Agreement, both in its original form and as amended. Therefore the
Purchaser and the Parent believe that the Original Merger Agreement and the
Merger Agreement each was approved by a majority of the directors of the Company
who are not employees of the Company.
6. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
Neither the Purchaser nor the Parent has received a report, opinion or
appraisal from an outside party which is materially related to the Offer or the
Merger, including, but not limited to, any such report, opinion or appraisal
relating to the consideration or the fairness of the consideration being offered
to holders of Common Shares or the fairness of the transaction to the Company,
to the Purchaser or the Parent or to holders of Common Shares or other
securities of the Company who are not affiliates of the Company. Item 9 of the
Schedule 14D-9 dated December 8, 1997 and the Schedule 14D-9/A (Amendment No. 1)
dated December 24, 1997, filed by the Company with the Securities and Exchange
Commission, copies of which have been or are being sent to the Company's
shareholders, describes an opinion of Arnhold and S. Bleichroeder & Co.
regarding the fairness of the Offer and the Merger to the Company's shareholders
from a financial point of view.
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THE TENDER OFFER
7. TERMS OF THE OFFER. On the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and conditions
of the extension or amendment), the Purchaser will accept for payment and pay
for all Shares validly tendered prior to the Expiration Time and not withdrawn
in accordance with Section 10. The term "Expiration Time" means 12:00 midnight,
New York City time, on Thursday, February 5, 1998, unless the Purchaser extends
the period during which the Offer is open, in which event the term "Expiration
Time" will mean the time and date at which the Offer, as extended, will expire.
In the Merger Agreement, the Purchaser has agreed that it will not extend
the Offer to a date which is more than 60 days after the Offer is commenced,
except that (a) if the Offer is modified during the period it is open to
increase the price per share payable in the Offer or in any other manner
permitted by the Merger Agreement, the Offer many be extended until not more
than 10 business days after the day on which the modification is communicated to
the Company's stockholders, (b) if anyone makes a tender offer for either the
Common Shares or the 8% Preferred Shares before the Offer expires, the Offer may
be extended until not more than 10 business days after the other tender offer
expires, (c) if the Purchaser is prevented by an order of a court or other
governmental agency from accepting Shares which are tendered, the Offer may be
extended until 10 business days after the Purchaser is able to accept Shares
without violating any order of any court or other governmental agency and (d) if
the Minimum Condition is not satisfied by the scheduled Expiration Time, the
Offer may be extended for up to an additional 60 days to enable the Minimum
Condition to be satisfied (and if, although the Minimum Condition is not
satisfied, at least 2,500,000 Common Shares and at least 35,000 8% Preferred
Shares are properly tendered and not withdrawn, the Purchaser will extend the
Offer for at least an additional 30 days to enable the Minimum Condition to be
satisfied).
The Purchaser also has agreed in the Merger Agreement that it will not (a)
decrease the number of Shares being tendered for in the Offer, (b) reduce the
Purchase Price either for the Common Shares or for the 8% Preferred Shares, (c)
modify or add to the conditions described in Section 11, (d) change the form of
consideration payable in the Offer, or (e) extend the Offer, except as required
or permitted by the Merger Agreement (which is described above).
The Purchaser reserves the right, at any time and from time to time, to
extend the period during which the Offer is open, by giving oral or written
notice of the extension to the Depositary and by making a public announcement of
it as described below. During any extension, all Shares previously tendered and
not withdrawn will remain tendered in response to the Offer, subject to the
rights of a tendering stockholder to withdraw tendered Shares. See Section 10.
Subject to the Merger Agreement and the applicable regulations of the
Securities and Exchange Commission (the "Commission"), the Purchaser reserves
the right, at any time and from time to time, to (i) delay acceptance for
payment of, or, regardless of whether Shares were already accepted for payment,
payment for, Shares pending receipt of any regulatory or third-party approval
described in Section 18 or in order to comply in whole or in part with any other
applicable law, (ii) terminate the Offer and not accept for payment any Shares
if any of the conditions described in Section 11 have not been satisfied or upon
the occurrence of any of the events described in Section 11 or (iii) waive any
condition or otherwise amend the Offer in any respect, in each case, by giving
oral or written notice of the delay, termination, waiver or amendment to the
Depositary and by making a public announcement of it, as described below.
The Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") requires the Purchaser to
pay the consideration offered or return the tendered Shares promptly after the
termination or withdrawal of the Offer and (ii) the Purchaser may not delay
acceptance for payment of, or payment for (except as provided in clause (i) of
the first sentence of
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the preceding paragraph), any Shares upon the occurrence of any of the events
described in Section 11 without extending the period of time during which the
Offer is open.
The Purchaser will make a public announcement of any extension, delay,
termination, waiver or amendment as promptly as practicable after it takes
place. In the case of an extension, a public announcement will be made no later
than 9:00 a.m., New York City time, on the business day after the day of the
previously scheduled Expiration Time. Subject to applicable law (including Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act, which require that material
changes be promptly disseminated to stockholders in a manner reasonably designed
to inform them of the changes), the Purchaser will have no obligation to
publish, advertise or otherwise communicate any public announcement other than
by issuing a press release.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or if it waives a material condition to the
Offer, the Purchaser will extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. Consummation of the Offer
is conditioned upon satisfaction of the Minimum Condition, and the other
conditions set forth in Section 11. The Purchaser reserves the right (but will
not be obligated) to waive any or all of those conditions.
If, prior to the Expiration Time, the Purchaser should decide to increase
the consideration being offered in the Offer, that increase will be applicable
to all stockholders whose Shares are accepted for payment, including
stockholders who tender their shares before the Purchaser increases the
consideration. If, at the time notice of an increase in the consideration being
offered is first published or otherwise given to holders of Shares, the Offer is
scheduled to expire earlier than the tenth business day after (but including)
the day the notice is first published or otherwise given, the Offer will be
extended at least until the expiration of that ten-business-day period. The
Purchaser does not expect to increase the consideration being offered.
The Company has given the Purchaser a stockholder list and security position
listings for the purpose of enabling the Purchaser to disseminate the Offer to
holders of Shares. This Supplemented Offer to Purchase and the related Letter of
Transmittal and other relevant materials will be mailed to record holders of
Shares and to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
stockholder list, or who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
8. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. On the terms and subject
to the conditions of the Offer (including, if the Offer is extended or amended,
the terms and conditions of the extension or amendment), the Purchaser will
purchase, by accepting for payment, and will pay for, all Shares which are
validly tendered (and not properly withdrawn in accordance with Section 10)
prior to the Expiration Time. Shares will be accepted as soon as practicable
after the later to occur of (i) the Expiration Time and (ii) the satisfaction or
waiver of the conditions set forth in Section 11. Any determination concerning
the satisfaction of the terms and conditions of the Offer will be in the sole
discretion of the Purchaser. See Section 11. The Purchaser expressly reserves
the right, in its sole discretion, to delay acceptance for payment of, or,
subject to the applicable rules of the Commission, payment for, Shares in order
to comply in whole or in part with any applicable law. See Section 18.
In all cases, payment for Shares which are tendered in response to the Offer
and accepted for payment will be made only after timely receipt by the
Depositary of (a) the certificate(s) representing the tendered Shares (the
"Share Certificates"), or timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of the Shares (if that procedure is available) into
the Depositary's account at The Depository Trust Company (the "Book-Entry
Transfer Facility"), as described in Section 9, (b) a properly completed and
duly executed Letter of Transmittal (or facsimile of one), or an Agent's Message
in connection with a book-entry transfer, and (c) any other documents required
by the Letter of Transmittal.
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An "Agent's Message" is a message, transmitted by the Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from a participant in the Book-Entry Transfer
Facility which tenders Shares that the participant has received, and agrees to
be bound by the terms of, the Letter of Transmittal and that the Purchaser may
enforce that agreement against the participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares when the Purchaser gives oral or
written notice to the Depositary of the Purchaser's acceptance of the Shares for
payment. Payment for Shares which are accepted will be made by deposit of the
aggregate purchase price for all the Shares which are accepted for payment with
the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payment from the Purchaser and transmitting payment to the
tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE OFFER PRICE
BE PAID BY THE PURCHASER BY REASON OF ANY DELAY IN PAYING FOR SHARES. Upon the
deposit of funds with the Depositary for the purpose of making payments to
tendering stockholders, the Purchaser's obligation to pay for Shares will be
satisfied and tendering stockholders must look solely to the Depositary for
payment of amounts owed to them by reason of the acceptance of their Shares
pursuant to the Offer. If, for any reason, acceptance for payment of or payment
for any Shares tendered in response to the Offer is delayed, or the Purchaser is
prevented from accepting for payment or paying for Shares which are tendered in
response to the Offer, the Depositary may, nevertheless, retain tendered Shares
on behalf of the Purchaser and those Shares may not be withdrawn, except to the
extent the tendering stockholder exercises withdrawal rights as described in
Section 10. The Purchaser will pay any stock transfer taxes incident to the
transfer to it of validly tendered Shares, except as otherwise provided in
Instruction 6 of the Letter of Transmittal, as well as any charges and expenses
of the Depositary and the Information Agent.
If any tendered Shares are not accepted for payment for any reason, or if
certificates which are submitted evidence more Shares than are tendered,
certificates representing unpurchased or untendered Shares will be returned or
sent, without expense to the tendering stockholder (or, in the case of Shares
tendered by book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility, Shares which are not purchased will be credited to an account
at that Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
IF, PRIOR TO THE EXPIRATION TIME, THE PURCHASER INCREASES THE CONSIDERATION
OFFERED TO HOLDERS OF SHARES TENDERED IN RESPONSE TO THE OFFER, THE INCREASED
CONSIDERATION WILL BE PAID TO ALL HOLDERS WHOSE SHARES ARE PURCHASED THROUGH THE
OFFER, INCLUDING HOLDERS WHOSE SHARES ARE TENDERED BEFORE THE CONSIDERATION IS
INCREASED.
The Purchaser reserves the right to transfer or assign, in whole, or in part
from time to time, to one or more of its affiliates the right to purchase all or
any portion of the Shares which are tendered in response to the Offer, but such
a transfer or assignment will not relieve the Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering stockholders to
receive payment for Shares which are validly tendered in response to the Offer
and accepted for payment.
9. PROCEDURES FOR TENDERING SHARES.
VALID TENDER OF SHARES. Except as set forth below, in order for Shares to be
validly tendered in response to the Offer, (a) a Letter of Transmittal or a
facsimile of one, properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this
Supplemented Offer to Purchase prior to the Expiration Time and (b) either (i)
the certificates representing the tendered Shares must be received by the
Depositary along with the Letter of Transmittal, (ii) the Shares must be
tendered using the procedure for book-entry transfer described below, and the
Book-Entry Confirmation must be received by the Depositary prior to the
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Expiration Time, or (iii) the tendering stockholder must comply with the
guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. ITEMS WILL BE
DEEMED DELIVERED ONLY WHEN THEY ARE ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Depositary has established an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
the original Offer to Purchase, and any financial institution that is a
participant in the Book-Entry Transfer Facility's system may make book-entry
delivery of Shares by causing the Book-Entry Transfer Facility to transfer the
Shares into the Depositary's account at the Book-Entry Transfer Facility.
Although delivery of Shares may be effected through book-entry transfer at the
Book-Entry Transfer Facility, a Letter of Transmittal or a facsimile of one,
with any required signature guarantees, or an Agent's Message in connection with
a book-entry delivery of Shares, and any other required documents, as well as
the Book Entry Confirmation relating to the Shares, must be transmitted to and
received by the Depositary at one of its addresses set forth on the back cover
of this Supplemented Offer to Purchase prior to the Expiration Time or the
guaranteed delivery procedures described below must be followed.
REQUIRED DOCUMENTS MUST BE TRANSMITTED TO AND RECEIVED BY THE DEPOSITARY AT
ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER PAGE OF THIS SUPPLEMENTED OFFER
TO PURCHASE. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on Letters of Transmittal need not be
guaranteed, unless the Shares to which they relate are being tendered by a
registered holder of Shares who has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal. Signatures on Letters of Transmittal on which either of
those boxes has been completed must be guaranteed by a firm which is a bank,
broker, dealer, credit union, savings association or other entity that is a
member in good standing of the Securities Transfer Agents Medallion Program
(each an "Eligible Institution"). See Instruction 1 of the Letter of
Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or
certificates representing shares which are not tendered or are not accepted for
payment are to be returned, to a person other than the registered holder(s),
then the Share Certificate must be endorsed or accompanied by appropriate stock
powers, in either case, signed exactly as the name(s) of the registered
holder(s) appear on the Share Certificate, with the signature(s) on the Share
Certificate or stock powers guaranteed. See Instructions 1 and 5 of the Letter
of Transmittal.
If Share certificates are delivered to the Depositary at different times, a
properly completed and duly executed Letter of Transmittal (or facsimile of one)
must accompany each delivery.
GUARANTEED DELIVERY. If a stockholder wishes to tender Shares in response
to the Offer but the Share Certificates are not immediately available or time
will not permit all required documents to reach the Depositary prior to the
Expiration Time, or the procedure for book-entry transfer cannot be completed on
a timely basis, the Shares may nevertheless be tendered as follows:
(i) the tender must be made by or through an Eligible Institution;
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(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided with the original Offer to
Purchase, must be received by the Depositary before the Expiration Time; and
(iii) the Share Certificates representing all tendered Shares, in proper
form for transfer, or the Book-Entry Confirmation, together with a properly
completed and duly executed Letter of Transmittal (or facsimile of one),
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by the Letter
of Transmittal are received by the Depositary within three (3) New York
Stock Exchange trading days after the date of execution of the Notice of
Guaranteed Delivery.
A Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary, but must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery distributed with the original Offer to Purchase.
Payment for Shares which are accepted for payment will be made only after
timely (i) receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, the Shares, (ii) a properly completed and duly
executed Letter of Transmittal (or facsimile of one), together with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and (iii) any other documents required by the Letter of Transmittal.
Accordingly, it is possible that payment will not be made to all tendering
stockholders at the same time.
BACKUP UNITED STATES FEDERAL WITHHOLDING TAX. Under the United States
Federal income tax laws, the Depositary may be required to withhold 31% of the
amount of any payments made to certain stockholders. To prevent backup Federal
income tax withholding, each tendering stockholder must provide the Depositary
with the stockholder's correct taxpayer identification number, or certify that
the stockholder is exempt from backup Federal income tax withholding, by
completing the Substitute Form W-9 included in the Letter of Transmittal. See
Instruction 10 of the Letter of Transmittal.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser as the tendering
stockholder's attorneys-in-fact and proxies, in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of the stockholder's rights with respect to the Shares tendered by the
stockholder and accepted for payment by the Purchaser (and with respect to any
other securities issued in respect of those Shares on or after the date of the
original Offer to Purchase). That proxy is considered coupled with an interest
in the tendered Shares. This appointment will be effective if, when and to the
extent that the Purchaser accepts the tendered Shares for payment pursuant to
the Offer. When tendered Shares are accepted for payment, all prior proxies
given by the stockholder with respect to the tendered Shares and any other
securities issued in respect of them will, without further action, be revoked,
and no subsequent proxies may be given. The designees of the Purchaser will,
with respect to the tendered Shares and any other securities for which the
appointment is effective, be empowered to exercise all voting and other rights
of the tendering stockholder as they, in their sole discretion, deem proper at
any annual, special, adjourned or postponed meeting of the Company's
stockholders, and the Purchaser reserves the right to require that in order for
Shares or other securities to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of the Shares, the Purchaser will be able to
exercise full voting rights with respect to the Shares.
Proxies are effective only as to Shares accepted for payment pursuant to the
Offer. The Offer does not constitute a solicitation of proxies, absent a
purchase of Shares, for any meeting of the Company's stockholders. Any
solicitation of proxies will be made only pursuant to separate proxy
solicitation materials complying with the Exchange Act.
DETERMINATIONS REGARDING TENDERS. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any Shares
using any of the procedures described above will be determined by the Purchaser,
in its sole discretion, and the Purchaser's determination will be final and
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binding on all parties. The Purchaser reserves the absolute right to reject any
or all tenders of Shares determined by it not to be in proper form or if the
acceptance for payment of, or payment for, the Shares may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right, in its sole discretion, to waive any of the conditions of the Offer or
any defect or irregularity in any tender with respect to Shares of any
particular stockholder, whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed to
have been validly made until all defects and irregularities have been cured or
waived.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions to it) will be final
and binding. None of Parent, the Purchaser, either Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification.
BINDING AGREEMENT. The Purchaser's acceptance for payment of Shares
tendered in response to the Offer will constitute a binding agreement by the
tendering stockholder to sell, and by the Purchaser to purchase, the tendered
Shares on the terms and subject to the conditions of the Offer.
10. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 10,
tenders of Shares made in response to the Offer are irrevocable. Shares tendered
in response to the Offer may be withdrawn at any time prior to the Expiration
Time and, unless they have been accepted for payment by the Purchaser, may also
be withdrawn at any time after February 9, 1998.
If the Purchaser extends the Offer, is delayed in its acceptance of Shares
for payment or is unable to accept Shares for payment for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Depositary may,
nevertheless, retain tendered Shares on behalf of the Purchaser, and those
Shares may not be withdrawn except to the extent that tendering stockholders are
entitled to withdraw them as described in this Section 10. Any such delay will
be accompanied by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission of a
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Supplemented Offer to Purchase. A
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and (if Share Certificates
have been tendered) the name of the registered holder, if different from that of
the person who tendered the Shares. If Share Certificates evidencing Shares to
be withdrawn have been delivered or otherwise identified to the Depositary, then
prior to the release of those Share Certificates, the serial numbers shown on
the particular Share Certificates to be withdrawn must be submitted to the
Depositary, and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution, unless the Shares have been tendered for the account
of an Eligible Institution. If Shares have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. Withdrawals of Shares may not be rescinded.
After Shares are properly withdrawn, they will be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered at any time prior to the Expiration Time using one of the procedures
described in Section 9.
All questions as to the form and validity (including, without limitation,
time of receipt) of notices of withdrawal will be determined by the Purchaser,
in its sole discretion, and its determination will be final and binding. None of
Parent, the Purchaser, either Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in any notice of withdrawal or will incur any
liability for failure to give any such notification.
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11. CONDITIONS OF THE OFFER. The Purchaser will not be required to accept
for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to the
Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), pay for, the Shares which are tendered
in response to the Offer if:
(a) The number of Shares properly tendered in response to the Offer and
not withdrawn, together with the Common Shares and any 8% Preferred Shares
already owned by the Purchaser, does not total more than two-thirds of the
outstanding Common Shares and two-thirds of the outstanding 8% Preferred
Shares;
(b) There are any 10% Preferred Shares outstanding after the day which
is 65 days after the Stock Purchase (February 3, 1998);
(c) Any statute, rule, regulation, order or injunction has been enacted,
promulgated, entered or enforced by any national or state government or
governmental authority or by any United States or Argentine court of
competent jurisdiction, that would make the acquisition of the Shares by the
Purchaser illegal or otherwise prohibit consummation of the Offer or the
Merger; or
(d) There has been (i) a general suspension of trading in, or limitation
on prices for, securities on the New York Stock Exchange which continued for
at least three business days, (ii) the declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States or
Argentina (whether or not mandatory) which continued for at least three
business days, (iii) the commencement of a war or armed hostilities or any
other international or national calamity directly or indirectly involving
the United States or Argentina, which has a significant adverse effect on
the functioning of financial markets in the United States or Argentina, (iv)
any limitation (whether or not mandatory) by any United States or Argentine
governmental authority or agency on the extension of credit by banks or
other financial institutions which would have a material adverse effect on
Parent's or the Purchaser's ability to borrow sufficient funds under its
bank facilities to purchase and pay for all the Shares which are tendered in
response to the Offer and to carry out the Merger on the terms contemplated
by the Merger Agreement or (v) there is a material acceleration or worsening
of any of the conditions described in clauses (i) through (iv) which exists
at the date of the commencement of the Offer.
(e) Any of the representations and warranties of the Company set forth
in the Merger Agreement is not true and correct as of the date of the Merger
Agreement except failures to be true and correct which would not, in the
aggregate, have a material adverse effect upon the Company;
(f) Since the date of the Merger Agreement, there has been an occurrence
or group of occurrences (whether or not related) which have had a material
adverse effect upon the Company (other than (i) occurrences which affected
generally the cable television industry worldwide or in Argentina, including
actual or proposed changes in laws or regulations, or (ii) the transactions
contemplated by the Merger Agreement, including the change in control
contemplated by it);
(g) the Company has not performed all the obligations it is required to
have performed under the Merger Agreement, except failures which (i) would,
in the aggregate, not materially impair or delay the ability of the
Purchaser to consummate the purchase of the Shares which are tendered in
response to the Offer or the ability of the Purchaser and the Company to
effect the Merger, (ii) have been caused by or result from a breach of the
Merger Agreement by the Purchaser; or (iii) do not, and are not reasonably
expected to, have a material adverse effect on the Company;
(h) The Merger Agreement has been terminated in accordance with its
terms; or
(i) The Board of Directors of the Company withdraws or modifies in a
manner adverse to the Purchaser the Board's approval or recommendation of
the Offer or the Merger.
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<PAGE>
The conditions set forth above are for the sole benefit of the Purchaser,
and may be waived by the Purchaser, in whole or in part. Any delay by the
Purchaser in exercising the right to terminate the Offer because any of the
conditions are not fulfilled will not be deemed a waiver of its right to do so.
Any delay in accepting shares for payment because conditions are not satisfied
will be accompanied by an extension of the Offer, and therefore an extension of
the right to withdraw Shares which are tendered in response to the Offer.
12. PRICE RANGE OF SHARES. The Common Shares trade on the NASDAQ Small-Cap
Market under the symbol "TESC." The following table sets forth, for the periods
indicated, the high and low sales prices per Common Share on the NASDAQ
Small-Cap Market.
COMMON SHARES
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Year Ended December 31,
1995:
First Quarter.......... $ 2.88 $ 1.88
Second Quarter......... 4.000 1.875
Third Quarter.......... 3.563 2.750
Fourth Quarter......... 3.875 2.750
Year Ended December 31,
1996
First Quarter.......... 4.375 2.500
Second Quarter......... 4.500 3.2500
Third Quarter.......... 4.1250 2.8750
Fourth Quarter......... 4.6250 2.8750
Year Ended December 31,
1997
First Quarter.......... 4.3125 3.2500
Second Quarter......... 4.000 3.0625
Third Quarter.......... 4.1875 3.0625
Fourth Quarter (through
December 4, 1997).... 4.1250 3.5000
</TABLE>
Insofar as the Purchaser is aware, there is no trading market for the 8%
Preferred Shares.
On September 15, 1997, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, the last sale price of
the Common Shares reported on NASDAQ was $3.375. On December 5, 1997, the last
full day of trading prior to the commencement of the Offer, the last sale price
reported on NASDAQ was $4 per Common Share. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES.
13. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Supplemented Offer to Purchase, including
financial information, has been taken from or is based upon publicly available
documents and records on file with the Commission and other public sources. None
of Parent, the Purchaser or either Dealer Manager assumes any responsibility for
the accuracy or completeness of the information concerning the Company contained
in those documents and records or for any failure by the Company to disclose
events which may have occurred or may affect the significance or accuracy of any
such information but which are not known to Parent, the Purchaser or either
Dealer Manager.
The Company is a Texas corporation and its principal executive offices are
located at 327 Congress Avenue, Suite 200, Austin, Texas 78701. The following
description of the Company's business has been taken from the Company's 1997
Form 10-KSB/A:
The Company acquires, develops and operates cable television and
communications systems in the Republic of Argentina, with concentrations in the
Patagonia and Tierra del Fuego regions. At March 31,
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<PAGE>
1997, the Company provided cable television service to approximately 69,000
subscribers. In addition, the Company holds a license to provide data services
to its customers under the name "Patagonia On-Line (TM)."
Set forth below is certain consolidated financial information with respect
to the Company, excerpted or derived from the summary financial information of
the Company contained in the Company's, 1997 Form 10-KSB/A and the Company's
Forms 10-Q for the periods ended September 30, 1996 and 1997. More comprehensive
financial information is included in those reports and other documents filed
with the Commission, and the following summary is qualified in its entirety by
reference to those reports and other documents, including the financial
information and related notes contained in them. The reports and other documents
may be inspected and copies of them may be obtained in the manner set forth
below.
TESCORP, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, YEARS ENDED MARCH 31,
---------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................. $14,337,250 $10,929,345 $22,580,466 $16,009,116
Operating income (loss).................. (1,851,700) (1,206,560) (2,391,448) (1,470,291)
Net income (loss)........................ (2,876,789) (1,353,687) (3,382,059) (1,495,297)
Net Income (loss) applicable to Common (3,607,194) (2,116,279) (4,877,119) (2,131,733)
Shares.................................
Net Income (loss) per share applicable to (0.27) (0.017) (0.38) (0.19)
Common Shares(1).......................
Ratio of earnings to fixed charges(2).... n.a. n.a. n.a. n.a.
BALANCE SHEET DATA (END OF PERIOD):
Total assets(3).......................... $50,831,707 43,058,722 49,626,962 44,244,645
Debt..................................... 7,193,613 1,059,287 7,262,237 447,651
Total liabilities........................ 19,916,392 6,245,423 15,119,002 5,802,986
Total Stockholders' equity............... 30,102,837 35,818,068 33,620,657 37,422,957
Stockholders' equity applicable to Common 12,721,337 18,286,748 16,226,337 19,103,637
Shares.................................
Stockholders' equity per share applicable 0.96 1.43 1.23 1.53
to Common Shares.......................
</TABLE>
- ------------------------
(1) Fully diluted earnings per share are not presented for any periods because
they do not materially differ from primary earnings per share or they are
antidilutive.
(2) Not applicable, because the Company did not have earnings for any of the
periods.
(3) In accordance with industry practice, the Company does not classify assets
and liabilities as being or not being current.
The Company is subject to the informational and reporting requirements of
the Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, any material interests of those persons in
transactions with the Company and other matters is
18
<PAGE>
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the Commission. These reports, proxy statements and
other information can be inspected and copied at the public reference facilities
of the Commission located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the Commission:
Seven World Trade Center, New York, New York 10048; and Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661. Copies of this material may be
obtained by mail, upon payment of the Commission's customary fees, from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission also maintains an Internet site on the world wide web at
http://www.sec.gov that contains reports, proxy statements and other
information. Reports, proxy statements and other information concerning the
Company should also be available for inspection at the offices of Nasdaq, 1735 K
Street, N.W., Washington, D.C. 20006. All of the information with respect to the
Company and its affiliates set forth in this Supplemented Offer to Purchase has
been derived from publicly available information.
14. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT.
THE PURCHASER. The Purchaser is a Delaware corporation organized in order
to enter into the transactions which are the subject of the Merger Agreement
(including the Offer). The principal executive offices of the Purchaser are
located at Godoy Cruz 316, Mendoza, Province of Mendoza, Argentina 5500. The
Purchaser is a wholly owned subsidiary of Parent. Until immediately prior to the
Stock Purchase, the Purchaser did not have any significant assets or liabilities
and had not engaged in activities other than those incidental to its formation
and capitalization and preparation for the Stock Purchase, the Offer and the
Merger. Due to the fact that the Purchaser is newly formed and, until the Stock
Purchase, had minimal assets and capitalization, no meaningful financial
information regarding the Purchaser is available.
In the Stock Purchase, the Purchaser purchased 6,006,006 Common Shares
Preferred Shares for $3.33 per Common Share (a total of $20,000,000). That price
is lower than the price to be paid in the Offer and the Merger. However, the
terms of the Stock Purchase were agreed upon (a) to provide funds to the Company
at prices Parent and the Purchaser were willing to pay even if they did not
acquire the remaining shares of the Company, and (b) with knowledge that if the
Offer and the Merger were completed, Parent would own all the stock of the
Company, and therefore Parent would, in effect, become the owner of the proceeds
of the Stock Purchase (or of the benefits of application of those proceeds). The
Agreement provides that unless the Purchaser purchases all the Shares tendered
in response to the Offer (even if the Minimum Condition or other conditions are
not fulfilled), the Company will have an option, which will expire one year
after the date of the Stock Purchase, to repurchase the shares it sold in the
Stock Purchase for the price the Purchaser paid for those shares. See
"Description of the Agreement."
PARENT. Parent, a corporation organized under the laws of Argentina, is the
third largest multi-channel television system operator in Argentina, providing
multi-channel television services via cable and wireless technology. The
principal executive offices of Parent are located at Godoy Cruz 316, Mendoza,
Province of Mendoza, Argentina 5500.
During the last 5 years none of Parent's or Purchaser's officers or
directors was (1) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (2) party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of the
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of or prohibiting activities subject to, Federal or state
securities laws or finding any violation of such laws.
Parent is not subject to the informational and reporting requirements of the
Exchange Act and Parent is not required to file reports and other information
with the Commission relating to its businesses, financial condition or other
matters.
19
<PAGE>
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of the Purchaser and Parent are set forth in Schedule I.
Except for the 6,006,006 Common Shares acquired by the Purchaser on December
5, 1997 through the Stock Purchase described in this Supplemented Offer to
Purchase, none of Parent, the Purchaser or, to the best knowledge of Parent or
the Purchaser, any of the persons listed on Schedule I or any associate or
majority owned subsidiary of any of those persons beneficially owns any equity
security of the Company, and none of Parent or the Purchaser or, to the best
knowledge of Parent or the Purchaser, any of the other persons referred to
above, or any of their respective directors, executive officers or subsidiaries,
has effected any transaction in any equity security of the Company during the
past 60 days.
Except as described in this Supplemented Offer to Purchase, none of Parent
or the Purchaser or, to the best knowledge of Parent or the Purchaser, any of
the persons listed on Schedule I has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, without limitation, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies.
Except as set forth in this Supplemented Offer to Purchase, none of Parent or
the Purchaser or, to the best knowledge of Parent or the Purchaser, any of the
persons listed on Schedule I has had any transactions with the Company or any of
its executive officers, directors or affiliates that would require reporting
under the rules of the Commission.
Except as described in this Supplemented Offer to Purchase, since January 1,
1994, there have been no contacts, negotiations or transactions between Parent
or the Purchaser, or their respective subsidiaries, or, to the best knowledge of
Parent or the Purchaser, any of the persons listed in Schedule I, on the one
hand, and the Company or its executive officers, directors or affiliates, on the
other hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, election of directors or a sale or other
transfer of a material amount of assets.
15. SOURCE AND AMOUNT OF FUNDS. If all the outstanding Shares not owned by
the Purchaser were tendered in response to the Offer, the Purchaser would be
required to pay a total of approximately $86 million to purchase the tendered
Shares and pay the fees and other expenses related to the Offer. See Section 17.
The Purchaser expects to obtain the funds required to consummate the Offer
through capital contributions or advances made by Parent. Parent has guaranteed
the Purchaser's obligations under the Merger Agreement, including obligations
with respect to the Offer.
On November 12, 1997, Parent entered into a Note Purchase Agreement (the
"Loan Document") among Parent and the other issuers named or referred to
therein, as issuers, the financial institutions parties thereto, as purchasers,
ING Baring (U.S.) Securities, Inc., as Arranger, ING Baring (U.S.) Capital
Corporation (the "Bank"), as Administrative Agent and Collateral Agent, and The
Bank of New York, as Registrar, under which Parent may borrow up to $300,000,000
by issuing Senior Floating Rate Notes. One of the reasons Parent entered into
the Loan Agreement was to obtain the funds it would require for the transactions
which are the subject of the Merger Agreement. Parent expects to obtain
substantially all the funds which will be used to pay for tendered Shares and to
pay the fees and expenses related to the Offer through borrowings under the Loan
Agreement. It is permitted to use up to $135 million of borrowings (including
the $20 million paid in the Stock Purchase) for the transactions under the
Merger Agreement and to pay costs of those transactions. ING Baring (U.S.)
Securities, Inc., an affiliate of the Bank, acted as a financial advisor to
Parent in connection with the transactions which are the subject of the Merger
Agreement and is one of the Deal Managers with regard to the Offer.
Borrowings under the Loan Agreement bear interest at LIBOR plus 4.5% per
annum and must be repaid by November 12, 2002. Parent anticipates that the
indebtedness under the Loan Document, including indebtedness incurred by Parent
in connection with the Stock Purchase, the Offer and the
20
<PAGE>
Merger, will be repaid from funds generated internally by Parent and its
subsidiaries (including, after the Merger, if consummated, dividends paid by the
surviving corporation and its subsidiaries), through additional borrowings,
through application of proceeds of dispositions of assets or through a
combination of two or more of those sources. No final decisions have been made,
however, concerning the method Parent will employ to repay that indebtedness.
Those decisions, when made, will be based on Parent's review from time to time
of the advisability of particular actions, as well as on prevailing interest
rates and financial and other economic conditions.
16. THE MERGER.
THE MERGER AGREEMENT. The Merger Agreement provides that if the Purchaser
acquires enough Shares through the Offer to satisfy the Minimum Condition,
following the satisfaction or waiver of the conditions described below under
"Conditions to the Merger", the Purchaser will be merged with and into the
Company, which will be the surviving corporation of the Merger (the "Surviving
Corporation"). When the Merger becomes effective, the separate existence of the
Purchaser will terminate, the Purchaser's real and personal property, other
assets, rights, privileges, immunities, powers, purposes and franchises will be
merged into the Surviving Corporation, and the Merger will have the other
effects specified in Section 259 of the Delaware General Corporate Law and
Article 5.06 of the Texas Business Corporation Act (the "TBCA").
STOCK OF THE COMPANY.
(a) At the Effective Time of the Merger, each Common Share which is
outstanding immediately before the Effective Time, other than shares owned by
the Purchaser, will be converted into and become the right to receive $4.50 in
cash, or any higher price per share paid with regard to Common Shares tendered
in response to the Offer (the "Common Shares Merger Price").
(b) At the Effective Time each 8% Preferred Share which is outstanding
immediately before the Effective Time will be converted into and become the
right to receive in cash $144 per share plus accrued dividends to the Expiration
Date of the Offer (except that if a dividend is paid with regard to the 8%
Preferred Shares between the Expiration Time and the Effective Time, each 8%
Preferred Share will be converted into and become the right to receive $144.00
in cash without regard to any accrued but unpaid dividends).
(c) At the Effective Time, each Common Share or 8% Preferred Share held by
the Purchaser or by any direct or indirect subsidiary of the Company immediately
before the Effective Time will be cancelled and no payment will be made with
respect to those shares.
STOCK OF THE PURCHASER. At the Effective Time, each share of stock of the
Purchaser which is outstanding immediately before the Effective Time will be
converted into and become one share of common stock of the Surviving Corporation
("Surviving Corporation Common Stock").
STOCKHOLDER VOTE REQUIRED TO APPROVE MERGER. Under the TBCA, the
affirmative vote of holders of two-thirds of the outstanding Common Shares and
two-thirds of the outstanding 8% Preferred Shares (including any Shares owned by
the Purchaser) is required to approve the Merger. If the Minimum Condition is
satisfied and the Purchaser purchases the Shares tendered in response to the
Offer, the Purchaser will have sufficient voting power to approve the Merger
without the vote of any other stockholder of the Company. If the Purchaser
acquires more than 90% of the outstanding shares of each class, stockholder
approval will not be required under TBCA Article 5.16.
STOCKHOLDERS MEETING. If the Minimum Condition is satisfied and the
Purchaser purchases the Shares tendered in response to the Offer, and if
approval by the Company's stockholders is required in order to consummate the
Merger, the Company will hold a special meeting of its stockholders as soon as
21
<PAGE>
practicable after the Expiration Time for the purpose of adopting the Merger
Agreement and approving the Merger.
CONDITIONS TO THE MERGER. Neither the Company nor the Purchaser is
contractually obligated to complete the Merger unless the Purchaser acquires the
Shares tendered in response to the Offer and the Minimum Condition is satisfied.
If that occurs (i) the Purchaser will own sufficient shares to be able to
approve the Merger even if no other stockholders of the Company vote in favor of
it and (ii) the Purchaser will be contractually obligated to vote in favor of
the Merger. The obligations of the Company to carry out the Merger will be
conditioned on the Merger's being approved by the holders of two-thirds of the
outstanding Common Shares and two-thirds of the outstanding 8% Preferred Shares
(which will occur if the Minimum Condition is satisfied and the Purchaser votes
in favor of the Merger). In addition, the obligations of the Company and of the
Purchaser to complete the Merger are subject to the following conditions: (a) no
order will have been entered by any court or governmental authority and be in
force which invalidates the Merger Agreement or restrains the Company from
completing the transactions contemplated by the Merger Agreement; (b) the
Effective Time will occur on or before April 30, 1998; (c) the number of shares
held by shareholders of the Company who have filed written objections to
approval of the Merger sufficient to preserve their rights to demand the fair
value of the shares pursuant to Articles 5.11 through 5.13 of the TBCA will not
exceed 5% of the total number of outstanding Common Shares and 8% Preferred
Shares combined (treating each 8% Preferred Share as being equal to 32 Common
Shares).
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be terminated
at any time prior to the Effective Time of the Merger (as defined below),
whether before or after approval of the terms of the Merger Agreement by the
stockholders of the Company:
(1) by mutual consent of the Company and the Purchaser;
(2) by the Company, if without fault of the Company, the Expiration Time
of the Offer is not on or before February 15, 1998;
(3) by the Company or the Purchaser if, without fault of the Purchaser,
the Effective Time of the Merger is not on or before April 30, 1998;
(4) by the Company if (i) any of the representations and warranties of
the Purchaser contained in the Merger Agreement was not complete and
accurate in all material respects on the date of the Merger Agreement or
(ii) any of the conditions to the Company's obligations to complete the
Merger are not satisfied or waived by the Company prior to or on the date of
the Merger;
(5) by the Purchaser if (i) any of the representations or warranties of
the Company contained in the Merger Agreement was not complete and accurate
in all material respects on the date of the Merger Agreement, or (ii) any of
the conditions to the Purchaser's obligations to complete the Merger are not
satisfied or waived by the Purchaser prior to or on the date of the Merger;
or
(6) by the Company if (A) a tender or exchange offer is commenced by a
potential acquiror for all the outstanding Common Shares and 8% Preferred
Shares, (B) the Company's Board of Directors determines in good faith and
after consultation with an independent financial advisor that the offer
constitutes a Superior Proposal (as defined below) and resolves to accept
the Superior Proposal or to recommend to the Company's stockholders that
they tender their shares in response to the tender or exchange offer, (C)
the Company has given the Purchaser at least 10 business days' prior notice
of its intention to terminate pursuant to this provision and (D) the Company
has paid the Purchaser $5 million. A "Superior Proposal" is an unsolicited
proposal to the Company which (x) would result in the Company's stockholders
receiving consideration with a fair value determined in good faith by the
Company's Board of Directors and after consultation with the Company's
independent financial advisor to be more than $5 per share of Common Stock
and more than $160 per share of 8% Preferred Stock and (y) is determined in
good faith by the Company's Board of Directors to be more
22
<PAGE>
favorable both to the holders of Common Shares and to the holders of the 8%
Preferred Shares than the Offer and the Merger.
EFFECT OF TERMINATION OF THE MERGER AGREEMENT. If the Merger Agreement is
terminated, neither the Company nor the Purchaser will be required to complete
the Merger. If the Merger Agreement is terminated after the Purchaser has
accepted Shares tendered in response to the Offer, the termination will not
affect the Purchaser's purchase of the Shares it has accepted or its obligation
to pay for those shares. If the Purchaser waives the Minimum Condition and votes
in favor of the Merger, but the Merger is not approved by the Company's
stockholders, the Company will have to pay the Purchaser $5 million.
ACQUISITION PROPOSALS. The Merger Agreement contains prohibitions against
the Company's soliciting, or authorizing its officers, directors, employees or
agents to solicit acquisition proposals, and regarding what the Company may do,
if it receives unsolicited acquisition proposals.
OTHER PROVISIONS. The Merger Agreement also contains provisions (i)
requiring the Company to operate its business in the ordinary course, including
maintaining the goodwill of its business and maintaining its assets in good
condition, limiting the Company's borrowings and commitments for capital
expenditures, and precluding the Company from paying dividends (other than
required dividends with regard to its preferred stock) or taking other steps
regarding its stock, until the Effective Time, and (ii) requiring the Purchaser
(and the corporation which survives the Merger) to indemnify directors,
officers, employees, fiduciaries and agents of the Company and its subsidiaries
against liability rising out of their service as directors, officers, employees
or agents of the Company or its subsidiaries, or of companies with regard to
which they served as directors, officers, employees or agents at the request of
the Company or its subsidiaries.
BOARD OF DIRECTORS. The Merger Agreement provides that if the Merger is
consummated, Daniel E. Vila, Alfredo L. Vila and Jose Maria Saenz Valiente will
be the directors of the Surviving Corporation.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties.
APPRAISAL RIGHTS. If the Merger is consummated, holders of Shares at the
Effective Time of the Merger will have rights pursuant to the provisions of
Article 5.12 or 5.16 of the TBCA to dissent and demand appraisal of their
Shares. Under Article 5.12 or 5.16, dissenting stockholders who comply with the
applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or exception of the Merger) and to receive
payment of that fair value in cash, together with a fair rate of interest, if
any. The statutory procedures include notifying the Company prior to the meeting
at which the Company's stockholders vote on the Merger that the particular
stockholder intends to exercise, dissenter's rights and giving that
stockholder's address. Any judicial determination of the fair value of Shares
could be more or less than the price per Share to be paid in the Merger. The
provisions of Articles 5.12 and 5.16 are summarized in greater detail in
Schedule II.
The foregoing summary of Articles 5.12 and 5.16 does not purport to be
complete and is qualified in its entirety by reference to Articles 5.12 and
5.16. FAILURE TO FOLLOW THE STEPS REQUIRED BY ARTICLE 5.12 OR 5.16 FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF THOSE RIGHTS.
The Purchaser will not be required to complete the Merger if holders of more
than 5% of the outstanding Common Shares and 8% Preferred Shares combined
(treating each 8% Preferred Share as equal to 32 Common Shares) file objections
sufficient to preserve their right to demand appraisal of their Shares.
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<PAGE>
17. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement prohibits the Company
from paying any dividends or making other distributions with regard to its
Common Shares or its 8% Preferred Shares (other than regularly scheduled
dividends with regard to the 8% Preferred Shares), or from issuing any shares,
until the Effective Time of the Merger. Insofar as the Purchaser and Parent are
aware, the Company has not paid any dividends during the past two years with
respect to its Common Shares.
18. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
GENERAL. Except as otherwise disclosed in this Supplemented Offer to
Purchase, based on the Company's representations and warranties in the Merger
Agreement and a review of publicly available filings by the Company with the
Commission, the Purchaser is not aware of (i) any license or regulatory permit
that appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the acquisition of Shares
by the Purchaser pursuant to the Offer or the Merger or (ii) any approval or
other action by any governmental, administrative or regulatory agency or
authority, domestic or foreign, that would be required for the acquisition or
ownership of Shares by the Purchaser, other than approvals by an Argentine
governmental authority which, although required as a pre-requisite to changes of
control of Argentine cable system operators, customarily are not given until
after the changes of control have taken place (and are not a condition to the
Offer or the Merger). Should any such approval or other action be required, the
Purchaser currently contemplates that the approval or action would be sought. It
is possible that any such approval or action, if needed, would not be obtained.
GOING PRIVATE TRANSACTIONS. The Commission has adopted Rule 13e-3 under the
Exchange Act, which is applicable to certain "going private" transactions. This
Supplemented Offering Memorandum contains information required by Rule 13e-3.
Also, the Purchaser and the Parent have filed with the Commission a Transaction
Statement on Schedule 13E-3. The Schedule 13E-3 and any exhibits or amendments
to it may be inspected at, and copies obtained from, the places described in
Section 13 (except that they will not be available at the regional offices of
the Commission).
ANTITRUST COMPLIANCE. Prior to the Stock Purchase, the Company and Parent
made a filing with the United States Federal Trade Commission (the "FTC") under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). The
HSR Act requires that, before an acquisition involving companies which exceed
specified sizes can take place, information must be provided to the FTC and to
the Antitrust Division of the United States Department of Justice, and specified
waiting periods must expire or be terminated by the FTC or the Antitrust
Division.
The required notification under the HSR Act was filed, and the waiting
period was terminated, before the Stock Purchase. That filing contemplated a
possible acquisition by Parent of all the stock of the Company. Therefore, no
further filing or waiting period will be required with regard to the Offer or
the Merger.
STATE TAKEOVER STATUTES. The Company is incorporated under the laws of
Texas. Effective September 1, 1997, a new Part Thirteen of the Texas Business
Corporation Act (the "Texas Business Combination Law") prohibits a public
corporation organized under Texas law, or its majority owned subsidiaries, from
engaging in a transaction with a person who acquires 20% or more of the
corporation's outstanding voting stock or its affiliates, for three years after
the person acquires that 20% or greater interest, share exchange, sale of
significant assets, issuance of shares, liquidation of the Corporation pursuant
to an agreement with the 20% or greater shareholder, reclassification of the
securities of the Corporation which increases the portion of the stock of any
class or series owned by the 20% or greater stockholder or the receipt by the
20% or greater stockholder of loans or similar financial assistance. The three
year ban does not apply, however, if the proposed transaction with the 20% or
greater stockholder, or the transaction by which the person became a 20% or
greater stockholder, is approved by the board of directors of the corporation
before the person becomes a 20% or greater stockholder. Because the Board of the
Company approved the Stock Purchase (the transaction by which the Purchaser, and
indirectly Parent, became a 20% or
24
<PAGE>
greater stockholder of the Company) before it took place, the Texas Business
Combination Law will not apply to the Purchaser or Parent.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In 1982, in EDGAR V. MITE CORP., the Supreme
Court of the United States invalidated on constitutional grounds the Illinois
Business Takeover Statute, which, as a matter of state securities law, made
takeovers of corporations meeting certain requirements more difficult. However,
in 1987, in CTS CORP. V. DYNAMICS CORP. OF AMERICA, the Supreme Court held that
the State of Indiana may, as a matter of corporate law, and, in particular, with
respect to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of a
target corporation without the prior approval of the remaining stockholders. The
state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of stockholders in the state and were
incorporated there.
19. FEES AND EXPENSES. Except as set forth below, neither Parent nor the
Purchaser will pay any fees or commissions to any broker, dealer or other person
for soliciting tenders of Shares pursuant to the Offer.
The Purchaser has retained Furman Selz LLC and ING Baring (U.S.) Securities,
Inc. to act as Dealer Managers in connection with the Offer. Furman Selz LLC and
ING Baring (U.S.) Securities, Inc. each will receive a fee of $125,000 for their
services as Dealer Managers in connection with the Offer. The Purchaser has also
agreed to reimburse Furman Selz LLC and ING Baring (U.S.) Securities, Inc. for
certain out-of pocket expenses incurred in connection with the Offer (excluding
certain fees and disbursements of their legal counsel) and to indemnify Furman
Selz LLC and ING Baring (U.S.) Securities, Inc. against certain liabilities in
connection with the Offer, including liabilities under the federal securities
laws.
The Purchaser has retained Morrow & Co., Inc. to act as the Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, facsimile, telegraph and personal interviews and may
request brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to beneficial owners of Shares. The Information Agent will
receive reasonable and customary compensation together with reimbursement for
its reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses, including certain liabilities under the federal
securities laws.
In addition, The Bank of New York has been retained as the Depositary. The
Depositary has not been retained to make solicitations or recommendations in its
role as Depositary. The Depositary will receive reasonable and customary
compensation for its services, will be reimbursed for certain reasonable out-of-
pocket expenses and will be indemnified against certain liabilities and
expenses. Brokers, dealers, commercial banks and trust companies will be
reimbursed by the Purchaser for customary mailing and handling expenses incurred
by them in forwarding offering material to their customers.
The Purchaser and the Parent estimate that the total cost of the Stock
Purchase, the Offer and the Merger, in addition to the amount paid to holders of
Common Shares and 8% Preferred Shares, will be approximately $2,750,000,
consisting of legal fees of $350,000, printing costs of $140,000, investment
banking fees (including fees of the Dealer Managers) of $2,250,000, and
miscellaneous costs of $10,000. The Purchaser or the Parent will pay these
costs. In addition, if the conditions to the Offer are fulfilled, the Purchaser
will be obligated to pay the expenses of the Company, which the Purchaser
estimates will exceed $2,300,000. These fees and expenses will be paid primarily
with borrowings under the Loan Document described in Section 15.
20. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction where
the making of the Offer is prohibited by any administrative or judicial action
or pursuant to any state statute. If the Purchaser becomes aware of any state
statute prohibiting the making of the Offer or the acceptance of the Shares
25
<PAGE>
which are tendered in response to the Offer, the Purchaser will make a good
faith effort to comply with that state statute. If, after a good faith effort,
the Purchaser cannot comply with any such state statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, Blue Sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer will be deemed to be made on behalf of the Purchaser by the Dealer
Managers or one or more registered brokers or dealers which are licensed under
the laws of that jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED IN THIS SUPPLEMENTED
OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, THAT
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Parent and the Purchaser have filed with the Commission (i) a Tender Offer
Statement on Schedule 14D-1 and amendments to it (the "Schedule 14D-1"),
together with exhibits, pursuant to Rule 14d-3 of the Rules under the Exchange
Act, and (ii) a Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3"),
together with exhibits, pursuant to Rule 13e-3 of the Rules under the Exchange
Act, each of which contains additional information with respect to the Offer,
and Parent or the Purchaser may file further amendments to the Schedule 14D-1
and amendments to the Schedule 13E-3. The Schedule 14D-1 and the Schedule 13E-3,
and any amendments to them, including exhibits, may be inspected at, and copies
may be obtained from, the places described in Section 13 (except that they will
not be available at the regional offices of the Commission).
TESCORP ACQUISITION CORPORATION
January 13, 1998
26
<PAGE>
SCHEDULE I
CERTAIN INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth below is the name,
current business address, citizenship and the present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years of each director and executive officer of Parent. The principal
address of Parent and, unless otherwise indicated below, the current business
address for each individual listed below is Godoy Cruz 316, Mendoza, Province of
Mendoza Argentina 5500. Unless otherwise indicated, each such person is a
citizen of the Republic of Argentina.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST
NAME FIVE YEARS, POSITIONS WITH PARENT AND CERTAIN DIRECTORSHIPS
- --------------------------------------------- -------------------------------------------------------------------
<S> <C>
Daniel Eduardo Vila.......................... Chairman of the Board of Directors of Parent since 1996; Chief
Executive Officer of Parent since March 1997; Vice Chairman of the
Board of Directors of Supercanal S.A. since 1984; Chairman of the
Board of Mendoza 21 S.A.; Director of Purchaser since September,
1997; publisher of DIARIO UNO, a daily newspaper in Mendoza; Radio
Nihuil S.A. a radio broadcaster, operating in the Province of
Mendoza and surrounding areas; publisher of PRIMERA FILA, a monthly
magazine; Vice Chairman of Radio Red Celeste y Blanca S.A., the
operator of an AM radio station in Buenos Aires; Director of
Dalvian S.A., a real estate development company; alternate director
of Banco de Mendoza S.A. and Banco Prevision Social S.A.;
Alfredo Luis Vila Santander.................. Vice Chairman of the Board of Directors of Parent since 1996;
Chairman and Chief Executive Officer of Supercanal S.A. from 1993
to 1996; Director and President of Purchaser since September, 1997;
Director of Radio Nihuil S.A., Mendoza 21 S.A. and of Dalvian S.A.;
Chairman and Chief Executive Officer of Supercanal Internacional
S.A.
Jorge Mas.................................... Director of Parent since July 1997; Alternate Director of Parent
from June 1996 through April 1997; Alternate Director of Supercanal
S.A. since 1996; President, Chief Executive Officer and Director of
MasTec, Inc., a U.S. publicly-held company, since March 1994;
during the past five years, President and Chief Executive Officer
of Church & Tower, Inc., a principal operating subsidiary of
MasTec, Inc.; Chairman of the Board of Directors of Neff
Corporation, a company which sells and leases construction and
industrial equipment, Atlantic Real Estate Holding Corp., a real
estate holding company, U.S. Development Corp. a real estate
company, and Santos Capital, Inc., a merchant banking firm, all
companies controlled by Mr. Mas.; during all or a portion of the
past five years, President and Chief Executive Officer of these
corporations.
Jose Maria Saenz Valiente, Jr................ Director of Parent since July 1996; Chairman of the Board of
Multicanal from 1993 until 1994; Director, Secretary and President
of Purchaser since September, 1997; since 1996
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST
NAME FIVE YEARS, POSITIONS WITH PARENT AND CERTAIN DIRECTORSHIPS
- --------------------------------------------- -------------------------------------------------------------------
Director of various companies in the multi-channel television
industry that were acquired by Multicanal; partner of the Saenz
Valiente & Padilla law firm.
<S> <C>
Alberto Luis Vila............................ Director of Parent since 1996; Director of Supercanal S.A. since
1993; Director of Primera Fila A.A.; legal counsel to various
multinational corporations in Mendoza; partner of the Vila law
firm.
Sergio Ceroi................................. Alternate Director of Parent since July, 1996; Chief Financial
Officer of Mendoza 21 S.A. since February 1996; prior to that,
Chief Financial Officer of Radio Nihuil S.A.; from January 1985 to
December 1987, Chief Auditor for Profim Cia Financiera S.A., a
money manager in the Province of Mendoza.
Juan Maria de la Vega........................ Alternate Director of Parent since July, 1996; Member of the Saenz
Valiente & Padilla law firm; and serving on the Board of Directors
of various companies in the multi-channel television industry
acquired by Multicanal since 1993; alternate Director of
Multicanal.
Kevin P. Fitzgerald.......................... Alternate Director of Parent since July 1997; prior to that,
Director of Supercanal Holding from 1996 until April 1997; Director
of Supercanal S.A. since April 1996; since July 1995, President and
Co-Chairman of Santos Capital, Inc., and President and Chief
Executive Officer of Neff Corporation and its subsidiaries, Neff
Rental, Inc. and Neff Machinery, Inc.; From 1991 to 1995, Senior
Vice President in the investment banking department of Houlihan
Lokey Howard & Zukin, a private investment bank; prior to that, in
the corporate finance department of Deloitte, Haskins & Sells, a
public accounting firm; Director of Primera Fila S.A., Neff Corp.
and Santos Capital, Inc.
Guillermo Vila............................... Alternate Director of Parent since July 1996; Director of
Supercanal S.A.; a partner of the Vila law firm.
Omar R. Alvarez.............................. Alternate Director of Parent since July, 1997; holds (i) 35% of the
capital stock and is President of San Rafael/Pehuenche, a
multi-channel television system controlled by the Company, (ii) 70%
of the capital stock and is President of Inversora C.T.C.S.R.L., an
investment company which holds interests in banks, medical
providers and real estate, (iii) 80% of the capital stock and is a
director of L.V. 23 Radio Rio Atuel S.R.L., an AM and FM radio
station, (iv) 33% of the CUOTAS and is partner of Lomas del Nihuil
S.R.L., a tourist resort in Nihuil, (v) 100% of the capital stock
of El Faro S.R.L., a tourist resort in Nihuil, (vi) 100% of the
capital stock of and a director of Cementerio Parque S.A. which
holds property for cemetery parks, and (vii) 100% of the CUOTAS and
President of
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST
NAME FIVE YEARS, POSITIONS WITH PARENT AND CERTAIN DIRECTORSHIPS
- --------------------------------------------- -------------------------------------------------------------------
Parque Turistico Sierra Pintada S.R.L., a 14,000 hectare reserve
and tourist park in the province of Mendoza.
<S> <C>
Fernando Julio Barbeira...................... Chief Financial Officer of Parent since August, 1996; from 1993 to
August 1996, held various general management positions in
subsidiaries of Multicanal, including Red Argentina S.A. ("Red
Argentina"), Multicanal's MSO management company, Intercable S.A.
and Lanus Video Cable S.A., operating subsidiaries of Multicanal,
companies controlled by Multicanal, and Aconcagua (Multicanal's
subsidiary in Mendoza); was responsible for the accounting and
financial statements of the Aerolineas Argentinas privatization at
Henry Martin y Asociados, a public accounting firm from 1991 to
1993; served in several positions at Neumaticos Goodyear S.A. from
1970 to 1990.
Omar Jorge Saez.............................. Chief Operating Officer of Parent since December 1996; from 1993 to
1996, served as General Manager of several different companies
acquired by Multicanal; from 1989 to 1993, was General Manager of
Cormasa S.A., a metal mechanic company.
Guillermo Horacio Panelli.................... Chief Administrative Officer of Parent since November 1996; from
November 1993 until September 1996, was Administrative and
Financial Manager of Concecuyo S.A., a licensee of YPF S.A.
operating service stations in the provinces of Mendoza, San Luis,
San Juan, La Rioja and Catamarca; From 1987 to 1993, was
Administrative and Financial Manager of Bodega Quiros S.A., a
beverages and winery concern.
Eduardo Elbio Carbini........................ Marketing Manager of Parent since January 1997; was Marketing
Manager of Supercanal S.A. between 1987 and 1996; served as
Marketing Manager of PRIMERA FILA from 1990 to 1996; from 1995 to
1996, was Director of Radio F.M. Brava S.A., the operator of a
local radio station, and Marketing Manager at DIARIO UNO.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. Set forth below is the
name, current business address, citizenship and the present principal occupation
or employment and material occupations, positions, offices or employments for
the past five years of each director and executive officer of Purchaser. The
principal address of Purchaser and, unless otherwise indicated below, the
current business address for each individual listed below is Godoy Cruz 316,
Mendoza, Province of Mendoza Argentina 5500. Unless otherwise indicated, each
such person is a citizen of the Republic of Argentina.
<TABLE>
<S> <C>
Daniel Eduardo Vila................. Director of Purchaser since September, 1997; Chairman
of the Board of Directors of Parent since 1996; Chief
Executive Officer of Parent since March 1997; Vice
Chairman of the Board of Directors of Supercanal S.A.
since 1984; Chairman of the Board of Mendoza 21 S.A.;
publisher of DIARIO UNO, a daily newspaper in Mendoza;
Radio Nihuil S.A. a radio
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST
FIVE YEARS, POSITIONS WITH PARENT AND CERTAIN
NAME DIRECTORSHIPS
- ------------------------------------ ------------------------------------------------------
broadcaster, operating in the Province of Mendoza and surrounding
areas; publisher of PRIMERA FILA, a monthly magazine; Vice Chairman
of Radio Red Celeste y Blanca S.A., the operator of an AM radio
station in Buenos Aires; Director of Dalvian S.A., a real estate
development company; alternate director of Banco de Mendoza S.A.
and Banco Prevision Social S.A.;
<S> <C> <C>
Alfredo Luis Vila Santander.................. Director and President of Purchaser since September, 1997; Vice
Chairman of the Board of Directors of Parent since 1996; Chairman
and Chief Executive Officer of Supercanal S.A. from 1993 to 1996;
Director of Radio Nihuil S.A., Mendoza 21 S.A. and of Dalvian S.A.;
Chairman and Chief Executive Officer of Supercanal Internacional
S.A.
Jose Maria Saenz Valiente, Jr................ Director, Secretary and Treasurer of Purchaser since September,
1997; Director of Parent since July 1996; Chairman of the Board of
Multicanal from 1993 until 1994; since 1996 Director of various
companies in the multi-channel television industry that were
acquired by Multicanal; partner of the Saenz Valiente & Padilla law
firm.
</TABLE>
I-4
<PAGE>
SCHEDULE II
SHAREHOLDERS' APPRAISAL RIGHTS UNDER THE TBCA
UNDER THE TEXAS BUSINESS CORPORATION ACT ("TBCA"), SHAREHOLDERS OF THE
COMPANY WILL BE ENTITLED TO APPRAISAL RIGHTS IF THE MERGER TAKES PLACE, AND IF
THE SHAREHOLDERS COMPLY WITH THE APPLICABLE PROVISIONS OF THE TBCA, WHICH ARE
DESCRIBED BELOW. SHAREHOLDERS OF THE COMPANY WILL NOT BE ENTITLED TO THE
APPRAISAL RIGHTS AS A RESULT OF THE OFFER. THEY WILL ONLY HAVE APPRAISAL RIGHTS
IF THE MERGER TAKES PLACE.
Holders of 8% Preferred Shares or Common Shares are entitled to appraisal
rights with respect to the Merger under TBCA Article 5.12, or in the event that
Purchaser acquires at least 90% both of the outstanding Common Shares and of the
outstanding 8% Preferred Shares in the Offer, under TBCA Article 5.16 ("Article
5.16").
Under Articles 5.12 and 5.16, if the Merger is consummated, a holder of
record of 8% Preferred Shares or Common Shares on the date of making a demand
for appraisal, as described below, who (i) strictly complies with the procedures
set forth under Article 5.12 or Article 5.16; and (ii) has not voted in favor of
the Merger, will be entitled to receive payment for the "fair value" of those
shares in lieu of the consideration provided for in the Merger Agreement. THE
STATUTORY RIGHT OF APPRAISAL GRANTED BY ARTICLES 5.12 and 5.16 REQUIRES STRICT
COMPLIANCE WITH THE PROCEDURES SET FORTH IN ARTICLES 5.12 and 5.16. FAILURE TO
FOLLOW ANY OF THOSE PROCEDURES MAY RESULT IN A TERMINATION OR WAIVER OF
DISSENTERS' RIGHTS UNDER ARTICLES 5.12 and 5.16. The following is a summary of
the principal provisions of Articles 5.12. and 5.16.
A holder of 8% Preferred Shares or Common Shares electing to exercise
appraisal rights under Article 5.12 must file with the Company, prior to the
meeting at which the vote to approve the Merger is held, a written objection to
the Merger. The objection must (i) state that the shareholder's right to dissent
will be exercised if the Merger is effective and (ii) give the shareholder's
address to which the Company will send a notice to the shareholder if the Merger
is effective. All written objections should be delivered to the Company,
Attention: Tescorp, Inc. 327 Congress Avenue, Suite 200, Austin, Texas 78701.
Under Article 5.12, if (i) the Merger is effective, (ii) the shareholder did
not vote in favor of the Merger, and (iii) the shareholder sent a written
objection to the Company prior to the vote on the Merger in compliance with
Article 5.12, the Surviving Corporation will, within ten days after the
Effective Time, deliver or mail to the shareholder written notice of the
effectiveness of the Merger.
Within ten days after the delivery or mailing of the notice of the
effectiveness of the Merger by the Surviving Corporation, a shareholder who
wishes to exercise his or her appraisal rights must make written demand on the
Surviving Corporation for payment of the fair value of the shareholder's shares.
The fair value of the shares will be their value as of the day immediately
preceding the meeting to vote on the Merger, excluding any appreciation or
depreciation in anticipation of the proposed action. The demand must state (i)
the number and class of shares owned by the shareholder and (ii) the fair value
of the shares as estimated by the shareholder. FAILURE TO FILE THE DEMAND ON A
TIMELY BASIS WILL CAUSE THE SHAREHOLDER'S RIGHT TO AN APPRAISAL TO CEASE.
If the Purchaser acquires more than 90% both of the outstanding Common
Shares and of the outstanding 8% Preferred Shares, stockholder approval will not
be required for the Merger to be effected under TBCA Article 5.16. In this case,
the Surviving Corporation will, within ten days after the Effective Time, mail
to each shareholder of record of the Company a copy of the articles of merger
and notify the shareholder that the Merger has become effective. Any shareholder
who would have been entitled to vote on the Merger if it had been effected
pursuant to Article 5.03 of the TBCA (those shareholders who would have been
able to vote on the merger had the Purchaser not acquired 90% of the outstanding
shares) will have the right to dissent from the merger and demand payment of the
fair value for the shareholder's shares in lieu of the consideration provided
for in the Merger Agreement.
II-1
<PAGE>
In order for a shareholder to dissent under Article 5.16, he or she must,
within twenty days after the Surviving Corporation mails the notice and copy of
the articles of merger, make written demand on the Surviving Corporation for
payment of the fair value of the shareholder's shares. The fair value of the
shares will be their value as of the day immediately preceding the effective
date of the Merger, excluding any appreciation or depreciation in anticipation
of the proposed action. The demand must state (i) the number and class of shares
owned by the shareholder and (ii) the fair value of the shares as estimated by
the shareholder. FAILURE TO FILE THE DEMAND ON A TIMELY BASIS WILL CAUSE THE
SHAREHOLDER'S RIGHT TO AN APPRAISAL TO CEASE.
Under TBCA Article 5.13, ("Article 5.13"), upon receiving a demand for
payment from a dissenting shareholder under Article 5.12 or 5.16, the Company
will make a notation of the demand in its shareholder records. Within twenty
days after demanding appraisal rights under Article 5.12 or 5.16, the
shareholder must submit the certificates representing the shares for which the
shareholder demands appraisal to the Company so the Company can make a notation
on the certificates that a demand for payment has been made. The failure of a
shareholder to submit certificates for notation will, at the option of the
Company, terminate the shareholder's appraisal rights, unless a court of
competent jurisdiction otherwise directs.
Within twenty days after the Surviving Corporation receives a demand for
payment made by a shareholder in accordance with Article 5.12, or within ten
days after the Surviving Corporation receives a demand for payment made by a
shareholder in accordance with Article 5.16, the Surviving Corporation must
deliver or mail to the shareholder a written notice in which either (i) the
Surviving Corporation accepts the amount claimed in the demand and agrees to pay
that amount within ninety days after the Effective Time and, in the case of
shares represented by certificates, upon the surrender of the certificates duly
endorsed or (ii) the Surviving Corporation states its estimate of the fair value
of the shares, together with an offer to pay the amount of that estimate within
ninety days after the Effective Time, upon receipt within sixty days after the
Effective Time of notice from the shareholder that the shareholder agrees to
accept the Surviving Corporation's estimate and, in the case of shares
represented by certificates, upon the surrender of the shareholder's
certificates duly endorsed.
Under Articles 5.12 and 5.16, if within sixty days after the Effective Time,
the value of the shares is agreed upon by a shareholder and the Surviving
Corporation, payment for the shares will be made within ninety days after the
Effective Time and, in the case of shares represented by certificates, upon
surrender of the certificates duly endorsed. Upon payment of the agreed value,
the shareholder will cease to have any interest in the shares or in the
Surviving Corporation.
Under Articles 5.12 and 5.16, if within sixty days after the Effective Time,
the shareholder and the Surviving Corporation do not agree on the value of the
shares, then the shareholder or the Surviving Corporation may within sixty days
after the expiration of the sixty day period, file a petition in any court of
competent jurisdiction in the county in which the principal office of the
Company is located (Travis County, Texas), asking for a finding and
determination of the fair value of the shareholder's shares. A dissenting
shareholder must serve a copy of the petition on the Surviving Corporation,
which must then, within ten days after service, file in the office of the clerk
in which the petition was filed a list containing the names and addresses of all
shareholders of the Company who have demanded payment for their shares and with
whom agreements as to the value of their shares have not been reached. If the
Surviving Corporation files the petition, it must include that list with the
petition.
The clerk of the court will give notice of the time and place fixed for the
hearing of the petition by registered mail to the Surviving Corporation and to
the shareholders named on the list at the addresses stated on the list. All
shareholders notified of the hearing by the court and the Surviving Corporation
will be bound by the final judgment of the court.
After the hearing of the petition, the court will determine which
shareholders have properly complied with Article 5.12 or alternately, Article
5.16, and are entitled to the valuation of and payment for their shares, and the
court will appoint one or more qualified appraisers to determine the value of
the shares.
II-2
<PAGE>
The appraisers will make a determination of the fair value of the shares after
an investigation they consider proper. The appraisers will give the interested
parties a reasonable opportunity to submit to them pertinent evidence as to the
value of the shares. There is no requirement that the appraised value be as high
as the sum being paid in the Merger.
The appraisers will determine the fair value of the shares of the
shareholders entitled to payment for their shares and will file a report of the
value of the shares in the office of the clerk of the court. Notice of the
filing of the report will be given by the clerk to the parties in interest. The
report will be subject to exceptions to be heard before the court upon both the
law and the facts. The court will by its judgment determine the fair value of
the shares of the shareholders entitled to payment for their shares and will
direct the Surviving Corporation to pay that value, together with interest for
the period beginning ninety-one days after the Effective Time to the date of the
judgement, to the shareholders entitled to payment. The amount specified in the
judgment will be payable to holders of uncertificated shares immediately and to
holders of shares represented by certificates upon and simultaneously with
surrender to the Surviving Corporation of duly endorsed certificates for those
shares. Upon payment of the judgment, the dissenting shareholder will cease to
have any interest in the shares or in the Company. The court will allow the
appraisers a reasonable fee as court costs, and all court costs will be allotted
between the parties in a manner the court finds fair and equitable.
Under TBCA Article 5.13, any shareholder who has demanded payment for his or
her shares under Article 5.12 or Article 5.16 will not be entitled after making
the demand to vote or exercise any other rights of a shareholder, except the
right to receive payment for the shares and the right to maintain an action on
the ground that the Merger would be or was fraudulent, and the shares for which
payment has been demanded will not be considered outstanding for any subsequent
vote of shareholders.
Under TBCA Article 5.13, any shareholder who has demanded appraisal of his
or her shares under Article 5.12 or 5.16 may withdraw the demand at any time
before payment of the appraised value of his or her shares has been made or
before a petition has been filed asking for a determination of the fair value of
the shares. No demand for appraisal of shares may be withdrawn after payment of
the appraised value has been made or, unless the Company consents, after any
petition has been filed. If, after the Effective Time, a dissenting shareholder
fails to perfect or loses the shareholder's right of appraisal, or withdraws the
shareholder's demand for appraisal, the shareholder will be presumed to have
consented to the Merger and will be bound by the Merger, the shareholder's
status as a shareholder will be restored and the shareholder will receive the
consideration for the shareholder's shares as provided in the Merger Agreement.
IN VIEW OF THE COMPLEXITY OF THESE PROVISIONS OF TEXAS LAW, ANY SHAREHOLDER
WHO IS CONSIDERING EXERCISING APPRAISAL RIGHTS SHOULD CONSULT A LEGAL ADVISOR.
WHILE THE PURCHASER AND THE PARENT BELIEVE THIS SUMMARY OF APPRAISAL RIGHTS
IS COMPLETE, SHAREHOLDERS ARE ADVISED TO CONSULT THE TBCA ITSELF.
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Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent by each stockholder of the Company
or the stockholder's broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:
<TABLE>
<S> <C> <C>
THE DEPOSITARY FOR THE OFFER IS:
THE BANK OF NEW YORK
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department (for Eligible Institutions Tender & Exchange Department
P.O. Box 11248 Only) 101 Barclay Street
Church Street Station (212) 815-6213 Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
FOR CONFIRMATION TELEPHONE:
(800) 507-9357
</TABLE>
Any questions or requests for assistance or additional copies of the
Supplemented Offer to Purchase, the Letter of Transmittal or the Notice of
Guaranteed Delivery may be directed to the Information Agent or the Dealer
Managers at their respective telephone numbers and locations listed below. You
may also contact your broker, dealer, commercial bank or trust company or other
nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
909 Third Avenue
20th Floor
New York, New York 10022
(212) 754-8000
Toll Free: (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
THE DEALER MANAGERS FOR THE OFFER ARE:
<TABLE>
<S> <C>
ING BARINGS FURMAN SELZ
667 Madison Avenue 230 Park Avenue
New York, New York 10021 New York, New York 10169
1-888-584-4166 (Toll Free) 1-888-584-4166 (Toll Free)
</TABLE>
<PAGE>
EXHIBIT 19(d)(10)
NEWS RELEASE
FOR IMMEDIATE RELEASE
Supercanal Subsidiary Extends
Tender Offer for Tescorp Inc.
Mendoza, Argentina (Jan. 12, 1998) -- Supercanal Holding S.A. announced
today an extension of the tender offer by its subsidiary, Tescorp Acquisition
Corporation, for all the outstanding common stock and all the outstanding Series
1995 8% Convertible Preferred Stock of Tescorp, Inc. to 12:00 midnight, New York
City time, on Thursday, February 5, 1998, unless the offer is further extended.
A Supercanal spokesman said that as a result of comments received from the
staff of the Securities and Exchange Commission, both Tescorp Acquisition
Corporation and Tescorp, Inc. will be supplementing the disclosures they made
regarding the tender offer. The purpose of the extension is to give Tescorp
stockholders an opportunity to review the supplemental disclosures.
The Supercanal spokesman said that at 3:00 pm on Friday, Jan. 9, 1998, a
total of 12,414,387 shares of common stock and 100,650 shares of 8% preferred
stock had been tendered. Because Tescorp Acquisition Corporation already owns
6,006,006 shares of Tescorp Inc. common stock, if none of the tendered shares
are withdrawn, Tescorp Acquisition Corporation would own approximately 95% of
the outstanding common stock and 72% of the outstanding 8% preferred stock.
That substantially exceeds the minimum percentages upon which the Tescorp
Acquisition Corporation tender offer was conditioned.
Tescorp Inc. stockholders will have the right to tender additional shares
and to withdraw shares which have been tendered, until the expiration time of
the tender offer.
Supercanal Holding S. A. provides multi-channel television services via
cable, wireless and DBS technology in Argentina. The company is the largest
multiple system operator (MSO) in Argentina operating exclusively outside the
Province of Buenos Aires.
For further information, contract Mario Repetto at (305) 371-9144 or Frank
N. Hawkins, Jr./Julie Marshall at Hawk Associates, Inc. at (305) 852-2383.
<PAGE>
EXHIBIT 19(e)
SHAREHOLDERS' APPRAISAL RIGHTS UNDER THE TBCA
Holders of 8% Preferred Shares or Common Shares are entitled to appraisal
rights with respect to the Merger under TBCA Article 5.12, or in the event that
Purchaser acquires at least 90% both of the outstanding Common Shares and of the
outstanding 8% Preferred Shares in the Offer, under TBCA Article 5.16 ("Article
5.16").
Under Articles 5.12 and 5.16, if the Merger is consummated, a holder of
record of 8% Preferred Shares or Common Shares on the date of making a demand
for appraisal, as described below, who (i) strictly complies with the procedures
set forth under Article 5.12 or Article 5.16; and (ii) has not voted in favor of
the Merger, will be entitled to receive payment for the "fair value" of those
shares in lieu of the consideration provided for in the Merger Agreement. THE
STATUTORY RIGHT OF APPRAISAL GRANTED BY ARTICLES 5.12 and 5.16 REQUIRES STRICT
COMPLIANCE WITH THE PROCEDURES SET FORTH IN ARTICLES 5.12 and 5.16. FAILURE TO
FOLLOW ANY OF THOSE PROCEDURES MAY RESULT IN A TERMINATION OR WAIVER OF
DISSENTERS' RIGHTS UNDER ARTICLES 5.12 and 5.16. The following is a summary of
the principal provisions of Articles 5.12. and 5.16.
A holder of 8% Preferred Shares or Common Shares electing to exercise
appraisal rights under Article 5.12 must file with the Company, prior to the
meeting at which the vote to approve the Merger is held, a written objection to
the Merger. The objection must (i) state that the shareholder's right to
dissent will be exercised if the Merger is effective and (ii) give the
shareholder's address to which the Company will send a notice to the shareholder
if the Merger is effective. All written objections should be delivered to the
Company, Attention: Tescorp, Inc. 327 Congress Avenue, Suite 200, Austin, Texas
78701.
Under Article 5.12, if (i) the Merger is effective, (ii) the shareholder
did not vote in favor of the Merger, and (iii) the shareholder sent a written
objection to the Company prior to the vote on the Merger in compliance with
Article 5.12, the Surviving Corporation will, within ten days after the
Effective Time, deliver or mail to the shareholder written notice of the
effectiveness of the Merger.
Within ten days after the delivery or mailing of the notice of the
effectiveness of the Merger by the Surviving Corporation, a shareholder who
wishes to exercise his or her appraisal rights must make written demand on the
Surviving Corporation for payment of the fair value of the shareholder's shares.
The fair value of the shares will be their value as of the day immediately
preceding the meeting to vote on the Merger, excluding any appreciation or
depreciation in anticipation of the proposed action. The demand to vote on the
Merger must state (i) the number and class of shares owned by the shareholder
and (ii) the fair value of the shares as estimated by the shareholder. FAILURE
TO FILE THE DEMAND ON A TIMELY BASIS WILL CAUSE THE SHAREHOLDER'S RIGHT TO AN
APPRAISAL TO CEASE.
<PAGE>
If the Purchaser acquires more than 90% both of the outstanding Common
Shares and of the outstanding 8% Preferred Shares, stockholder approval will not
be required for the Merger to be effected under TBCA Article 5.16. In this case,
the Surviving Corporation will, within ten days after the Effective Time, mail
to each shareholder of record of the Company a copy of the articles of merger
and notify the shareholder that the Merger has become effective. Any
shareholder who would have been entitled to vote on the Merger if it had been
effected pursuant to Article 5.03 of the TBCA (those shareholders who would have
been able to vote on the merger had the Purchaser not acquired 90% of the
outstanding shares) will have the right to dissent from the merger and demand
payment of the fair value for the shareholder's shares in lieu of the
consideration provided for in the Merger Agreement.
In order for a shareholder to dissent under Article 5.16, he or she must,
within twenty days after the Surviving Corporation mails the notice and copy of
the articles of merger, make written demand on the Surviving Corporation for
payment of the fair value of the shareholder's shares. The fair value of the
shares will be their value as of the day immediately preceding the effective
date of the Merger, excluding any appreciation or depreciation in anticipation
of the proposed action. The demand must state (i) the number and class of
shares owned by the shareholder and (ii) the fair value of the shares as
estimated by the shareholder. FAILURE TO FILE THE DEMAND ON A TIMELY BASIS WILL
CAUSE THE SHAREHOLDER'S RIGHT TO AN APPRAISAL TO CEASE.
Under TBCA Article 5.13, ("Article 5.13"), upon receiving a demand for
payment from a dissenting shareholder under Article 5.12 or 5.16, the Company
will make a notation of the demand in its shareholder records. Within twenty
days after demanding appraisal rights under Article 5.12 or 5.16, the
shareholder must submit certificates representing the shares for which the
shareholder demands appraisal to the Company so the Company can make a notation
on the certificates that a demand for payment has been made. The failure of a
shareholder to submit certificates for notation will, at the option of the
Company, terminate the shareholder's appraisal rights, unless a court of
competent jurisdiction otherwise directs.
Within twenty days after the Surviving Corporation receives a demand for
payment made by a shareholder in accordance with Article 5.12, or within ten
days after the Surviving Corporation receives a demand for payment made by a
shareholder in accordance with Article 5.16, the Surviving Corporation must
deliver or mail to the shareholder a written notice in which either (i) the
Surviving Corporation accepts the amount claimed in the demand and agrees to pay
that amount within ninety days after the Effective Time and, in the case of
shares represented by certificates, upon the surrender of the certificates duly
endorsed or (ii) the Surviving Corporation states its estimate of the fair value
of the shares, together with an offer to pay the amount of that estimate within
ninety days after the Effective Time, upon receipt within sixty days after the
Effective Time of notice from the shareholder that the shareholder agrees to
accept the Surviving Corporation's estimate and, in the case of shares
represented by certificates, upon the surrender of the shareholder's
certificates duly endorsed.
Under Articles 5.12 and 5.16, if within sixty days after the Effective
Time, the value of the shares is agreed upon by a shareholder and the Surviving
Corporation, payment for the shares will be made within ninety days after the
Effective Time and, in the case of shares represented by
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<PAGE>
certificates, upon surrender of the certificates duly endorsed. Upon payment of
the agreed value, the shareholder will cease to have any interest in the shares
or in the Surviving Corporation.
Under Articles 5.12 and 5.16, if within sixty days after the Effective
Time, the shareholder and the Surviving Corporation do not agree on the value of
the shares, then the shareholder or the Surviving Corporation may within sixty
days after the expiration of the sixty day period, file a petition in any court
of competent jurisdiction in the county in which the principal office of the
Company is located (Travis County, Texas), asking for a finding and
determination of the fair value of the shareholder's shares. A dissenting
shareholder must serve a copy of the petition on the Surviving Corporation,
which must then, within ten days after service, file in the office of the clerk
in which the petition was filed a list containing the names and addresses of all
shareholders of the Company who have demanded payment for their shares and with
whom agreements as to the value of their shares have not been reached. If the
Surviving Corporation files the petition, it must include that list with the
petition.
The clerk of the court will give notice of the time and place fixed for the
hearing of the petition by registered mail to the Surviving Corporation and to
the shareholders named on the list at the addresses stated on the list. All
shareholders notified of the hearing by the court and the Surviving Corporation
will be bound by the final judgment of the court.
After the hearing of the petition, the court will determine which
shareholders have properly complied with Article 5.12 or alternately, Article
5.16, and are entitled to the valuation of and payment for their shares, and the
court will appoint one or more qualified appraisers to determine the value of
the shares. The appraisers will make a determination of the fair value of the
shares after an investigation they consider proper. The appraisers will give
the interested parties a reasonable opportunity to submit to them pertinent
evidence as to the value of the shares. There is no requirement that the
appraised value be as high as the sum being paid in the Merger.
The appraisers will determine the fair value of the shares of the
shareholders entitled to payment for their shares and will file a report of the
value of the shares in the office of the clerk of the court. Notice of the
filing of the report will be given by the clerk to the parties in interest.
The report will be subject to exceptions to be heard before the court upon both
the law and the facts. The court will by its judgment determine the fair value
of the shares of the shareholders entitled to payment for their shares and will
direct the Surviving Corporation to pay that value, together with interest for
the period beginning ninety-one days after the Effective Time to the date of the
judgement, to the shareholders entitled to payment. The amount specified in the
judgment will be payable to holders of uncertificated shares immediately and to
holders of shares represented by certificates upon and simultaneously with
surrender to the Surviving Corporation of duly endorsed certificates for those
shares. Upon payment of the judgment, the dissenting shareholder will cease to
have any interest in the shares or in the Company. The court will allow the
appraisers a reasonable fee as court costs, and all court costs will be allotted
between the parties in a manner the court finds fair and equitable.
Under TBCA Article 5.13, any shareholder who has demanded payment for his
or her shares under Article 5.12 or Article 5.16 will not be entitled after
making the demand to vote or
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<PAGE>
exercise any other rights of a shareholder, except the right to receive payment
for the shares and the right to maintain an action on the ground that the Merger
would be or was fraudulent, and the shares for which payment has been demanded
will not be considered outstanding for any subsequent vote of shareholders.
Under TBCA Article 5.13, any shareholder who has demanded appraisal of his
or her shares under Article 5.12 or 5.16 may withdraw the demand at any time
before payment of the appraised value of his or her shares has been made or
before a petition has been filed asking for a determination of the fair value of
the shares. No demand for appraisal of shares may be withdrawn after payment of
the appraised value has been made or, unless the Company consents, after any
petition has been filed. If, after the Effective Time, a dissenting shareholder
fails to perfect or loses the shareholder's right of appraisal, or withdraws the
shareholder's demand for appraisal, the shareholder will be presumed to have
consented to the Merger and will be bound by the Merger, the shareholder's
status as a shareholder will be restored and the shareholder will receive the
consideration for the shareholder's shares as provided in the Merger Agreement.
4
