<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 13, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934)
----------------
DSG INTERNATIONAL LIMITED
(NAME OF ISSUER AND PERSON FILING STATEMENT)
ORDINARY SHARES, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
G28471103
(CUSIP NUMBER OF CLASS OF SECURITIES)
PETER CHANG
ASSOCIATED HYGIENIC PRODUCTS LLC
4455 RIVER GREEN PARKWAY
DULUTH, GA 30136
(770) 497-9800
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS
ON BEHALF OF THE PERSON FILING STATEMENT)
Copy to:
ROBERT E. SULLIVAN
PILLSBURY MADISON & SUTRO LLP
235 MONTGOMERY STREET
SAN FRANCISCO, CA 94104
(415) 983-1361
NOVEMBER 13, 1996
(DATE TENDER OFFER FIRST PUBLISHED,
SENT OR GIVEN TO SECURITY HOLDERS)
<TABLE>
- --------------------------------------------------------
- --------------------------------------------------------
<CAPTION>
TRANSACTION VALUATION(*) AMOUNT OF FILING FEE
- --------------------------------------------------------
<S> <C>
$12,325,000 $2,465
- --------------------------------------------------------
- --------------------------------------------------------
</TABLE>
(*) Determined pursuant to Rule 0-11(b)(1). Assumes the purchase of 850,000
shares at $14.50 per share.
[_]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: Not applicable.
Form or
Registration
No.: Not applicable.
Filing Party: Not applicable.
Dated Filed: Not applicable.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
This is Page One of Pages
The Exhibit Index is located on Sequentially Numbered Page 5
<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is DSG International Limited, a British Virgin
Islands company (the "Company"), that has its principal executive offices at
17/F Watson Centre, 16-22 Kung Yip St., Kwai Chung, Hong Kong.
(b) This schedule relates to the offer by the Company to purchase up to
850,000 outstanding Ordinary Shares (or such lesser number of shares as are
properly tendered and not withdrawn), par value $.01 per share (the "Ordinary
Shares"), at a price not greater than $14.50 nor less than $12.75 per Ordinary
Share, net to the seller in cash, to be selected by the Company, taking into
account the number of Ordinary Shares so tendered and the prices specified by
tendering holders of the Ordinary Shares, that will allow the Company to buy
850,000 Ordinary Shares (or such lesser number as are properly tendered and
not withdrawn) at a price not greater than $14.50 nor less than $12.75, all
upon the terms and subject to the conditions set forth in the Offer to
Purchase dated November 13, 1996 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which together constitute the "Offer"), copies of which
are attached hereto as Exhibits (a)(1) and (a)(2), respectively. The Offer is
being made to all holders of Ordinary Shares, including officers, directors
and affiliates of the Company. The information set forth on page 1 and under
"Number of Shares; Proration" in Section 1 and "Purpose of the Offer; Certain
Effects of the Offer" in Section 9 of the Offer to Purchase is incorporated
herein by reference.
(c) The information set forth under "Price Range of Shares; Dividends" in
Section 8 of the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth under "Source and Amount of Funds" in Section
10 of the Offer to Purchase is incorporated herein by reference.
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(j) The information set forth on page 1 and under "Purpose of the Offer;
Certain Effects of the Offer" in Section 9 and "Certain Information Concerning
the Company" in Section 11 of the Offer to Purchase is incorporated herein by
reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth under "Purpose of the Offer" and under
"Transactions and Agreements Concerning the Shares" in Section 12 of the Offer
to Purchase is incorporated herein by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The information set forth under "Transactions and Agreements Concerning the
Shares" in Section 12 of the Offer to Purchase is incorporated herein by
reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "Fees and Expenses" in Section 16 of the
Offer to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) and (b) The information set forth under "Certain Information Concerning
the Company" in Section 11 of the Offer to Purchase is incorporated herein by
reference.
2
<PAGE>
ITEM 8. ADDITIONAL INFORMATION.
(a)-(d) None or not applicable.
(e) Reference in hereby made to the Offers to Purchase and the related
Letter of Transmittal copies of which are attached hereto at
Exhibits (a)(1) and (a)(2), respectively, and are incorporated in
their entirety herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Form of Offer to Purchase dated November 13, 1996.
(a)(2) Form of Letter of Transmittal dated November 13, 1996, together with
Guidelines for Certification of Taxpayer I.D. Number on Substitute
Form W-9.
Form of Letter to Shareholders from the Company dated November 13,
(a)(3) 1996.
(a)(4) Form of Notice of Guaranteed Delivery.
(a)(5) Form of Letter to Brokers, Dealers, Commercial Banks and Trust
Companies dated November 13, 1996.
(a)(6) Form of Letter to Clients dated November 13, 1996.
(a)(7) Form of Tombstone Advertisement.
(a)(8) Press Release dated November 13, 1996.
(b) Commitment Letter dated November 4, 1996 between SouthTrust Bank of
Georgia, National Association and Associated Hygienic Products LLC.
(c) None.
(d) None.
(e) None.
(f) None.
3
<PAGE>
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: November 13, 1996.
DSG INTERNATIONAL LIMITED
/s/ Brandon Wang
By __________________________________
Brandon Wang
Chairman and President
4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
(a)(1) Form of Offer to Purchase dated November 13, 1996.......
(a)(2) Form of Letter of Transmittal dated November 13, 1996,
together with Guidelines for Certification of Taxpayer
I.D. Number on Substitute Form W-9......................
Form of Letter to Shareholders from the Company dated
(a)(3) November 13, 1996.......................................
(a)(4) Form of Notice of Guaranteed Delivery...................
(a)(5) Form of Letter to Brokers, Dealers, Commercial Banks and
Trust Companies dated November 13, 1996.................
(a)(6) Form of Letter to Clients dated November 13, 1996.......
(a)(7) Form of Tombstone Advertisement.........................
(a)(8) Press Release dated November 13, 1996...................
(b) Commitment Letter dated November 4, 1996 between
SouthTrust Bank of Georgia, National Association and
Associated Hygenic Products LLC.........................
(c) None....................................................
(d) None....................................................
(e) None....................................................
(f) None....................................................
</TABLE>
5
<PAGE>
DSG INTERNATIONAL LIMITED
OFFER TO PURCHASE FOR CASH UP TO
850,000 OF ITS ORDINARY SHARES AT A PURCHASE PRICE NOT GREATER THAN $14.50 NOR
LESS THAN $12.75 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, DECEMBER 13, 1996, UNLESS THE OFFER IS
EXTENDED.
DSG International Limited, a British Virgin Islands company (the "Company"),
hereby invites its shareholders to tender its Ordinary Shares, par value $.01
per share (the "Shares"), to the Company at prices, net to the seller in cash,
not greater than $14.50 nor less than $12.75 per Share specified by such
shareholders, upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer"). The Company will, upon the terms and subject to the
conditions of the Offer, determine a single price per Share that it will pay
for the Shares (the "Purchase Price") validly tendered and not withdrawn
pursuant to the Offer, taking into account the number of Shares so tendered
and the prices specified by tendering shareholders that will enable it to
purchase 850,000 Shares (or such lesser number of Shares as are validly
tendered at prices not greater than $14.50 nor less than $12.75 per Share)
pursuant to the Offer. All Shares validly tendered at prices at or below the
Purchase Price and not withdrawn will be purchased at the Purchase Price, net
to the seller in cash, upon the terms and subject to the conditions of the
Offer, including the proration terms hereof. Shares tendered at prices in
excess of the Purchase Price and Shares not purchased because of proration and
conditional tenders will be returned.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE SECTION 7.
----------------
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY SHAREHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH SHAREHOLDER
MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS BEEN ADVISED THAT
NO DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE
OFFER, EXCEPT THAT TERRENCE D. DANIELS, A DIRECTOR OF THE COMPANY, CONTROLS A
COMPANY THAT IS THE GENERAL PARTNER OF A FUND THAT OWNS 210,000 SHARES AND
THAT FUND MAY TENDER ANY OR ALL OF SUCH SHARES IN THE OFFER.
The Shares are listed and principally traded on the Nasdaq National Market
System ("Nasdaq") under the symbol "DSGIF". On November 12, 1996, the last
trading day prior to the Company's announcement and commencement of the Offer,
the last reported sale price of the Shares on Nasdaq was $11 7/8 per Share.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE
SECTION 8.
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
November 13, 1996.
<PAGE>
IMPORTANT
Any shareholder desiring to tender all or any portion of his or her Shares
should either (1) complete and sign the Letter of Transmittal, or a facsimile
thereof in accordance with the instructions in the Letter of Transmittal, mail
or deliver it and any other required documents to the Depositary, and either
deliver the certificates for Shares to Chase Mellon Shareholder Services,
L.L.C. (the "Depositary") along with the Letter of Transmittal or deliver such
Shares pursuant to the procedure for book-entry transfer set forth in
Section 3 hereof or (2) request his or her broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for him or her. A
shareholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if he or she desires
to tender such Shares. Shareholders desiring to tender Shares and whose
certificates for such Shares are not immediately available, or who cannot
comply in a timely manner with the procedure for book-entry transfer, must
tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3 hereof. SHAREHOLDERS MUST COMPLETE THE SECTION OF THE
LETTER OF TRANSMITTAL RELATING TO THE PRICE AT WHICH THEY ARE TENDERING SHARES
IN ORDER TO VALIDLY TENDER SHARES.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional
copies of this Offer to Purchase, the Letter of Transmittal or other tender
offer materials may be obtained from the Information Agent.
2
<PAGE>
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<C> <S> <C>
INTRODUCTION.................................................... 4
PURPOSE OF THE OFFER............................................ 5
1. NUMBER OF SHARES; PRORATION..................................... 5
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES..................... 7
3. PROCEDURE FOR TENDERING SHARES.................................. 7
PROPER TENDER OF SHARES......................................... 7
BOOK-ENTRY DELIVERY............................................. 8
SIGNATURE GUARANTEES............................................ 8
METHOD OF DELIVERY.............................................. 8
FEDERAL INCOME TAX WITHHOLDING.................................. 9
GUARANTEED DELIVERY............................................. 9
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF
DEFECTS; NO OBLIGATION TO GIVE NOTICE OF DEFECTS .............. 9
TENDER CONSTITUTES AN AGREEMENT................................. 9
4. WITHDRAWAL RIGHTS............................................... 10
5. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES................... 10
6. CONDITIONAL TENDER OF SHARES.................................... 11
7. CERTAIN CONDITIONS OF THE OFFER ................................ 12
8. PRICE RANGE OF SHARES; DIVIDENDS................................ 14
9. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.............. 14
10. SOURCE AND AMOUNT OF FUNDS...................................... 16
11. CERTAIN INFORMATION CONCERNING THE COMPANY...................... 17
12. TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES............. 20
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS..................... 21
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES......................... 21
15. EXTENSION OF THE OFFER; TERMINATION; AMENDMENTS................. 27
16. FEES AND EXPENSES............................................... 28
17. MISCELLANEOUS................................................... 28
</TABLE>
3
<PAGE>
TO THE HOLDERS OF ORDINARY SHARES OF DSG INTERNATIONAL LIMITED:
INTRODUCTION
The Company hereby invites its shareholders to tender Ordinary Shares, par
value $0.01 per share (the "Shares"), to the Company at prices, net to the
seller in cash, not greater than $14.50 nor less than $12.75 per Share,
specified by such shareholders upon the terms and conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer"). The Company will, upon the terms and subject to the
conditions of the Offer, determine a single price per Share that it will pay
for the Shares (the "Purchase Price") properly tendered and not withdrawn
pursuant to the Offer, taking into account the number of Shares so tendered and
the prices specified by tendering shareholders that will allow it to buy
850,000 Shares (or such lesser number of Shares as are properly tendered and
not withdrawn) at prices not greater than $14.50 nor less than $12.75 pursuant
to the Offer. All Shares properly tendered and not withdrawn at prices at or
below the Purchase Price prior to the Expiration Date (as defined in Section 1)
will be purchased at the Purchase Price, net to the seller in cash, upon the
terms and subject to the conditions of the offer, including the proration terms
described below. See Section 1.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 7.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
SHAREHOLDERS AS TO WHETHER TO TENDER ALL OR ANY SHARES. SHAREHOLDERS MUST MAKE
THEIR OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED. NO DIRECTOR
OR EXECUTIVE OFFICER OF THE COMPANY INTENDS TO TENDER ANY SHARES PURSUANT TO
THE OFFER, EXCEPT THAT TERRENCE D. DANIELS, A DIRECTOR OF THE COMPANY, CONTROLS
A COMPANY THAT IS THE GENERAL PARTNER OF A FUND THAT OWNS 210,000 SHARES AND
THAT FUND MAY TENDER ANY OR ALL OF SUCH SHARES IN THE OFFER. SEE SECTION 9.
Each shareholder who has properly tendered (and not withdrawn) Shares at or
below the Purchase Price will receive the Purchase Price, net to the
shareholder in cash, for all Shares purchased, upon the terms and subject to
the conditions of the Offer, including the provisions relating to proration
described herein. If, prior to the Expiration Date, more than 850,000 Shares
(or such greater number of Shares as the Company may elect to purchase) are
properly tendered and not withdrawn, the Company will, upon the terms and
subject to the conditions of the Offer, accept shares for purchase first from
Odd Lot Owners (as defined in Section 2) who properly tender Shares at or below
the Purchase Price and then on a pro rata basis from other shareholders whose
Shares are properly tendered at or below the Purchase Price and not withdrawn.
The Company will return at its own expense all Shares not purchased, including
Shares not purchased because of proration or conditional Tender. Tendering
shareholders will not be obligated to pay brokerage fees or commissions or,
except as set forth in Instruction 7 of the Letter of Transmittal, stock
transfer taxes on the purchase of Shares by the Company pursuant to the Offer.
The Company will pay all fees and expenses of the Depositary, D. F. King & Co.,
Inc. (the "Information Agent") and Salomon Brothers Inc (the "Dealer Manager")
in connection with the Offer.
As of November 12, 1996, there were 7,682,000 Shares outstanding. The 850,000
Shares that the Company is offering to purchase represent at November 12, 1996
approximately 11% of the Shares outstanding. The Shares are listed and
principally traded on Nasdaq under the symbol "DSGIF." On November 12, 1996,
the last full trading day on Nasdaq prior to the Company's announcement and
commencement of the Offer, the closing per Share sales price as reported by
Nasdaq was $11 7/8. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES. SEE SECTION 8.
4
<PAGE>
PURPOSE OF THE OFFER
Over the past several years, the Company's operations have generated
substantial cash, resulting in a strong balance sheet with substantial
borrowing capacity. After the Offer is completed, the Company expects to have
sufficient cash flow and access to other sources of capital to fund its growth
initiatives, including building its businesses and making strategic
acquisitions. The Company believes that the purchase of its Shares at this
time represents an attractive investment opportunity that will benefit the
Company and its remaining shareholders.
The Offer provides shareholders who are considering a sale of all or a
portion of their Shares the opportunity to determine the price or prices (not
greater than $14.50 nor less than $12.75 per Share) at which they are willing
to sell their Shares and, if any such Shares are purchased pursuant to the
Offer, to sell those Shares for cash to the Company without the usual costs
associated with a market sale. The Offer gives shareholders an opportunity to
sell their Shares at a price greater than the prevailing market prices of the
Shares immediately prior to the announcement of the Offer. The Offer would
also allow Odd Lot Owners whose Shares are purchased pursuant to the Offer to
avoid both the payment of brokerage commissions and any applicable odd lot
discounts payable on sales of odd lots on a securities exchange. To the extent
the purchase of Shares in the Offer results in a reduction in the number of
shareholders of record, the costs to the Company for services to shareholders
should be reduced. Shareholders who determine not to accept the Offer will
increase their proportionate interest in the Company's equity, and therefore
in the Company's future earnings and assets, subject to the Company's right to
issue additional Shares and other equity securities in the future.
On May 31, 1994, the Company announced that the Board of Directors had
authorized the repurchase of up to 500,000 of the then outstanding Shares (the
"Repurchase Program"). The Shares were to be purchased from time to time in
the open market or through unsolicited negotiated transactions, including
block purchases. The timing of the Repurchase Program and number of Shares
repurchased was to be dictated by overall financial and market conditions. The
authority was increased to 1,000,000 shares on July 7, 1995. Since May 31,
1994, the Company has repurchased 633,000 Shares at prices ranging from
$10.875 to $15.875 per Share pursuant to the Repurchase Program. During the
last 40 days the Company purchased 10,000 shares on October 23 at $11.625 per
share and 30,000 shares on November 4 at $11.875 per share. Rule 13e-4 under
the Exchange Act prohibits the Company from making any purchases of Shares
until 10 business days after the Expiration Date, other than pursuant to the
Offer; thereafter, the Company intends to resume the Repurchase Program. Any
Share purchases under the Repurchase Program or otherwise may be on the same
terms as, or on terms more or less favorable to shareholders than, the terms
of the Offer. Any future purchases by the Company, either pursuant to the
Repurchase Program or otherwise, will depend on numerous factors, including
the market price of the Shares, the results of the Offer, the Company's
business and financial condition and general economic and market conditions.
Shares purchased in the Offer will not be counted in the aggregate number of
Shares to be purchased pursuant to the Repurchase Program.
Shares the Company acquires pursuant to the Offer will become authorized but
unissued Shares and will be available for issue without further shareholder
action (except as required by applicable law or, the rules of any securities
exchange on which Shares are listed) for purposes including, but not limited
to, the acquisition of other businesses, raising of additional capital for use
in the Company's business, and satisfaction of obligations under existing or
future employee benefit plans. The Company has no current plan for issuance of
Shares repurchased pursuant to the Offer.
The Company in the past has considered and expects to continue to consider
potential acquisitions or other strategic arrangements that may fit the
Company's strategic plan. Although the Company from time to time engages in
preliminary discussions with respect to such transactions, it has not entered
into any definitive agreement with respect to any particular transaction.
There can be no assurance that any agreement with respect to any potential
acquisitions or other strategic
5
<PAGE>
arrangements will be reached on terms acceptable to the Company nor does the
Company believe that any such acquisition or strategic arrangement is
necessary for successful consummation of its strategic plan.
1. NUMBER OF SHARES; PRORATION
Upon the terms and subject to the conditions of the Offer, the Company will
accept for payment and purchase 850,000 Shares or such lesser number of Shares
as are properly tendered on or prior to the Expiration Date (and not withdrawn
in accordance with Section 4) at a price (determined in the manner set forth
below) not greater than $14.50 nor less than $12.75 per Share. The term
"Expiration Date" means 12:00 Midnight, New York City time, on Friday,
December 13, 1996, unless the Company, in its sole discretion, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall refer to the latest time and date at which the
Offer, as so extended by the Company, shall expire. For a description of the
Company's right to extend the period of time during which the Offer is open,
and to delay, terminate or amend the Offer, see Section 15. If the Offer is
oversubscribed, Shares tendered prior to the Expiration Date will be subject
to proration. The proration period also expires on the Expiration Date.
The Company will, upon the terms and subject to the conditions of the Offer,
determine a single Purchase Price, taking into account the number of Shares so
tendered and the prices specified by tendering shareholders that will allow it
to buy 850,000 Shares (or such lesser number as are properly tendered and not
withdrawn) at prices not greater than $14.50 nor less than $12.75 per Share
pursuant to the Offer.
All Shares purchased pursuant to the Offer will be purchased at the Purchase
Price. All Shares not purchased pursuant to the Offer, including Shares
tendered at prices greater than the Purchase Price and Shares not purchased
because of proration or otherwise, will be returned to the tendering
shareholders at the Company's expense as promptly as practicable.
If the number of Shares properly tendered prior to the Expiration Date (and
not withdrawn in accordance with Section 5) at prices not greater than $14.50
nor less than $12.75 per Share is less than or equal to 850,000 Shares (or
such greater number of Shares as the Company may elect to purchase pursuant to
the Offer), the Company will, upon the terms and subject to the conditions of
the Offer, purchase at the Purchase Price all Shares so tendered.
Upon the terms and subject to the conditions of the Offer, in the event that
prior to the Expiration Date more than 850,000 Shares (or such greater number
of Shares as the Company elects to purchase) are properly tendered and not
withdrawn at or below the Purchase Price, the Company will accept Shares for
purchase in the following order of priority:
(a) first, all Shares properly tendered at or below the Purchase Price
prior to the Expiration Date (and not withdrawn) by any Odd Lot Owner (as
defined in Section 2), who:
(1) tenders all Shares beneficially owned by such Odd Lot Owner at or
below the Purchase Price (partial tenders will not qualify for this
preference); and
(2) completes the section entitled "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) then, after purchase of all of the foregoing Shares, all other Shares
properly tendered at or below the Purchase Price, before the Expiration
Date (and not withdrawn), on a pro rata basis, if necessary (with
adjustments to avoid purchases of fractional Shares).
In the event that proration of tendered Shares is required, the Company will
determine the final proration factor as promptly as practicable after the
Expiration Date. Proration for each shareholder tendering Shares other than
Odd Lot Owners shall be based on the ratio of the number of Shares
6
<PAGE>
tendered by such shareholder to the total number of Shares tendered by all
shareholders other than Odd Lot Owners at or below the Purchase Price.
Although the Company does not expect to be able to announce the final results
of such proration until approximately five Nasdaq trading days after the
Expiration Date, it will announce preliminary results of proration by press
release as promptly as practicable after the Expiration Date. Shareholders may
obtain such preliminary information from the Information Agent and may be able
to obtain such information from their brokers.
As described in Section 14, the number of Shares that the Company will
purchase from a shareholder may affect the federal income tax consequences to
the shareholder of such purchase and therefore may be relevant to a
shareholder's decision whether to tender Shares. Each shareholder will be
afforded the opportunity to designate in the Letter of Transmittal the order
of priority in which Shares owned are to be purchased.
THE COMPANY RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO PURCHASE
ADDITIONAL SHARES PURSUANT TO THE OFFER. If (i) the Company increases or
decreases the price to be paid for Shares, increases the number of Shares
being sought and such increase in the number of Shares being sought exceeds 2%
of the outstanding Shares or decreases the number of Shares being sought and
(ii) the Offer is scheduled to expire at any time earlier than the expiration
of a period ending on the tenth business day from, and including, the date
that notice of such increase or decrease is first published, sent or given in
the manner described in Section 15, the Offer will be extended until the
expiration of ten business days from the date of publication of such notice.
For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m. through 12:00 Midnight, New York City time.
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES
For purposes of the Offer, the term "Odd Lots" means all Shares properly
tendered, in accordance with the procedures set forth in Section 3, by the
Expiration Date and not withdrawn, by or on behalf of shareholders ("Odd Lot
Owners") who beneficially hold, as of the close of business on the Expiration
Date, fewer than 100 Shares. As set forth above, Odd Lots will be accepted for
purchase before any proration. IN ORDER TO QUALIFY FOR THIS PREFERENCE, AN ODD
LOT OWNER MUST PROPERLY TENDER ALL SHARES BENEFICIALLY OWNED BY HIM OR HER.
PARTIAL TENDERS WILL NOT QUALIFY FOR THIS PREFERENCE. The preference is not
available to holders of 100 or more Shares, even if holders have separate
share certificates for fewer than 100 Shares. ANY ODD LOT OWNER WISHING TO
TENDER ALL SHARES BENEFICIALLY OWNED FREE OF PRORATION MUST COMPLETE THE
SECTION ENTITLED "ODD LOTS" IN THE LETTER OF TRANSMITTAL AND, IF APPLICABLE,
ON THE NOTICE OF GUARANTEED DELIVERY. Shareholders owning an aggregate of less
than 100 Shares whose Shares are purchased pursuant to the Offer not only will
avoid the payment of brokerage commissions, but also will avoid any applicable
odd-lot discounts payable on a sale of their Shares in a Nasdaq transaction.
3. PROCEDURE FOR TENDERING SHARES
PROPER TENDER OF SHARES. To tender Shares pursuant to the Offer, (i) a
properly completed and duly executed Letter of Transmittal (or manually
executed facsimile thereof) with any required signature guarantees and any
other documents required by the Letter of Transmittal must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase, and either certificates for the Shares to be tendered must be
transmitted to and received by the Depositary at one of such addresses or such
Shares must be tendered pursuant to the procedures for book-entry transfer
described below (and a confirmation of such tender received by the
Depositary), in each case by the Expiration Date, or (ii) the guaranteed
delivery procedure described below must be followed.
7
<PAGE>
As specified in Instruction 5 of the Letter of Transmittal, each shareholder
desiring to tender Shares pursuant to the Offer must properly indicate in the
section captioned "Price (In Dollars) Per Ordinary Share At Which Ordinary
Shares Are Being Tendered" on the Letter of Transmittal the price (in
multiples of $.125) at which his or her Shares are being tendered; provided,
however, that an Odd Lot Owner may check the box in the section entitled "Odd
Lots" indicating that he or she is tendering all of his or her Shares at the
Purchase Price. SHAREHOLDERS DESIRING TO TENDER SHARES AT MORE THAN ONE PRICE
MUST COMPLETE SEPARATE LETTERS OF TRANSMITTAL FOR EACH PRICE AT WHICH SHARES
ARE BEING TENDERED, EXCEPT THAT THE SAME SHARES CANNOT BE TENDERED (UNLESS
PROPERLY WITHDRAWN PREVIOUSLY IN ACCORDANCE WITH THE TERMS OF THE OFFER) AT
MORE THAN ONE PRICE. IN ORDER TO PROPERLY TENDER SHARES, ONE AND ONLY ONE
PRICE BOX MUST BE CHECKED IN THE APPROPRIATE SECTION ON EACH LETTER OF
TRANSMITTAL.
In addition, Odd Lot Owners who tender all their Shares must complete the
section entitled "Odd Lots" in the Letter of Transmittal and, if applicable,
on the Notice of Guaranteed Delivery in order to qualify for the preferential
treatment available to Odd Lot Owners as set forth in Section 1.
Notwithstanding any other provision hereof, payment for Shares tendered and
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for such Shares (or a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities, as defined below), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees and any other documents
required by the Letter of Transmittal.
BOOK-ENTRY DELIVERY. The Depositary will establish accounts with respect to
the Shares at The Depositary Trust Company and the Philadelphia Depository
Trust Company (collectively referred to as "Book-Entry Transfer Facilities")
for purposes of the Offer within two business days after the date of this
Offer to Purchase, and any financial institution that is a participant in the
system of any Book-Entry Transfer Facility may make delivery of Shares into
the Depositary's account in accordance with the procedures of such Book-Entry
Transfer Facility. However, although delivery of Shares may be effected
through book-entry transfer into the Depositary's account at a Book-Entry
Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) with any required signature
guarantees and any other required documents must, in any case, be transmitted
to and received by the Depositary at one of the addresses set forth on the
back cover of this Offer to Purchase by the Expiration Date, or the guaranteed
delivery procedure described below must be complied with. Delivery of the
Letter of Transmittal and any other required documents to a Book-Entry
Transfer Facility does not constitute delivery to the Depositary.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal if the Letter of Transmittal is signed by the registered holder of
the Shares exactly as the name of the registered holder appears on the
certificate (which term, for purposes of this Section 3, includes any
participant in a Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Shares) tendered therewith, and payment is to
be made directly to such registered holder, or if Shares are tendered for the
account of a member firm of a registered national securities exchange, a
member of the Stock Transfer Association's approved medallion program (such as
STAMP, SEMP or MSP) or a commercial bank or trust company having an office,
branch or agency in the United States (each such entity, an "Eligible
Institution"). In all other cases, all signatures on the Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instruction 1 of the Letter
of Transmittal. If a certificate representing Shares is registered in the name
of a person other than the signer of a Letter of Transmittal, or if payment is
to be made, or Shares not purchased or tendered are to be issued, to a person
other than the registered holder, the certificate must be endorsed or
accompanied by an appropriate stock power, in either case signed exactly as
the name of the registered holder appears on the certificate with the
signature on the certificate or stock power guaranteed by an Eligible
Institution.
8
<PAGE>
METHOD OF DELIVERY. THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF
CERTIFICATES FOR SHARES ARE TO BE SENT BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
FEDERAL INCOME TAX WITHHOLDING. To prevent federal income tax backup
withholding equal to 31% of the gross payments made pursuant to the Offer,
each shareholder who does not otherwise establish an exemption from such
withholding must notify the Depositary of such shareholder's correct taxpayer
identification number (or certify that such taxpayer is awaiting a taxpayer
identification number) and provide certain other information by completing a
Substitute Form W-9 included in the Letter of Transmittal. Foreign
shareholders may be required to submit Form W-8, certifying non-United States
status, in order to avoid backup withholding. See Instruction 13 of the Letter
of Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and cannot deliver certificates for such Shares (or the procedures
for book-entry transfer cannot be completed on a timely basis) or time will
not permit all required documents to reach the Depositary by the Expiration
Date, such Shares may nevertheless be tendered if all of the following
conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) the Notice of Guaranteed Delivery properly completed and duly
executed, substantially in the form provided by the Company, is received by
the Depositary by the Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for transfer
(or a confirmation of a book-entry transfer of Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities), together with a
properly completed and duly executed Letter of Transmittal (or manually
executed facsimile thereof) and any other documents required by the Letter
of Transmittal, are received by the Depositary within three Nasdaq trading
days after the date the Depositary received such Notice of Guaranteed
Delivery. The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by telegram, facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set
forth in such Notice.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of Shares
to be accepted, the form of documents and the validity, eligibility (including
time of receipt) and acceptance for payment of any tender of Shares will be
determined by the Company, in its sole discretion, which determination shall
be final and binding on all parties. The Company reserves the absolute right
to reject any or all tenders of Shares determined by it not to be in proper
form or the acceptance for payment of or payment for which may be unlawful.
The Company also reserves the absolute right to waive any of the conditions of
the Offer or any defect or irregularity in any tender of Shares. No tender of
Shares will be deemed to be properly made until all defects and irregularities
have been cured or waived. None of the Company, the Dealer Manager, the
Information Agent, the Depositary, or any other person will be under any duty
to give notification of any defect or irregularity in tenders or incur any
liability for failure to give any such notice.
TENDER CONSTITUTES AN AGREEMENT. The tender of Shares pursuant to any one of
the procedures described above will constitute a binding agreement between the
tendering shareholder and the Company upon the terms and subject to the
conditions of the Offer.
It is a violation of Rule 14e-4 promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), for a person, directly or
indirectly, to tender shares for his or her own account unless, at the time of
the tender and at the end of the proration period, the person so tendering
9
<PAGE>
(i) has a net long position equal to or greater than the amount of (x) shares
tendered or (y) other securities immediately convertible into, exercisable, or
exchangeable for the amount of shares tendered and will acquire such shares
for tender by conversion, exercise or exchange of such other securities and
(ii) will cause such shares to be delivered in accordance with the terms of
the Offer. Rule 14e-4 promulgated under the Exchange Act provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. The tender of Shares pursuant to any one of the procedures
described above will constitute the tendering shareholder's acceptance of the
terms and conditions of the Offer as well as the tendering shareholder's
representation and warranty that (i) such shareholder has a net long position
in the Shares being tendered within the meaning of Rule 14e-4 and (ii) the
tender of such Shares complies with Rule 14e-4.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer will be irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company as provided in this Offer to Purchase, may
also be withdrawn after 12:00 Midnight, New York City time, on January 10,
1997.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the registered holder,
if different from that of the person who tendered such Shares. If the
certificates have been delivered or otherwise identified to the Depositary,
then, prior to the release of such certificates, the tendering shareholder
must submit the serial numbers shown on the particular certificates evidencing
the Shares to be withdrawn and the signature on the notice of withdrawal must
be guaranteed by an Eligible Institution, except in the case of Shares
tendered by an Eligible Institution. If Shares have been tendered pursuant to
the procedure for book-entry transfer set forth in Section 3, the notice of
withdrawal must specify the name and the number of the account at the
applicable Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with the procedures of such facility. All
questions as to the form and validity (including time of receipt) of notices
of withdrawal will be determined by the Company, in its sole discretion, which
determination shall be final and binding. None of the Company, the Dealer
Manager, the Depositary, the Information Agent or any other person shall be
obligated to give any notice of any defects or irregularities in any notice of
withdrawal and none of them shall incur any liability for failure to give any
such notice. Any Shares properly withdrawn will thereafter be deemed not
tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by the Expiration Date by again following any of the procedures
described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or is
unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain on behalf of the Company all tendered Shares, and
the Shares may not be withdrawn except to the extent tendering shareholders
are entitled to withdrawal rights as described in this Section 4.
5. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the offer (including
proration), the Company will accept for payment as soon as practicable after
the Expiration Date 850,000 (or such lesser number of Shares as are properly
tendered and not withdrawn) at prices not greater than $14.50 nor less than
$12.75 per Share. For purposes of the Offer, the Company will be deemed to
have accepted for payment, subject to proration, Shares tendered at or below
the Purchase Price and not withdrawn if, as and when the Company gives oral or
written notice to the Depositary of its acceptance of such Shares for payment
pursuant to the Offer.
10
<PAGE>
Payment for Shares accepted for payment pursuant to the Offer will be made
by depositing the aggregate Purchase Price for such Shares with the
Depositary, which will act as agent for the tendering shareholders for the
purpose of receiving payment from the Company and transmitting such payments
to tendering shareholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date; however, the Company does not expect to be able to
announce the final results of any such proration until approximately five
Nasdaq trading days after the Expiration Date. Certificates for all Shares not
purchased, including Shares not purchased due to proration, will be returned
(or, in the case of Shares tendered by book-entry transfer, such Shares will
be credited to the account maintained within such Book-Entry Transfer Facility
by the participant therein who so delivered such Shares) as soon as
practicable after the Expiration Date or termination of the Offer without
expense to the tendering shareholder. Under no circumstances will interest be
paid by the Company by reason of any delay in paying for any Shares or
otherwise. In addition, if certain events occur, the Company may not be
obligated to purchase Shares pursuant to the Offer. See Section 7.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer, except if (i)
payment of the Purchase Price is to be made to, or (ii) (in the circumstances
permitted by the Offer) Shares not tendered or not accepted for purchase are
to be registered in the name of any person other than the registered holder,
or if tendered certificates are registered in the name of any person other
than the person signing the Letter of Transmittal. In such circumstances, the
amount of all stock transfer taxes, if any (whether imposed on the registered
holder or such other person), payable on account of the transfer to such
person will be deducted from the Purchase Price unless evidence satisfactory
to the Company of the payment of such taxes or exemption therefrom is
submitted. See Instruction 7 of the Letter of Transmittal.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND
SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL MAY BE
SUBJECT TO REQUIRED FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS
PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE
SECTION 3.
6. CONDITIONAL TENDER OF SHARES.
Under certain circumstances and subject to the exceptions set forth in
Section 1, the Company may prorate the number of Shares purchased pursuant to
the Offer. As discussed in Section 14, the number of Shares to be purchased
from a particular shareholder might affect the tax treatment of such purchase
to such shareholder and such shareholder's decision whether to tender. EACH
SHAREHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR. Accordingly,
a shareholder may tender Shares subject to the condition that a specified
minimum number of such holder's Shares tendered pursuant to a Letter of
Transmittal or Notice of Guaranteed Delivery must be purchased if any such
Shares so tendered are purchased, and any shareholder desiring to make such a
conditional tender must so indicate in the box captioned "Conditional Tender"
in such Letter of Transmittal or, if applicable, the Notice of Guaranteed
Delivery.
Any tendering shareholders wishing to make a conditional tender must
calculate and appropriately indicate such minimum number of Shares. If the
effect of accepting tenders on a pro rata basis would be to reduce the number
of Shares to be purchased from any shareholder (tendered pursuant to a Letter
of Transmittal or Notice of Guaranteed Delivery) below the minimum number so
specified, such tender will automatically be regarded as withdrawn (except as
provided in the next paragraph) and all Shares tendered by such shareholder
pursuant to such Letter of Transmittal or Notice of Guaranteed Delivery will
be returned as promptly as practicable thereafter.
11
<PAGE>
If conditional tenders would otherwise be so regarded as withdrawn and would
cause the total number of Shares to be purchased to fall below 850,000, then,
to the extent feasible, the Company will select enough of such conditional
tenders that would otherwise have been so withdrawn to permit the Company to
purchase 850,000 Shares. In selecting among such conditional tenders, the
Company will select by lot and will limit its purchase in each case to the
designated minimum number of Shares to be purchased.
7. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, purchase or pay for any Shares tendered and
may terminate or amend the Offer or may postpone the acceptance for payment
of, or the payment for, Shares tendered, if at any time on or after November
13, 1996 and at or before the payment for any such Shares, any of the
following events shall have occurred (or shall have been determined by the
Company to have occurred) which, in the Company's sole judgment in any such
case and regardless of the circumstances (including any action or omission to
act by the Company), makes it inadvisable to proceed with the Offer or with
such acceptance for purchase or payment:
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental authority or regulatory or
administrative agency, domestic or foreign, or by any other person,
domestic or foreign, before any court or governmental authority or
regulatory or administrative agency, domestic or foreign, (i) that
challenges or seeks to make illegal, or delay or otherwise directly or
indirectly restrain or prohibit the making of the Offer, the acceptance for
payment of or payment for some or all of the Shares by the Company or
otherwise directly or indirectly relating in any manner to or affecting the
Offer, or (ii) that otherwise, in the sole judgment of the Company, has or
may have a material adverse effect on the business, financial condition,
income, operations or prospects of the Company and its subsidiaries taken
as a whole or has or may materially impair the contemplated benefits of the
Offer to the Company; or
(b) any action shall have been threatened, instituted, pending or taken
or approval withheld or any statute, rule, regulation, judgment or order or
injunction proposed, sought, enacted, enforced, promulgated, amended,
issued or deemed applicable to the Offer or the Company or any of its
subsidiaries by any court, government or governmental authority or
regulatory or administrative agency, domestic or foreign, that, in the sole
judgment of the Company might, directly or indirectly, result in any of the
consequences referred to in clauses (i) or (ii) of paragraph (a) above; or
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market, (ii) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation by any governmental, regulatory or
administrative authority or agency or any other event that, in the sole
judgment of the Company, might affect the extension of credit by banks or
other lending institutions, (v) any significant decrease in the market
price of the Shares or any change in the general political, market,
economic or financial conditions in the United States or abroad that has or
may have material adverse effects with respect to the Company's business,
operations or prospects or the trading in the Shares, (vi) in the case of
any of the foregoing existing at the time of the commencement of the Offer,
a material acceleration or worsening thereof, or (vii) any decline in
either the Dow Jones Industrial Average (6266.04 at the close of business
on November 12, 1996) or the Standard and Poor's Index of 500 Industrial
Companies (729.56 at the close of business on November 12, 1996) by an
amount in excess of 10%, measured from the close of business on
November 12, 1996; or
12
<PAGE>
(d) a tender or exchange offer for some or all of the Shares (other than
the Offer) or a proposal with respect to a merger, consolidation or other
business combination with or involving the Company or any subsidiary shall
have been proposed to be made or shall have been made by another person; or
(e)(1) any entity, group (as that term is used in Section 13(d)(3) of the
Exchange Act), or person (other than entities, groups or persons, if any,
who have filed with the Securities and Exchange Commission (the
"Commission") on or before December 13, 1996 a Schedule 13G or a Schedule
13D with respect to any of the Shares) shall have acquired or proposed to
acquire beneficial ownership of more than 5% of the outstanding Shares; or
(2) such entity, group or person that has publicly disclosed any such
beneficial ownership of more than 5% of the Shares prior to such date shall
have acquired, or proposed to acquire, beneficial ownership of additional
Shares constituting more than 2% of the outstanding Shares or shall have
been granted any option or right to acquire beneficial ownership of more
than 2% of the outstanding Shares; or
(3) any person or group shall have filed a Notification and Report Form
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 reflecting
an intent to acquire the Company or any of its Shares; or
(f) any change or changes have occurred (or any development shall have
occurred involving any prospective change or changes) in the business,
assets, liabilities, condition (financial or otherwise), operations,
results of operations or prospects of the Company or any of its
subsidiaries that, in the sole judgment of the Company, have or may have a
material effect with respect to the Company and its subsidiaries taken as a
whole.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company in its sole discretion regardless of the circumstances
(including any action or inaction by the Company) giving rise to any such
conditions, or may be waived by the Company in its sole discretion, in whole
or in part at any time. The failure by the Company at any time to exercise its
rights under any of the foregoing conditions shall not be deemed a waiver of
any such right; the waiver of any such right with respect to particular facts
and other circumstances shall not be deemed a waiver with respect to any other
facts and circumstances, and each such right shall be deemed an ongoing right
which may be asserted at any time or from time to time. Any determination by
the Company concerning the events described in this Section 7 shall be final
and binding on all parties.
13
<PAGE>
8. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and principally traded on Nasdaq under the symbol
"DSGIF". The following table sets forth the high and low closing sales prices
of the Shares on Nasdaq and the cash dividend per Share for the fiscal
quarters indicated.
<TABLE>
<CAPTION>
CASH
DIVIDENDS
HIGH LOW PER SHARE
------- ------- ---------
<S> <C> <C> <C>
1994:
1st Quarter......................................... $ 28 $22 1/4 $ --
2nd Quarter......................................... 27 1/2 21 --
3rd Quarter......................................... 29 1/4 20 1/4 0.25
4th Quarter......................................... 26 3/4 16 3/4 --
1995:
1st Quarter......................................... $17 3/4 $ 11 $ --
2nd Quarter......................................... 19 1/2 13 1/4 --
3rd Quarter......................................... 18 5/8 8 1/2 --
4th Quarter......................................... 13 10 --
1996:
1st Quarter......................................... $15 1/8 $12 1/2 $ --
2nd Quarter......................................... 15 1/8 10 7/8 --
3rd Quarter......................................... 11 5/8 10 --
4th Quarter (to November 12, 1996).................. 12 1/8 11 1/4
</TABLE>
On November 12, 1996, the last full trading day prior to the announcement
and commencement of the Offer, the last reported sale price of the Shares on
Nasdaq was $11 7/8 per Share.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES.
9. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
The Company believes that the purchase of its Shares at this time represents
an attractive investment opportunity that will benefit the Company and its
remaining shareholders. The Offer will afford to shareholders who are
considering the sale of all or a portion of their Shares the opportunity to
determine the price at which they are willing to sell their Shares and, in the
event the Company accepts such Shares, to dispose of Shares without the usual
transaction costs associated with a market sale. The Offer will also allow
qualifying shareholders owning beneficially fewer than 100 Shares to avoid the
payment of brokerage commissions and the applicable odd lot discount payable
on a sale of Shares in a transaction effected on a securities exchange.
Correspondingly, the costs to the Company for servicing the accounts of odd
lot holders will be reduced. See Section 2.
Shareholders who determine not to accept the Offer will obtain a
proportionate increase in their ownership interest in the Company. After
consummation of the Offer, increases or decreases in earnings per Share are
likely to be greater than is presently the case because of the smaller number
of Shares outstanding.
If fewer than 850,000 Shares are purchased pursuant to the Offer, the
Company may repurchase the remainder of such Shares on the open market, in
private transactions or otherwise. The Company may in the future determine to
purchase additional Shares on the open market, in private transactions,
through one or more tender offers or otherwise. Any such purchases may be on
the same terms or on
14
<PAGE>
terms which are more or less favorable to shareholders than the terms of the
Offer. However, Rule 13e-4 under the Exchange Act prohibits the Company and
its affiliates from purchasing any Shares, other than pursuant to the Offer,
until at least ten business days after the Expiration Date. Any future
purchases of Shares by the Company would depend on many factors, including the
market price of the Shares, the Company's business and financial position, and
general economic and market conditions.
Shares that the Company acquires pursuant to the Offer will become
authorized but unissued Shares and will be available for issuance by the
Company without further shareholder action (except as may be required by
applicable law or the rules of the securities exchange on which the Shares are
listed). Such Shares could be issued without shareholder approval for, among
other things, acquisitions, the raising of additional capital for use in the
Company's business, stock dividends or in connection with employee stock,
stock option and other plans, or a combination thereof. The Company has no
current plans for the Shares it may acquire pursuant to the Offer or any other
authorized but unissued Shares.
As of the close of business on November 12, 1996, the Company had issued and
outstanding 7,682,000 Shares. The 850,000 Shares that the Company is offering
to purchase represent approximately 11% of the Shares then outstanding. As of
the close of business on November 12, 1996, all directors and executive
officers of the Company as a group owned beneficially an aggregate of
4,627,846 Shares, or approximately 60% of the outstanding Shares. The Company
has been advised that no director or executive officer intends to tender
Shares pursuant to the Offer. If the Company purchases 850,000 Shares pursuant
to the Offer and no director or executive officer of the Company tenders
Shares, the percentage of outstanding Shares owned beneficially by all
directors and executive officers as a group would increase to approximately
68% of the Shares outstanding after the Offer.
Except as disclosed in this Offer to Purchase, the Company has no plans or
proposals which relate to or would result in: (a) the acquisition by any
person of additional securities of the Company or the disposition of
securities of the Company; (b) an extraordinary corporate transaction, such as
a merger, reorganization or liquidation, involving the Company or any of its
subsidiaries; (c) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries; (d) any change in the present Board of
Directors or management of the Company; (e) any material change in the present
dividend rate or policy, or indebtedness or capitalization of the Company; (f)
any other material change in the Company's corporate structure or business;
(g) any change in the Company's Memorandum or Articles of Association or any
actions which may impede the acquisition of control of the Company by any
person; (h) the Shares being delisted from Nasdaq; (i) a class of equity
security of the Company becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Exchange Act; or (j) the suspension of the
Company's obligation to file reports pursuant to Section 15(d) of the Exchange
Act.
The Company in the past has considered and expects to continue to consider
potential acquisitions or other strategic arrangements that may fit the
Company's strategic plan. Although the Company from time to time engages in
preliminary discussions with respect to such transactions, it has not entered
into any definitive agreement with respect to any particular transaction.
There can be no assurance that any agreement with respect to any potential
acquisitions or other strategic arrangements will be reached on terms
acceptable to the Company nor does the Company believe that any such
acquisition or strategic arrangement is necessary for successful consummation
of its strategic plan.
The Company will not effect the repurchase in such a way that it would cause
the Company's shares to no longer be listed on Nasdaq and the Company may, in
its discretion, purchase less than the maximum number of shares or select such
lots to be purchased as to ensure that the shares will continue to be traded
on Nasdaq.
15
<PAGE>
The Company does not believe that the Offer will result in delisting of the
Shares on Nasdaq or termination of registration of the Shares under the
Exchange Act.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL
OF SUCH SHAREHOLDER'S SHARES AND NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY
SUCH RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE FULLY ALL INFORMATION
IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND
THE PRICE OR PRICES AT WHICH TO TENDER.
10. SOURCE AND AMOUNT OF FUNDS.
Assuming that the Company purchases 850,000 Shares pursuant to the Offer at
a price of $14.50 per Share, the total amount required by the Company to
purchase such Shares will be $12,325,000, exclusive of fees and other
expenses. The Company expects to fund the purchase of such Shares from the
credit facilities described below.
The Company intends to obtain the required funds from two credit facilities
("Facility A" and "Facility B") with SouthTrust Bank of Georgia, National
Association (the "Bank"). The Company's subsidiaries, Associated Hygienic
Products LLC ("AHP-LLC"), Associated Hygienic Products (Canada), Inc. ("AHP-
Canada") and AHP Holdings L.P. ("AHP-LP") (collectively referred to as the
"Borrowers"), will borrow funds under either Facility A which is a $10,000,000
line of credit facility or under Facility B which is a $15,000,000 term loan.
The Bank has agreed to permit the Borrowers to loan or to dividend the
necessary funds up to $21,000,000 to the Company, whereby up to $17,000,000
may be used to buy back Shares and up to $4,000,000 may be used to provide
working capital for the Company.
Pursuant to the terms of Facility A, the Borrowers have a $10,000,000 line
of credit facility which is reduced to $5,000,000 on December 31, 1997 and
matures on April 20, 1998. Loans made under Facility A bear interest, at the
Borrowers' option, calculated on the basis of a 360 day year, (i) at a
floating annual rate equal to the Bank's base rate or (ii) at a floating
annual rate equal to 30, 90 or 180 day LIBOR plus 1.75%. The interest will be
payable monthly in arrears and the principal payable at maturity. Under both
Facility A and Facility B, when the Borrowers' debt/tangible net worth ratio
reaches 2.0 or less, the Bank will reduce the spread over the LIBOR rate
option by .50% per annum Facility A is secured by all of the accounts
receivable and inventory of the Borrowers and all the property, plant and
equipment located at 4455 River Green Parkway, Duluth, Georgia and 5640
Lindbergh Lane, Bell, California and a second mortgage will be recorded on all
assets at 1185 East Colborne Street, Brantford, Ontario. The loan agreement
for Facility A includes representations and warranties and covenants usually
included in financing of this type and also includes specific financial
covenants, including minimum net income, minimum tangible net worth, maximum
debt/tangible net worth, minimum fixed charge coverage, minimum annual capital
expenditures, no other debt except that in the ordinary course of business,
approval by the Bank of certain transactions and no other distributions by the
Borrowers other than the special dividend and working capital financing
mentioned in the foregoing paragraph. The Borrowers must also obtain hazard
insurance for their properties, and report audited quarterly financial
statements to the Bank. The Facility A loan agreement also contains the
customary conditions precedent, indemnification and expenses provisions.
Pursuant to the terms of Facility B, the Borrowers have a 5 year,
$15,000,000 term loan. The loan made under Facility B bears interest at either
(i) a floating annual rate equal to the Bank's base rate or (ii) a floating
annual rate equal to 30, 90 or 180 day LIBOR plus 2.00%. Principal repayment
will be based upon a ten year amortization schedule and principal and interest
will be payable monthly in
16
<PAGE>
arrears. the Borrowers are allowed to remit 50% of excess cash flow to reduce
the loan amount annually. The rest of the terms of the Facility B loan
agreement are identical to the terms of the Facility A loan agreement.
The Company is a guarantor for both credit facilities.
The Company expects that the indebtedness incurred under the credit
facilities will be repaid through cash flow from operations and/or future
borrowings.
11. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company and its predecessors have been in the business of manufacturing
and distributing disposable diapers since 1973. With manufacturing plants in
Hong Kong, California, Georgia, Australia, England, Singapore, Canada,
Switzerland, China and Thailand, the Company distributes its products
throughout Asia, Australia, North America and Europe. The Company also
produces private label disposable diapers, adult incontinence and feminine
napkins at certain operations. The Company's best selling brands include
"Fitti(R)", "Pet Pet(R)", "Cosies(R)", "Cosifits(R)", "Baby Love(R)",
"Togs(R)", "Cares(R)" and "Vlesi(R)", "Dispo 123(TM)", "Laurelle(R)" and
"Handy(TM)".
The Company's principal executive offices are located at 17/F Watson Centre,
16-22 Kung Yip Street, Kwai Chung, Hong Kong and its telephone number is 852-
2427-6951.
17
<PAGE>
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
Set forth below is certain summary consolidated historical financial
information of the Company and its subsidiaries. The consolidated historical
financial information at December 31, 1995 and December 31, 1994 and for the
fiscal years then ended has been summarized from the Company's audited
consolidated financial statements as set forth in the Company's Annual Report
on Form 20-F for the fiscal year ended December 31, 1995. The consolidated
historical financial information for the quarterly periods ended September 30,
1996 and September 30, 1995 has been summarized from the Company's unaudited
consolidated financial statements as set forth in the Company's Report on Form
6-K setting forth financial information for the quarterly period ended
September 30, 1996. More comprehensive financial information regarding the
Company and its subsidiaries is included in such reports, which are on file
with the Commission. The financial information that follows is qualified in
its entirety by reference to such reports and the audited financial statements
and the related notes therein. Copies of such reports may be obtained by
calling the Company at 852-2427-6951. Copies of such reports may also be
obtained as set forth in Section 17.
SUMMARY CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
--------------------------- -------------------------
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1995 1996 1994 1995
------------- ------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues............... $188,572 $180,096 $218,771 $245,881
Income before taxes.... 6,150 10,652 26,683 7,732
Net income............. 2,249 5,743 16,650 4,687
Earnings per ordinary
share
Primary............... 0.28 0.74 2.00 0.58
Fully diluted......... 0.28 0.74 2.00 0.58
Average number of
ordinary shares
outstanding:
Primary............. 8,172 7,797 8,315 8,109
Fully diluted....... 8,172 7,797 8,315 8,109
Ratio of earnings to
fixed charges....... 4.7X 5.6X 20.9X 4.1X
<CAPTION>
AT AT
--------------------------- -------------------------
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1995 1996 1994 1995
------------- ------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.......... $ 30,166 $ 31,577 $ 34,307 $ 19,577
Total assets............. 152,797 154,962 135,437 154,393
Total long-term debt .... 14,352 18,053 11,480 16,470
Shareholders' equity..... 82,327 86,866 82,990 83,706
Book value per ordinary
share................... 10.4 11.2 10.0 10.6
</TABLE>
18
<PAGE>
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
The following summary unaudited consolidated pro forma financial information
gives effect to the purchase of Shares pursuant to the Offer, based on certain
assumptions described in the Notes to Summary Unaudited Consolidated Pro Forma
Financial Information. The Consolidated Statement of Operations gives effect
to the purchase of Shares pursuant to the Offer as if it had occurred at the
beginning of the period presented. The Consolidated Balance Sheet gives effect
to the purchase of Shares pursuant to the Offer as if it had occurred on
December 31, 1995 and September 30, 1996, respectively. The summary unaudited
consolidated pro forma financial information should be read in conjunction
with the summary consolidated historical financial information and does not
purport to be indicative of the results that would actually have been obtained
had the purchase of the Shares pursuant to the Offer been completed at the
dates indicated or that may be obtained in the future.
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1996 DECEMBER 31, 1995
---------------------------- ----------------------------
PRO FORMA PRO FORMA
----------------- -----------------
AT AT AT AT
$12.75 $14.50 $12.75 $14.50
PURCHASE PURCHASE PURCHASE PURCHASE
HISTORICAL PRICE PRICE HISTORICAL PRICE PRICE
---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $180,096 $180,096 $180,096 $245,881 $245,881 $245,881
Income before taxes..... 10,652 10,034 9,948 7,732 6,888 6,778
Net income.............. 5,743 5,366 5,313 4,687 4,172 4,105
Earnings per ordinary
share:
Primary............... 0.74 0.77 0.76 0.58 0.57 0.57
Fully diluted......... 0.74 0.77 0.76 0.58 0.57 0.57
Average number of
ordinary shares
outstanding:
Primary............... 7,797 6,947 6,947 8,109 7,259 7,259
Fully diluted......... 7,797 6,947 6,947 8,109 7,259 7,259
Ratio of earnings to
fixed charges.......... 5.6x 4.4x 4.3x 4.1x 3.1x 3.0x
<CAPTION>
AT SEPTEMBER 30, 1996 AT DECEMBER 31, 1995
---------------------------- ----------------------------
PRO FORMA PRO FORMA
----------------- -----------------
AT AT AT AT
$12.75 $14.50 $12.75 $14.50
PURCHASE PURCHASE PURCHASE PURCHASE
HISTORICAL PRICE PRICE HISTORICAL PRICE PRICE
---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 31,577 $ 21,031 $ 20,799 $ 19,577 $ 8,870 $ 8,589
Total assets............ 154,962 154,275 154,116 154,393 148,457 148,243
Total long-term debt.... 18,053 19,222 20,530 16,470 17,615 18,889
Shareholders' equity.... 86,866 75,152 73,611 83,706 71,854 70,299
Book value per ordinary
share.................. 11.2 10.9 10.7 10.6 10.2 9.9
</TABLE>
See Notes to Summary Unaudited Consolidated Pro Forma Financial Information.
19
<PAGE>
NOTES TO SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
The following assumptions regarding the Offer were made in arriving at the
pro forma financial information:
The information assumes 850,000 Shares are repurchased and retired at a
$12.75 per Share price and at a $14.50 per Share price, respectively, with
the purchase being financed with bank borrowing. There can be no assurance
that the Company will repurchase 850,000 Shares or of the price at which
Shares will be repurchased.
(1) Earnings were reduced for the cost of borrowed funds. The assumed
average interest rates for the year ended December 31, 1995 and the
quarterly period ended September 30, 1996 were 7.4% and 7.3%, respectively.
(2) The income tax benefit on the reduction of interest income related to
the above-referenced use of cash was computed at an assumed effective tax
rate of 39% for 1995 and 1996.
(3) Expenses directly related to the Offer are assumed to be $500,000 and
are charged against additional paid-in capital.
(4) The ratio of earnings to fixed charges has been computed by dividing
the sum of income before taxes, interest expense and a portion of rental
expense representative of the interest factor by the sum of total interest,
including amounts capitalized, and the portion of rental expense
representative of the interest factor.
12. TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES.
On May 31, 1994, the Company announced that the Board of Directors had
authorized the repurchase of up to 500,000 of the then outstanding Shares (the
"Repurchase Program"). The Shares were to be purchased from time to time in
the open market or unsolicited negotiated transactions, including block
purchases. The timing of the Repurchase Program and number of Shares
repurchased was to be dictated by overall financial and market conditions. The
authority was increased to 1,000,000 shares on July 7, 1995. Since May 31,
1994, the Company has repurchased 633,000 Shares at prices ranging from
$10.875 to $15.875 per Share pursuant to the Repurchase Program. Rule 13e-4
under the Exchange Act prohibits the Company from making any purchases of
Shares until 10 business days after the Expiration Date, other than pursuant
to the Offer; thereafter, the Company intends to resume the Repurchase
Program. Any Share purchases under the Repurchase Program or otherwise may be
on the same terms as, or on terms more or less favorable to shareholders than,
the terms of the Offer. Any future purchases by the Company, either pursuant
to the Repurchase Program or otherwise, will depend on numerous factors,
including the market price of the Shares, the results of the Offer, the
Company's business and financial condition and general economic and market
conditions. Shares purchased in the Offer will not be counted in the aggregate
number of Shares to be purchased pursuant to the Repurchase Program.
Shares the Company acquires pursuant to the Offer will be retained as
treasury stock (unless and until the Company determines to retire such Shares)
and be available for issue without further shareholder action (except as
required by applicable law or, if retired, the rules of any securities
exchange on which Shares are listed) for purposes including, but not limited
to, the acquisition of other businesses, raising of additional capital for use
in the Company's businesses, and satisfaction of obligations under existing or
future employee benefit plans. The Company has no current plans for issuance
of Shares repurchased pursuant to the Offer.
Other than as set forth above, based upon the Company's records and upon
information provided to the Company by its directors and executive officers,
neither the Company nor, to the Company's
20
<PAGE>
knowledge, any of its associates, subsidiaries, directors, executive officers
or any associate of any such director, officer, or any director or executive
officer of its subsidiaries, has engaged in any transactions involving the
Shares during the 40 business days preceding the date hereof.
Neither the Company nor, to the Company's knowledge, any of its directors or
executive officers is a party to any contract, arrangement, understanding or
relationship relating directly or indirectly to the Offer with any other
person with respect to the Shares.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit that it
believes is material to the Company's business that might be adversely
affected by the Company's acquisition of Shares as contemplated herein or of
any approval or other action by any government or governmental, administrative
or regulatory authority or agency, domestic or foreign, that would be required
for the acquisition or ownership of Shares by the Company as contemplated
herein. Should any such approval or other action be required, the Company will
make a good faith effort to obtain such approval or other action. The Company
is unable to predict whether it will be required to delay the acceptance for
payment of, or payment for, Shares tendered pursuant to the Offer pending the
outcome of any such matter. There can be no assurance that any such approval
or other action, if needed, would be obtained or would be obtained without
substantial consideration or that the failure to obtain any such approval or
other action might not result in adverse consequences to the Company's
business. The Company's obligations under the Offer to accept for payment and
pay for Shares are subject to certain conditions. See Section 7.
14. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following summary discusses the material United States federal income
tax consequences relating to the Offer for a US Holder participating in the
Offer. As used herein, a "US Holder" is a holder of Shares who is a citizen or
resident of the United States, a corporation (or other entity which is taxable
as a corporation for United States income tax purposes) created or organized
in or under the laws of the United States or any political subdivision
thereof, and any other person or entity whose ownership of Shares is
effectively connected with the conduct of a trade or business in the United
States. The following summary does not address the tax consequences that may
be relevant to particular US Holders subject to special treatment under
certain United States federal income tax laws, such as dealers in securities
or currencies, banks, financial institutions, tax-exempt organizations, life
insurance companies, persons holding Shares as part of a conversion
transaction or as part of a hedge or hedging transaction, or as a position in
a straddle for tax purposes. The summary assumes that a US Holder holds their
Shares as capital assets within the meaning of Section 1221 of the Code. This
summary does not address the tax consequences of the Offer to US Holders who
acquired their Shares (or options to acquire such Shares) in connection with
the performance of services for the Company. The summary is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury
Regulations thereunder and administrative rulings and judicial authority as of
the date hereof. All of the foregoing are subject to change, possibly with
retroactive effect, and any such change could affect the continuing validity
of the discussion. This summary does not address any consequences arising
under the laws of any state, locality or foreign jurisdiction.
The Company will not seek a ruling from the Internal Revenue Service (the
"IRS") with regard to any of the United States federal income tax consequences
of the Offer, and there can be no assurance that the IRS will agree with the
discussion set forth below. ACCORDINGLY, EACH SHAREHOLDER SHOULD CONSULT HIS,
HER OR ITS OWN TAX ADVISOR WITH REGARD TO THE OFFER AND THE APPLICATION OF
UNITED STATES FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE, LOCAL
OR FOREIGN TAXING JURISDICTION, TO HIS, HER OR ITS PARTICULAR SITUATION.
21
<PAGE>
GENERAL
Sales of Shares by a US Holder pursuant to the Offer will be taxable
transactions for United States federal income tax purposes and may also be
taxable transactions under applicable state, local, foreign and other tax
laws. The United States federal income tax consequences to a US Holder may
vary depending upon such US Holder's particular facts and circumstances.
A transfer of Shares to the Company pursuant to the Offer will generally be
treated as a sale or exchange of such Shares if one of three tests for sale or
exchange treatment under Section 302 of the Code is satisfied. See "--
Requirements for Sale or Exchange Treatment." If any of the three sale or
exchange tests is met, a tendering shareholder will recognize gain or loss,
computed separately for each block of Shares sold pursuant to the Offer, equal
to the difference between the amount of cash received for such Shares and such
shareholder's tax basis in such Shares. Assuming the shares are held as
capital assets, such gain or loss will generally be a capital gain or loss,
and will be long-term capital gain or loss if the holding period for the
Shares exchanged is more than one year.
If none of the three sale or exchange tests under Section 302 is satisfied,
the tendering shareholder will be treated instead as having received a
dividend taxable as ordinary income in an amount equal to the lesser of (i)
the total amount of cash received by the shareholder pursuant to the Offer and
(ii) such shareholder's allocable portion of the Company's current and
accumulated earnings and profits. Amounts distributed to shareholders in
excess of their allocable share of the Company's earnings and profits will be
treated as a return of capital to the extent of a shareholder's basis in their
Shares. Such shareholder's basis in their Shares will be reduced by the amount
treated as a tax-free return of capital (but not below zero). Amounts received
by a shareholder which exceed their tax basis in their Shares will generally
be treated as received from the sale or exchange of such Shares, and if such
Shares are held as a capital asset, as capital gain. Such capital gain will be
long-term capital gain if the holding period for the Shares exceeds one year.
See "--Dividend Treatment."
Certain shareholders may be subject to different treatment if the Company is
or was in a prior year a PFIC, FPHC or CFC (each as defined below). See "--
PFIC, FPHC and CFC Issues." The Company does not believe that it is or was in
any prior year a PFIC, FPHC or CFC. However, the Company has not sought a
ruling from the IRS on its classification under these rules for the current
year or any prior year. Accordingly, no assurance can be given that the
Company will not be classified as a PFIC, FPHC or CFC during the current year
or a prior year. Any such classification may have an adverse effect on the
United States federal income tax consequences of a shareholder participating
in the Offer.
REQUIREMENTS FOR SALE OR EXCHANGE TREATMENT
Under Section 302 of the Code, a transfer of shares to the Company pursuant
to the Offer will be treated as a sale or exchange of such Shares if the
receipt of cash upon such transfer (a) is "substantially disproportionate"
with respect to the shareholder, (b) results in a "complete termination" of
the shareholder's interest in the Company or (c) is "not essentially
equivalent to a dividend" with respect to such shareholder (each as described
in more detail below). In determining whether any of the sale or exchange
tests under Section 302 is satisfied, shareholders must take into account not
only the Shares which they actually own, but also Shares which they are deemed
to own pursuant to the constructive ownership rules of Section 318 of the
Code. Pursuant to these constructive ownership rules, a shareholder is deemed
to own the Shares actually owned, and in some cases constructively owned, by
certain related individuals and entities, and the Shares which the shareholder
has the right to acquire by exercise of an option or by conversion or exchange
of a security.
The Substantially Disproportionate Test. The receipt of cash by a
shareholder will be "substantially disproportionate" if the percentage of the
outstanding Shares actually and constructively owned by the shareholder
immediately following the sale of Shares pursuant to the Offer is less than
22
<PAGE>
80% of the percentage of the outstanding Shares actually and constructively
owned by such shareholder immediately before the sale of Shares pursuant to
the Offer. Shareholders should consult their tax advisors with respect to the
application of the "substantially disproportionate" test to their particular
facts and circumstances.
The Complete Termination Test. The receipt of cash by a shareholder will be
a "complete termination" of the shareholder's interest in the Company if
either (a) all of the Shares actually and constructively owned by the
shareholder are sold pursuant to the Offer or (b)(i) all of the Shares
actually owned by the shareholder are sold pursuant to the Offer and (ii) the
shareholder is eligible to waive and does effectively waive attribution of all
Shares constructively owned by the shareholder in accordance with Section
302(c)(2) of the Code.
The Not Essentially Equivalent to a Dividend Test. Even if the receipt of
cash by a shareholder fails to satisfy the "substantially disproportionate"
test or the "complete termination" test, such shareholder may nevertheless
satisfy the "not essentially equivalent to a dividend" test, if the
shareholder's sale of Shares pursuant to the Offer results in a "meaningful
reduction" in the shareholder's proportionate interest in the Company arising
from actual and constructive ownership of Shares. Whether the receipt of cash
by a shareholder will be "not essentially equivalent to a dividend" will
depend upon the individual shareholder's facts and circumstances. The IRS has
ruled that whether a meaningful reduction in a shareholder's interest had
occurred must be determined on a shareholder-by-shareholder basis, and has
identified three rights inherent in stock ownership (the shareholder's right
to vote and thereby exercise control, the shareholder's right to participate
in current earnings and accumulated surplus and the shareholder's right to
share in net assets on liquidation) that it views as important in making such
a determination. In the case of a small minority shareholder, even a small
reduction in his proportionate interest should satisfy this test. Although a
reduction in a shareholder's proportionate interest in the Company would not
occur if the Company redeemed an equal percentage of each of the shareholders'
Shares, the IRS has ruled that a reduction from .0001118% to .0001081% in the
proportionate interest of a shareholder in a publicly held corporation who
exercised no meaningful control would constitute such a "meaningful
reduction." Shareholders expecting to rely upon the "not essentially
equivalent to a dividend" test should consult with their tax advisors as to
its application in their particular situation.
It may be possible for a tendering shareholder to satisfy one of the above
three tests by contemporaneously selling or otherwise disposing of all or some
of the Shares that are actually or constructively owned by such shareholder
but are not purchased pursuant to the Offer. Correspondingly, a tendering
shareholder may not be able to satisfy one of the above three tests because of
contemporaneous acquisitions of Shares by such shareholder or a related party
whose Shares would be attributed to such shareholder. Shareholders should
consult their tax advisors regarding the tax consequences of such sales or
acquisitions in their particular circumstances.
Each shareholder should be aware that proration of the Offer may mean that
even if all the Shares actually and constructively owned by a shareholder are
tendered pursuant to the Offer, fewer than all such Shares may be purchased by
the Company, which in turn may affect the shareholder's ability to satisfy one
of the three tests for sale or exchange treatment under Section 302 of the
Code, as discussed above. See Section 6 for information regarding each
shareholder's option to make a conditional tender of a minimum number of
Shares. A SHAREHOLDER WHO DETERMINES TO MAKE A CONDITIONAL TENDER IS STRONGLY
URGED TO CALCULATE THE MINIMUM NUMBER IN CONSULTATION WITH HIS, HER OR ITS TAX
ADVISOR.
23
<PAGE>
DIVIDEND TREATMENT
If none of the three sale or exchange tests under Section 302 of the Code is
satisfied the tendering shareholder will be treated as having received a
dividend taxable as ordinary income in an amount equal to the lesser of (i)
the total amount of cash received by the shareholder pursuant to the Offer and
(ii) such shareholder's allocable portion of the Company's current and
accumulated earnings and profits. To the extent the receipt of cash is treated
as a dividend, the tendering shareholder's basis in the Shares sold pursuant
to the Offer would generally be added to such shareholder's basis in any
remaining Shares actually or constructively owned by the tendering
shareholders. Amounts distributed to a shareholder in excess of their
allocable share of the Company's current and accumulated earnings and profits
will be treated as a pro rata distribution made with respect to all of the
remaining Shares held by such shareholder. Such distribution will be treated
as a return of capital (and not taxable) to the extent of such shareholder's
basis in each adequately identified block of Shares, and such shareholder's
basis in each such block of Shares will be reduced by the amount treated as a
return of capital (but not below zero). It appears that amounts received by a
shareholder with respect to a particular block of Shares which exceed the tax
basis of such Shares will generally be treated as received from the sale or
exchange of such Shares, and if such Shares are held as a capital asset, as
capital gain. Such capital gain will be long-term capital gain if the holding
period for the Shares exceeds one year.
No dividends-received deduction is available for corporate shareholders
because the Company is not a domestic corporation for U.S. federal tax
purposes.
PFIC, FPHC AND CFC ISSUES
Various provisions contained in the Code impose special federal income tax
treatment on certain corporations and their shareholders. These include the
rules relating to classification as a PFIC, FPHC or CFC (each as defined
below). The Company may be classified as one or more of the foregoing types of
entities. Classification as one or more of the foregoing may affect the
treatment of a shareholder participating in the Offer. The Company does not
believe that it should be classified as a PFIC, FPHC or CFC for United States
federal income tax purposes for the current year or any prior year. However,
no ruling has been requested by the Company from the IRS as to its status as a
PFIC, FPHC or CFC (either for the current year or any prior year), and there
can be no assurance that the Company will not be classified as one or more of
such entities. Classification of the Company as a PFIC, FPHC or CFC may,
depending upon the facts relevant to a particular shareholder, have an adverse
impact upon such shareholder.
Passive Foreign Investment Company
Sections 1291 through 1297 of the Code relate to passive foreign investment
companies ("PFICs") and impose an interest charge on "excess distributions"
made from a PFIC. A foreign corporation is a PFIC if (i) 75% or more of its
gross income for the taxable year is passive income as defined under Section
954(c) of the Code (the "passive income test"), or (ii) 50% or more of the
average value (or adjusted tax basis if the corporation is a CFC) of the
assets held by the corporation during the taxable year consist of assets that
produce or are held for the production of passive income (the "passive asset
test"). Certain look-through rules take into account the assets and activities
of related corporations from which the foreign corporation either receives
income or in which it holds an interest. Although a determination whether a
corporation is a PFIC is made annually, in general, once a corporation has
been classified as a PFIC, it cannot thereafter lose its status as a PFIC.
An "excess distribution" under the PFIC regime will generally include all
gain recognized on the sale or exchange of shares of a PFIC (including a
distribution treated as a sale or exchange under Section 302(a) of the Code).
An actual distribution from a PFIC (other than a distribution treated as a
24
<PAGE>
sale or exchange under Section 302(a) of the Code) will generally be
characterized as an excess distribution to the extent such distribution, when
combined with all other actual distributions received by the U.S. Holder in
such taxable year, exceeds 125% of the average actual distributions received
by such shareholder in the three preceding taxable years (or its holding
period if shorter). Once the amount of the excess distribution is determined,
it is allocated ratably to all days in the shareholder's holding period for
the shares of the PFIC. Amounts allocated to the current year or a year prior
to the date upon which the corporation was a PFIC are included in the
shareholder's income as ordinary income. Amounts allocated to prior years in
which the corporation was a PFIC are subject to the highest rate of tax for
the year to which allocated, and each of the resulting amounts of tax is
subject to an interest charge as if it were an underpayment of taxes for such
tax year.
The Company does not believe that it should, in the current year or any
prior year, be classified as a PFIC. Under Section 1296(c) of the Code for
purposes of determining PFIC status, a foreign corporation is deemed to hold
its proportionate share of the assets and to receive directly its
proportionate share of the income of its subsidiaries in which it owns 25
percent or more of the stock (determined by value). The Company, through its
more than 25 percent owned subsidiaries, is engaged in substantial
manufacturing activities and holds few assets (and receives little income)
which would be classified as passive assets under Notice 88-22 or would be
classified as passive income under Section 954(c) of the Code (after
application of the look-through rules under Section 1296(c) of the Code).
However, the Company has not sought a ruling from the IRS on its
classification under the PFIC rules, and the Company's view on its status as a
PFIC is not binding on the IRS.
Foreign Personal Holding Companies
Sections 551 through 558 of the Code relate to foreign personal holding
companies ("FPHCs") and impute undistributed income of certain foreign
corporations to United States persons who are shareholders of such
corporations. A foreign corporation will be classified as a FPHC if (i) at any
time during the taxable year five or fewer individuals, who are United States
citizens or residents, directly or indirectly own more than 50% of the
corporation's shares (measured either by voting power or value) (the
"shareholder test") and (ii) the corporation receives 60% or more of its gross
income, as specially adjusted, from certain passive sources (the "income
test"). Generally, for years following the first year a corporation is a FPHC,
the passive income threshold for purposes of the income test drops to 50% or
more.
Under the FPHC rules, a pro rata portion of a FPHC's undistributed foreign
personal holding company income is imputed to United States persons holding,
directly or indirectly, its stock on the last day of the corporation's tax
year during which it met the ownership test. Such amount would be taxable to
such persons as a dividend for United States federal income tax purposes. The
amount of such hypothetical dividend will also increase such shareholder's tax
basis in their shares of stock. Shares of a corporation classified as a FPHC
in the taxable year preceding the death of a shareholder are not eligible for
a step-up in their tax basis to fair market value upon the death of such
shareholder. Instead, such shares obtain a tax basis equal to the lesser of
their fair market value or their tax basis in the hands of the decedent.
The Company believes that it is not currently and has not been an FPHC for
any taxable year during the period of time that it has been publicly traded in
the United States, because for each such taxable year the income test and/or
the shareholder test has not been satisfied. However, the Company has not
sought a ruling on its status as an FPHC, and the Company's view on its status
as an FPHC is not binding on the IRS.
25
<PAGE>
Controlled Foreign Corporations
Sections 951 through 964 and 1248 of the Code relate to controlled foreign
corporations ("CFCs") and impute undistributed income to certain U.S.
shareholders and convert into dividend income gain on dispositions of shares
which would otherwise qualify for capital gains treatment. The CFC provisions
only apply if Ten Percent U.S. Shareholders (as defined below) directly or
indirectly or constructively own, in the aggregate, more than 50% (measured by
voting power or value) of the shares of a foreign corporation.
If the Company is, or was during a five-year look-back period, a CFC, then
any United States person that, directly, indirectly or constructively owns or
owned 10% or more of the combined voting power of all classes of its voting
stock (a "Ten Percent U.S. Shareholder") during any portion of such period
when the Company was a CFC may be subject to the special rules noted in the
preceding paragraph.
The Company does not believe that it should be classified as a CFC at the
present time or at any time during the previous five years, since it does not
believe that there are sufficient Ten Percent U.S. Shareholders to classify
the Company as a CFC. However, the Company has not sought a ruling on its
status as a CFC, and the Company's view on its status as a CFC is not binding
on the IRS.
CERTAIN PROPOSED LEGISLATION
Individual shareholders should be aware that legislation has been proposed
which, if enacted, would generally prevent a shareholder who owns more than
one block of Shares and who sells less than all of their Shares from measuring
their gain or loss based on the tax basis of the blocks of Shares specified by
such shareholder. Such shareholders would instead be treated as selling Shares
with a tax basis equal to the average tax basis of all of the Shares owned by
such shareholder. It is impossible to predict whether this or similar
legislation will be enacted, and whether such legislation, if enacted, would
apply to the Offer. Individual shareholders should consult with their own tax
advisors concerning possible legislation affecting their ability to select
particular blocks of Shares to be sold in the Offer.
TAX RATES AND ESTIMATED PAYMENTS
The maximum federal income tax rate on ordinary income and short-term
capital gain for individuals, estates and trusts is 39.6% (although income at
certain specified levels may be subject to tax at a higher effective rate due
to the phase-out of the personal exemptions and the benefit of certain
itemized deductions for high income taxpayers). Long-term capital gains are
subject to tax at a maximum rate of 28% for individuals, estates and trusts
(with similar effects on phase-out of exemptions and itemized deductions). For
corporations, the maximum federal income tax rate on ordinary income is 35%
(although income at certain specified levels may be subject to tax at a higher
rate due to the phase-out of lower brackets). Long-term capital gains
recognized by corporate taxpayers are taxable at a maximum rate of 35%.
Capital gains and losses are netted and combined according to special rules
in arriving at the overall capital gain or loss for a particular tax year.
Deductions for net capital losses are subject to significant limitations. For
US Holders which are individuals a capital loss is allowable in the year
incurred to the extent of capital gains, plus the lesser of (i) $3,000 and
(ii) the excess of such losses over such gains. In later tax years, any unused
portion of such net capital loss may generally be carried over and treated as
though incurred in the successive year, subject to the rules described in the
preceding sentence. For US Holders which are corporations, a capital loss is
allowable in the year incurred only to the extent of capital gains. Any unused
portion of such net capital loss may be carried back three years and then
carried forward five years from the year in which the loss arose, to offset
net capital gains during such period.
26
<PAGE>
Shareholders are urged to consult with their own tax advisors regarding any
possible impact on their obligation to make estimated tax payments as a result
of the recognition of any capital gain (or the receipt of any ordinary income)
caused by the sale of any Shares to the Company pursuant to the Offer.
BACKUP WITHHOLDING
See Section 3 with respect to the application of United States federal
income tax backup withholding. Shareholders (including those who are not US
Holders) may be subject to backup withholding, at a rate of 31% of the gross
amount paid, unless the requirements set forth in Section 3 are complied with.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY. THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF A SALE PURSUANT TO THE OFFER MAY VARY DEPENDING UPON, AMONG
OTHER THINGS, THE PARTICULAR CIRCUMSTANCES OF THE TENDERING SHAREHOLDER. NO
INFORMATION IS PROVIDED HEREIN AS TO THE STATE, LOCAL OR FOREIGN TAX
CONSEQUENCES OF A SALE PURSUANT TO THE OFFER. SHAREHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF A SALE PURSUANT TO THE OFFER.
15. EXTENSION OF THE OFFER; TERMINATION; AMENDMENTS.
The Company expressly reserves the right, in its sole discretion, and
regardless of whether or not any of the conditions specified in Section 7
shall have occurred, at any time or from time to time, to extend the period of
time during which the Offer for the Shares is open by giving oral or written
notice of such extension to the Depositary, followed by a public announcement
thereof no later than 9:00 a.m. New York City time, on the next business day
after the previously scheduled Expiration Date. There can be no assurance that
the Company will exercise its right to extend the Offer for the Shares. During
any such extension, all Shares previously tendered and not withdrawn will
remain subject to the Offer.
The Company also expressly reserves the right, in its sole discretion, (i)
to delay payment for any shares not therefore paid for or to terminate the
Offer and not to accept for payment any Shares not theretofore accepted for
payment, upon the occurrence of any of the conditions specified in Section 7,
or (ii) at any time or from time to time to amend the Offer for the Shares in
any respect, including increasing or decreasing the number of Shares the
Company may purchase or the range of prices it may pay pursuant to the Offer.
Any such extension, delay, termination or amendment will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which the Company may choose to make public announcement, except as
provided by applicable law (including Rule 13e-4(e)(2) under the Exchange
Act), the Company shall have no obligation to publish, advertise or otherwise
communicate such public announcement other than by making a release to the Dow
Jones News Service.
If the Company makes a material change in the terms of the Offer for the
Shares or the information concerning the Offer for the Shares, or if it waives
a material condition of the Offer for the Shares, the Company will extend the
Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) under the
Exchange Act, which require that the minimum period during which an offer must
remain open following material changes in the terms of the Offer or
information concerning the Offer (other than a change in price, a change in
percentage of securities sought) will depend on the facts and circumstances,
including the relative materiality of such terms or information. The Company
confirms that its reservation of the right to delay payment for Shares which
it has accepted for payment is limited by Rule 13e-4(f)(5) under the Exchange
Act, which requires that an issuer pay the consideration
27
<PAGE>
offered or return the tendered securities promptly after the termination or
withdrawal of a tender offer. If (i) the Company increases or decreases the
price to be paid for the Shares, or the Company increases the number of Shares
being sought and such increase in the number of Shares being sought exceeds 2%
of the outstanding Shares or the Company decreases the number of Shares being
sought and (ii) the Offer for the Shares is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that notice of such increase or decrease is first
published, sent or given, the Offer for the Shares will be extended until the
expiration of such period of ten business days.
16. FEES AND EXPENSES.
Salomon Brothers Inc has been retained by the Company to act as Dealer
Manager in connection with the Offer. Salomon Brothers Inc will receive a fee
of $200,000 for its services as Dealer Manager. The Company has also agreed to
reimburse Salomon Brothers Inc for its reasonable out-of-pocket expenses
incurred in connection with the Offer, including fees and disbursements of
counsel not to exceed $20,000, and to indemnify Salomon Brothers Inc against
certain liabilities, including certain liabilities under the federal
securities laws.
The Company has retained D.F. King & Co., Inc. to act as Information Agent
and ChaseMellon Shareholder Services, L.L.C. to act as Depositary in
connection with the Offer. The Information Agent and the Dealer Manager may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interviews, and may request brokers, dealers, and other nominee stockholders
to forward materials relating to the Offer to beneficial owners. The
Information Agent and Depositary will each receive reasonable and customary
compensation for their respective services, and will be reimbursed for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws. The Depositary has rendered
stock transfer services to the Company in the past for which they have
received customary compensation, and can be expected to continue to render
similar service to the Company in the future. Neither the Depositary, the
Information Agent nor the Dealer Manager has been retained to, or is
authorized to, make recommendations in connection with the Offer.
The Company will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager, the Information Agent and the
Depositary) for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies will, upon request, be
reimbursed by the Company for reasonable and necessary costs and expenses
incurred by them in forwarding materials to their customers.
17. MISCELLANEOUS.
The Offer is being made to all holders of Shares. The Company is not aware
of any jurisdiction in which the making of the Offer or the acceptance for
payment of Shares in connection therewith would not be in compliance with the
laws of such jurisdiction. If the Company becomes aware of any jurisdiction
where the making of the Offer would not be in compliance with such laws, the
Company will make a good faith effort to comply with such laws or seek to have
such laws declared inapplicable to the Offer. If after such good faith effort
the Company cannot comply with any such laws, the Offer will not be made to,
nor will tenders be accepted from or on behalf of, holders of Shares in any
such jurisdictions. In those jurisdictions whose laws require that the Offer
be made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of the Company by Salomon Brothers Inc as Dealer Manager or one or
more registered brokers or dealers licensed under the laws of such
jurisdictions.
28
<PAGE>
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. Certain information as of particular dates, concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is filed with the Commission.
The Company has also filed an Issuer Tender Offer Statement on Schedule 13E-4
with the Commission, which includes certain additional information relating to
the Offer. Such reports, as well as such other material, may be inspected and
copies may be obtained at the Commission's public reference facilities at 450
Fifth Street, N.W., Washington, D.C., and should also be available for
inspection and copying at the regional offices of the Commission located at
7 World Trade Center, Suite 1300, New York, New York, and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois. Copies of such 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 Company's Schedule 13E-4 may not be available at the Commission's
regional offices.
DSG INTERNATIONAL LIMITED
November 13, 1996
29
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted from Eligible
Institutions. The Letter of Transmittal and certificates for Shares and any
other required documents should be sent or delivered by each tendering
shareholder or his or her broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Hand or Overnight Couri-
By Mail: By Facsimile Transmission: er:
Reorganization Department (201) 329-8936 Reorganization Department
Midtown Station Confirm Receipt of Notice of 120 Broadway - 13th Floor
P.O. Box 798 Guaranteed Delivery: New York, NY 10271
New York, NY 10018 (201) 296-4209 (OR)
(201) 296-4381
</TABLE>
Any questions or requests for assistance may be directed to the
Information Agent or the Dealer Manager. Additional copies of the Offer to
Purchase or the Letter of Transmittal may be obtained from the Information
Agent. Shareholders may also contact their local broker, dealer,
commercial bank, trust company or other nominee for assistance concerning
the Offer.
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street
New York, New York 10005 (212) 269-5550 (collect)
or
Call Toll Free 1-800-714-3306
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-6467
<PAGE>
LETTER OF TRANSMITTAL
TO ACCOMPANY ORDINARY SHARES
OF
DSG INTERNATIONAL LIMITED
TENDERED PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 13, 1996
THIS OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, DECEMBER 13, 1996, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Facsimile Transmission:
By Hand or Overnight
Reorganization Department (201) 329-8936 Courier:
Midtown Station Reorganization Department
P.O. Box 798 120 Broadway-13th Floor
New York, NY 10018 New York, NY 10271
Confirm Receipt of Notice of
Guaranteed Delivery:
(201) 296-4209 (or)
(201) 296-4381
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN ONE OF THOSE SHOWN
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE OF
THOSE LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO BOOK
ENTRY TRANSFER FACILITIES WILL NOT CONSTITUTE VALID DELIVERY TO THIS
DEPOSITARY.
This Letter of Transmittal is to be used if (a) certificates for Ordinary
Shares (as defined below) are to be forwarded with it; or (b) a tender of
Shares is to be made by book-entry transfer to the account maintained by the
Depositary at The Depository Trust Company or the Philadelphia Depository Trust
Company (collectively, the "Book-Entry Transfer Facilities)" pursuant to
Section 3 of the Offer to Purchase. Shareholders who desire to tender Shares
pursuant to the Offer and who cannot deliver their certificates (or who are
unable to comply with the procedures for book-entry transfer on a timely basis)
and all other documents required by this Letter of Transmittal to the
Depositary at or before the Expiration Date (as defined in the Offer to
Purchase) may tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2.
Delivery of documents to one of the Book-Entry Transfer Facilities does not
constitute delivery to the Depositary.
DESCRIPTION OF SHARES TENDERED (SEE INSTRUCTIONS 3 AND 4)
- --------------------------------------------------------------------------------
INDICATE IN THIS BOX ORDER (BY CERTIFICATE NUMBER) IN WHICH SHARES ARE TO
BE PURCHASED IN EVENT OF PRORATION (ATTACH ADDITIONAL SIGNED LIST IF
NECESSARY):*** SEE INSTRUCTION 9.
1st: ; 2nd: ; 3rd: ; 4th: ; 5th: ; 6th:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR ON CERTIFICATE(S) TENDERED
CERTIFICATE(S)) (ATTACH SIGNED LIST IF NECESSARY)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NUMBER OF SHARES
CERTIFICATE REPRESENTED NUMBER OF
NUMBER(S)* BY CERTIFICATE(S)* SHARES TENDERED**
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
TOTAL SHARES
</TABLE>
- --------------------------------------------------------------------------------
* Need not be completed if Shares are delivered by book-entry transfer.
** If you desire to tender fewer than all Shares of evidenced by any
certificates listed above, please indicate in this column the number of
Shares you wish to tender. If you fail to indicate the number of Shares
tendered, all Shares evidenced by certificates will be deemed to have
been tendered. See Instruction 4.
*** If you do not designate an order, in the event less than all Shares
tendered are purchased due to proration, Shares will be selected for
purchase by the Depositary.
<PAGE>
[_CHECK]HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH ONE OF THE BOOK-ENTRY
TRANSFER FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ______________________________________________
Check Box of Applicable Book-Entry Transfer Facility:
DTC [_] PDTC [_]
Account number: _____________________________________________________________
Transaction Code Number: ____________________________________________________
[_]CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): ____________________________________________
Date of Execution of Notice of Guaranteed Delivery: _________________________
Name of Institution that Guaranteed Delivery: _______________________________
Window ticket number (if available): ________________________________________
If Delivery is by Book-Entry Transfer Check Box of Applicable Book-Entry
Transfer Facility:
DTC [_] PDTC [_]
Account number: _____________________________________________________________
Transaction Code Number: ____________________________________________________
2
<PAGE>
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
PART 1--PLEASE PROVIDE
SUBSTITUTE FORM W-9 YOUR TIN IN THE BOX AT SOCIAL SECURITY NUMBER
RIGHT AND CERTIFY BY
SIGNING AND DATING BELOW.
OR_____________________
Department of the Treasury EMPLOYER
Internal Revenue Service IDENTIFICATION NUMBER
Payer's Request for Taxpayer
Identification Number
("TIN")
- -------------------------------------------------------------------------------
Part 2--CERTIFICATION--Under the penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding because: (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup withholding
because of under-reporting interest or dividends on your tax return. However,
if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out such item (2).
- -------------------------------------------------------------------------------
SIGNATURE DATE 1996
NAME _________________________________________________ PART 3--
ADDRESS ______________________________________________ Awaiting TIN [_]
______________________________________________________
______________________________________________________
(City, State and Zip code)
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered
an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security
Administration Office, or (2) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a taxpayer
identification number by the time of payment, 31% of all reportable
payments made to me will be withheld.
SIGNATURE DATE 1996
<PAGE>
TO CHASEMELLON SHAREHOLDER SERVICES, L.L.C.:
The undersigned hereby tenders to DSG International Limited, a British Virgin
Islands corporation (the "Company"), the above-described Ordinary Shares, par
value $0.01 per share, of the Company (the "Shares"), at the price per Share
indicated in this Letter of Transmittal, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Company's Offer to
Purchase dated November 13, 1996, receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which together constitute the "Offer").
Subject to and effective upon acceptance for payment of the Shares tendered
hereby in accordance with the terms of the Offer (including, if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to all Shares
tendered hereby or orders the registration of such Shares tendered by book-
entry transfer that are purchased pursuant to the Offer to or upon the order of
the Company and hereby irrevocably constitutes and appoints the Depositary as
attorney-in-fact of the undersigned with respect to such Shares, with full
power of substitution (such power of attorney being an irrevocable power
coupled with an interest), to:
(a) deliver certificates for Shares or transfer ownership of such Shares
on the account books maintained by a Book-Entry Transfer Facility, together
in either such case with all accompanying evidences of transfer and
authenticity, to or upon the order of the Company, upon receipt by the
Depositary, as the undersigned's agent, of the Purchase Price (as defined
below) with respect to such Shares;
(b) present certificates for such Shares for cancellation and transfer on
the Company's books; and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares, subject to the next paragraph, all in accordance
with the terms of the Offer.
The undersigned hereby represents and warrants to the Company that:
(a) the undersigned understands that tenders of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and
in the Offer and in the Instructions hereto will constitute the
undersigned's acceptance of the terms and conditions of the Offer,
including the undersigned's representation and warranty that (i) the
undersigned has a net long position in Shares or equivalent securities at
least equal to the Shares tendered within the meaning of Rule 14e-4 under
the Securities Exchange Act of 1934, as amended, and (ii) such tender of
Shares complies with Rule 14e-4;
(b) when and to the extent the Company accepts the Shares for purchase,
the Company will acquire good, marketable and unencumbered title to them,
free and clear of all security interests, liens, charges, encumbrances,
conditional sales agreements or other obligations relating to their sale or
transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any additional
documents the Depositary or the Company deems necessary or desirable to
complete the assignment, transfer and purchase of the Shares tendered
hereby; and
(d) the undersigned has read, understands and agrees with, all of the
terms of the Offer.
With respect to holders of certificates representing Shares tendered hereby,
the names and addresses of the registered holders should be printed, if they
are not already printed above, exactly as they appear on the certificates
representing Shares tendered hereby. The certificate numbers, the number of
Shares represented by such certificates, and the number of Shares that the
undersigned wishes to tender, should be set forth in the appropriate boxes
above.
4
<PAGE>
The undersigned understands that the Company will, upon the terms and subject
to the conditions of the Offer, determine a single price per Share (not greater
than $14.50 nor less than $12.75) that it will pay for Shares (the "Purchase
Price") properly tendered and not withdrawn pursuant to the Offer, taking into
account the number of Shares so tendered and the prices specified by tendering
shareholders of the Shares. The undersigned understands that the Company will
select the Purchase Price which will allow it to purchase 850,000 Shares (or
such lesser number of Shares as are properly tendered and not withdrawn) at
prices not greater than $14.50 nor less than $12.75 pursuant to the Offer. The
undersigned understands that all Shares properly tendered at prices at or below
the Purchase Price and not withdrawn will be purchased at the Purchase Price,
net to the seller in cash, upon the terms and subject to the conditions of the
Offer, including its proration provisions, and that the Company will return all
other Shares, including Shares tendered and not withdrawn prices greater than
the Purchase Price and Shares not purchased because of proration.
The undersigned recognizes that under certain circumstances set forth in the
Offer to Purchase, the Company may terminate or amend the Offer or may postpone
the acceptance for payment of, or the payment for, Shares tendered or may
accept for payment fewer than all of the Shares tendered hereby. In either
event, the undersigned understands that certificate(s) for any Shares not
tendered or not purchased will be returned to the undersigned at the address
indicated above, unless otherwise indicated under the "Special Payment
Instructions" or "Special Delivery Instructions" below. The undersigned
recognizes that the Company has no obligation, pursuant to the Special Payment
Instructions, to transfer any certificate for Shares from the name of their
registered holder, or to order the registration or transfer of such Shares
tendered by book-entry transfer, if the Company purchases none of the Shares
represented by such certificate or tendered by such book-entry transfer.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
IF PORTIONS OF SHARE HOLDINGS ARE BEING TENDERED AT MORE THAN ONE PRICE, USE A
SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE SPECIFIED. (SEE INSTRUCTION 5)
The check for the Purchase Price for such of the tendered Shares as are
purchased will be issued to the order of the undersigned and mailed to the
address indicated above unless otherwise indicated under the Special Payment
Instructions or the Special Delivery Instructions below.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligations of the undersigned under this Letter of Transmittal shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
5
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
PRICE (IN DOLLARS) PER ORDINARY SHARE AT
WHICH SHARES ARE BEING TENDERED
- --------------------------------------------------------------------------------
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, A SEPARATE LETTER OF
TRANSMITAL FOR EACH PRICE SPECIFIED MUST BE USED.
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES.
[_] $12.750 [_] $13.125 [_] $13.500 [_] $13.875 [_] $14.250
[_] $12.875 [_] $13.250 [_] $13.625 [_] $14.000 [_] $14.375
[_] $13.000 [_] $13.375 [_] $13.750 [_] $14.125 [_] $14.500
ODD LOTS
(SEE INSTRUCTION 8)
To be completed ONLY if Shares are being tendered by or on behalf of a
Person owning beneficially, as of the close of business on the Expiration
Date, an aggregate of fewer than 100 Shares.
The undersigned either (check one box):
[_will]be the beneficial owner as of the close of business on the Expiration
Date of an aggregate of fewer than 100 Shares; or
[_is]a broker, dealer, commercial bank, trust company or other nominee that:
(a) is tendering, for the beneficial owners thereof, Shares with respect to
which it is the record owner, and
(b) believes, based upon representations made to it by such beneficial
owners, that each such person will be the beneficial owner as of the
close of business on the Expiration Date, of an aggregate of fewer than
100 Shares.
In addition, the undersigned is tendering Shares either (check one box):
[_at]the Purchase Price (defined above), as the same shall be determined by
the Company in accordance with the terms of the Offer (persons checking
this box need not indicate the price per Share above); or
[_at]the price per Share indicated above under "Price (in Dollars) Per Share
at Which Shares Are Being Tendered" in this Letter of Transmittal.
6
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6, 7
AND 10)
To be completed ONLY if
certificates for Shares not
tendered or not purchased and/or
any check for the Purchase Price of SPECIAL DELIVERY INSTRUCTIONS
Shares purchased are to be issued (SEE INSTRUCTIONS 1, 4, 6, 7
in the name of someone other than AND 10)
the undersigned, or if Shares
delivered by book-entry transfers
that are not purchased are to be
returned by credit to an account
maintained by a Book-Entry Transfer
Facility.
To be completed ONLY if
certificate(s) for Shares not
tendered or not purchased and/or
any check for the Purchase Price of
Shares purchased are to be sent to
someone other than the undersigned,
or to the undersigned at an address
other than that shown above.
------------------------------
Issue [_] Check and/or
[_] Certificate(s) Deliver [_] Check and/or
to:
[_] Certificate(s)
to:
Name _______________________________
(Please Print)
Address ____________________________
Name _______________________________
------------------------------------ (Please Print)
(Include Zip Code)
Address ____________________________
------------------------------------
(Tax Identification or Social ------------------------------------
Security Number)
[_] Credit Shares tendered by book-
entry transfer and not purchased ------------------------------------
to the account set forth below: (Include Zip Code)
Name of account party: _____________
Account number: ____________________
Check box of Applicable Book-Entry
Transfer Facility:
------------------------------------
DTC [_]
DTC [_] PDTC [_]
7
<PAGE>
SHAREHOLDER(S) SIGN HERE (SEE INSTRUCTIONS 1 AND 6)
(PLEASE ALSO COMPLETE THE ENCLOSED SUBSTITUTE FORM W-9)
Must be signed by the registered holder(s) exactly as name(s) appear(s) on
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificate(s) and documents transmitted with
this Letter of Transmittal. If signature is by attorney-in-fact, executor,
administrator, trustee, guardian, officer of a corporation or another acting in
a fiduciary or representative capacity, please set forth the full title.
Instruction 6.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s) of Owner(s)
Name(s)_________________________________________________________________________
(Please Print)
Capacity (full title)___________________________________________________________
Address_________________________________________________________________________
- --------------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone Number__________________________________________________
Tax ID Number or Social Security Number_________________________________________
Dated____________________________
SIGNATURE GUARANTEE
(SEE INSTRUCTIONS 1 AND 6)
Authorized Signature____________________________________________________________
Name(s)_________________________________________________________________________
(Please Print)
Title___________________________________________________________________________
Name of Firm ___________________________________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
(Including Zip Code)
Area Code and Telephone Number__________________________________________________
Tax ID Number of Social Security Number_________________________________________
Dated ___________________________
8
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS OF THE OFFER
1. GUARANTEE OF SIGNATURES.
No signature guarantee is required if:
(a) this Letter of Transmittal is signed by the registered holder of the
Shares (which term, for purposes of this document, shall include any
participant in a Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) exactly as the name of
the registered holder appears on the certificate tendered with this Letter
of Transmittal and payment and delivery are to be made directly to such
owner unless such owner has completed either the box entitled "Special
Payment Instructions" or "Special Delivery Instructions" above; or
(b) such Shares are tendered for the account of a member firm of a
registered national securities exchange, a member of the Stock Transfer
Association's approved medallion program (such as STAMP, SEMP or MSP) or a
commercial bank or trust company having an office, branch or agency in the
United States (each such entity, an "Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures on
this Letter of Transmittal. See Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES.
This Letter of Transmittal is to be used only if certificates are delivered
with it to the Depositary (or such certificates will be delivered pursuant to
a Notice of Guaranteed Delivery previously sent to the Depositary), if tenders
are to be made pursuant to the procedure for tender by book-entry transfer set
forth in Section 3 of the Offer to Purchase. Certificates for all physically
tendered Shares or confirmation of a book-entry transfer into the Depositary's
account at a Book-Entry Transfer Facility of Shares tendered electronically,
together in each case with a facsimile of the Letter of Transmittal and any
other documents required by this Letter of Transmittal, should be mailed or
delivered to the Depositary at the appropriate address set forth herein and
must be delivered to the Depositary on or before the Expiration Date.
Holders of Shares whose certificates are not immediately available or who
cannot deliver Shares and all other required documents to the Depositary
before the Expiration Date, or whose Shares cannot be delivered on a timely
basis pursuant to the procedures for book-entry transfer, may tender their
Shares by or through any Eligible Institution by properly completing and duly
executing and delivering a Notice of Guaranteed Delivery (or facsimile of it)
and by otherwise complying with the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. Pursuant to such procedure, the
certificates for all physically tendered Shares or book-entry confirmation, as
the case may be, as well as a properly completed and duly executed Letter of
Transmittal and all other documents required by this Letter of Transmittal,
must be received by the Depositary within three Nasdaq trading days after
receipt by the Depositary of such Notice of Guaranteed Delivery, all as
provided in Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
a telegram, facsimile transmission or mail to the Depositary and must include
a guarantee by an Eligible Institution in the form set forth in such Notice.
For Shares to be tendered validly pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
9
<PAGE>
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES
AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
DELIVERY.
The Company will not accept any alternative or contingent tenders, nor will
it purchase any fractional Shares, except as expressly provided in the Offer
to Purchase. All tendering shareholders by execution of this Letter of
Transmittal (or a photocopy of it), waive any right to receive any notice of
the acceptance of their tender.
3. INADEQUATE SPACE.
If the space provided in the box captioned "Description of Shares Tendered"
is inadequate, the certificate numbers and/or the number of Shares should be
listed on a separate signed schedule and attached to this Letter of
Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES. (NOT APPLICABLE TO SHAREHOLDERS WHO
TENDER BY BOOK-ENTRY TRANSFER.)
If fewer than all of the Shares evidenced by any certificate are to be
tendered, fill in the number of Shares which are to be tendered in the column
entitled "Number of Shares Tendered." In such case, if any tendered Shares are
purchased, a new certificate for the remainder of the Shares evidenced by the
old certificate(s) will be issued and sent to the registered holder(s), unless
otherwise specified in either the "Special Payment Instructions" or "Special
Delivery Instructions" box on this Letter of Transmittal, as soon as
practicable after the Expiration Date. Unless otherwise indicated, all Shares
represented by the certificates listed and delivered to the Depositary will be
deemed to have been tendered.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED.
For Shares to be properly tendered, the shareholder MUST check the box
indicating the price per Share at which he or she is tendering Shares under
"Price (In Dollars) Per Share at Which Shares Are Being Tendered" on this
Letter of Transmittal, provided, however, that an Odd Lot Owner (as defined in
Instruction 8) may check the box above in the section entitled "Odd Lots"
indicating that he or she is tendering all of his or her Shares at the
Purchase Price. ONLY ONE BOX MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED
OR IF NO BOX IS CHECKED, THERE IS NO PROPER TENDER OF SHARES. A shareholder
wishing to tender portions of Share holdings at different prices must complete
a separate Letter of Transmittal for each price at which he or she wishes to
tender each such portion of his or her Shares. The same Shares cannot be
tendered (unless previously properly withdrawn as provided in Section 4 of the
Offer to Purchase) at more than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered hereby, the signature(s) must correspond with the name(s)
as written on the face of the certificates without alteration, enlargement or
any change whatsoever.
(b) If the Shares are registered in the names of two or more joint holders,
each such holder must sign this Letter of Transmittal.
(c) If any of the tendered Shares are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or photocopies of it) as there are
different registrations of certificates.
(d) When this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed and transmitted hereby, no endorsement(s) of certificate(s)
representing such Shares or separate stock powers are required unless payment
is to be made, or the certificate(s) for Shares not tendered or not
10
<PAGE>
purchased are to be issued to a person other than the registered holder(s).
SIGNATURES ON SUCH CERTIFICATES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
If this Letter of Transmittal is signed by any person or other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appears on the
certificate(s), and the signature(s) or such certificate(s) or stock powers
must be guaranteed by an Eligible Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificate or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit proper
evidence satisfactory to the Company of the authority so to act.
7. STOCK TRANSFER TAXES.
Except as provided in this Instruction 7, no stock transfer tax stamps or
funds to cover such stamps need accompany this Letter of Transmittal. The
Company will pay or cause to be paid any stock transfer taxes payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however:
(a) payment of the Purchase Price is to be made to any person other than
the registered holder(s);
(b) Shares not tendered or not accepted for purchase are to be registered
in the name of any person other than the registered holder(s); or
(c) tendered certificates are registered in the name of any person other
than the person(s) signing the Letter of Transmittal;
then the Depositary will deduct from the Purchase Price the amount of any
stock transfer taxes (whether imposed on the registered holder, such other
person or otherwise) payable on account of the transfer to such person unless
satisfactory evidence of the payment of such taxes or an exemption from them
is submitted.
8. ODD LOTS.
As described in Section 1 of the Offer to Purchase, if the Company is to
purchase fewer than all Shares tendered before the Expiration Date and not
withdrawn, the Shares purchased first will consist of all Shares tendered by
or on behalf of shareholders ("Odd Lot Owners") who beneficially hold, as of
the close of business on the Expiration Date, an aggregate of fewer than 100
Shares at or below the Purchase Price. This preference will not be available
unless the box captioned "Odd Lots" is completed. Partial tenders of Shares
will not qualify for this preference and this preference will not be available
unless the box captioned "Odd Lots" in this Letter of Transmittal and the
Notice of Guaranteed Delivery, if any, is completed.
9. ORDER OF PURCHASE IN EVENT OF PRORATION.
As described in Section 1 of the Offer to Purchase, shareholders may
designate the order in which their Shares are to be purchased in the event of
proration. If a shareholder is entitled to capital gain or loss treatment as
described in Section 14 of the Offer to Purchase, the order of purchase may
have an effect on the amount of any taxable gain or loss on the Shares
purchased, depending on the shareholder's basis in the Shares. See Sections 1
and 14 of the Offer to Purchase.
10. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS.
If certificate(s) for Shares not tendered or not purchased and/or check(s)
are to be issued in the name of a person other than the signer of the Letter
of Transmittal or if such certificate(s) and/or check(s) are to be sent to
someone other than the person signing the Letter of Transmittal or to the
11
<PAGE>
signer at a different address, the boxes captioned "Special Payment
Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal should be completed as applicable and signatures must be
guaranteed as described in Instruction 1. Shareholders tendering Shares by
book-entry transfer may request that Shares not purchased be credited to such
account maintained at a Book-Entry Transfer Facility as such shareholder may
designate under "Special Payment Instructions." If no such instructions are
given, such Shares not purchased will be returned by crediting the account at
the Book-Entry Transfer Facility designated above.
11. IRREGULARITIES.
All questions as to the number of Shares to be accepted, the price to be
paid therefor and the validity, form, eligibility (including time of receipt)
and acceptance for payment of any tender of Shares will be determined by the
Company in its sole discretion, which determination shall be firm and binding
on all parties. The Company reserves the absolute right to reject any or all
tenders of Shares it determines not to be in proper form or the acceptance of
which or payment for which may, in the opinion of the Company's counsel, be
unlawful. The Company also reserves the absolute right to waive any of the
conditions of the Offer and any defect or irregularity in the tender of any
particular Shares, and the Company's interpretation of the terms of the Offer
(including these instructions) will be final and binding on all parties. No
tender of Shares will be deemed to be properly made until all defects and
irregularities have been cured or waived. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as
the Company shall determine. None of the Company, the Dealer Manager, the
Depositary, the Information Agent (as defined in the Offer to Purchase) or any
other person is or will be obligated to give notice of any defects or
irregularities in tenders and none of them will incur any liability for
failure to give any such notice.
12. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES.
Questions and requests for assistance may be directed to the Information
agent or the Dealer Manager at their addresses and telephone numbers set forth
at the end of this Letter of Transmittal. Additional copies of the Offer to
Purchase, the Notice of Guaranteed Delivery and this Letter of Transmittal may
be obtained from the Information Agent.
13. SUBSTITUTE FORM W-9 AND FORM W-8.
Under U.S. Federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
shareholder's correct taxpayer identification number ("TIN") on Substitute
Form W-9. If the Depositary is not provided with the correct TIN, the Internal
Revenue Service may subject the shareholder or other payee to a $50 penalty.
In addition, payments that are made to such shareholder or other payee with
respect to Shares purchased pursuant to the Offer may be subject to 31% backup
withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the shareholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 may be
obtained from the Depositary. See the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for more
instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the shareholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to
backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
12
<PAGE>
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN
is provided to the Depositary.
The shareholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
13
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted from Eligible
Institutions. The Letter of transmittal and certificates for Shares and any
other required documents should be sent or delivered by each tendering
shareholder or his or her broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Facsimile Transmission:By Hand or Overnight
Reorganization Department (201) 329-8936 Courier:
Reorganization
Department
Midtown Station
Confirm Receipt of Notice of Guaranteed Delivery:
P.O. Box 798
New York, NY 10018 (201) 296-4209 (or) 120 Broadway-13th Floor
(201) 296-4381 New York, NY 10271
Any questions or requests for assistance may be directed to the
Information Agent or Dealer Manager. Additional copies of the Offer to
Purchase or the Letter of Transmittal may be obtained from the Information
Agent. Shareholders may also contact their broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
D. F. King & Co., Inc.
77 Water Street
New York, New York 10005
(212) 269-5550 (collect)
or
Call Toll-Free (800) 714-3306
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-6467
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR--Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payor.
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- -----------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-
savings trust (grantor trustee(1)
is also trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
5. Sole proprietorship The owner(1)
</TABLE>
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
-------
<S> <C>
6. Sole proprietorship The owner(3)
7. A valid trust, estate or The legal
pension trust entity(4)
8. Corporate The corporation
9. Association, club, The corporation
religious, charitable,
educational or other tax-
exempt organization
10. Partnership The partnership
11. A broker or registered The broker or
nominee nominee
12. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a state or
local government, school
district, or prison) that
receives agricultural
program payments
</TABLE>
- ---------------------------------------
---------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle minor's name and furnish the minor's social security number.
(3) Show your individual name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate or pension
trust. (Do not furnish the identifying number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER (TIN) ON SUBSTITUTE FORM W-9
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE)
PAGE 2
NAME
If you are an individual, you must generally provide the name shown on your
social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security
Administration of the name change, please enter your first name, the last name
shown on your social security card, and your new last name.
OBTAINING A NUMBER
If you don't have a taxpayer identification number ("TIN"), apply for one
immediately. To apply, obtain Form SS-5, Application for a Social Security
Card, from your local office of the Social Security Administration, or Form
SS-4, Application for Employer Identification Number, from you local Internal
Revenue Service (the "IRS") office.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt item (9). For broker transactions, payees listed in (1)
through (13) and a person registered under the Investment Adviser Act of 1940
who regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except that a corporation
that provides medical and health care services or bills and collects for such
services is not exempt from backup withholding or information reporting.
(1) A corporation.
(2) An organization exempt from tax under section 501(1), or an individual
retirement plan ("IRA"), or a custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or
a possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment fund.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payment of dividends generally not subject to backup withholding include the
following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and that have at least one nonresident partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payor's trade or business and you have not pro-
vided your correct TIN to the payor.
. Payments of tax-exempt interest (including exempt-interest dividends un-
der section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
.Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject to
backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6050A and 6050N, and the regulations under those sections.
PRIVACY ACT NOTICE.--Section 6109 requires you to furnish your correct TIN
to persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid,
the acquisition or abandonment of secured property, or contributions you made
to an IRA. The IRS uses the numbers for identification purposes and to help
verify the accuracy of your tax return. You must provide your TIN whether or
not you are qualified to file a tax return. Payors must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a TIN to a payor. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TIN.--If you fail to furnish your correct TIN to a re-
quester (the person asking you to furnish your TIN), you are subject to a pen-
alty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying certi-
fications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS
<PAGE>
DSG INTERNATIONAL LIMITED
November 13, 1996
Dear Fellow Shareholders:
DSG International Limited (the "Company") is offering to purchase up to
850,000 of the Company's Ordinary Shares, representing approximately 11% of
the Company's currently outstanding Ordinary Shares at a price not greater
than $14.50 nor less than $12.75 per Share. This offer provides shareholders
with an opportunity to sell some or all of their shares without the payment of
any brokerage fees. The Company will use its available cash on hand and some
borrowed funds to purchase the shares.
The Offer to Purchase is being made by means of a so-called "Dutch Auction,"
which permits you to select the cash price within the specified range at which
you are willing to sell shares to the Company. The Company will determine the
lowest single purchase price within that range that will enable it to buy
850,000 shares, assuming at least that many shares have been properly
tendered. The Company will then pay that price for all shares properly
tendered at or below that price, subject to possible proration. Any shares
tendered by you which the Company does not purchase will be returned to you.
Unless extended by the Company, the offer will expire at 12:00 Midnight, New
York City time, on Friday, December 13, 1996. Neither the Company nor its
Board of Directors makes any recommendation to any shareholder whether to
tender any or all shares.
The offer is explained in detail in the enclosed Offer to Purchase and
related Letter of Transmittal. We encourage you to read these materials
carefully before making any decision with respect to the offer. Should you
have any questions regarding the offer or need assistance in tendering your
shares, please call D.F. King & Co., Inc., the Information Agent for the
offer, toll-free at (800) 714-3306.
Sincerely,
Brandon Wang
Chairman of the Board and
Chief Executive Officer
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
DSG INTERNATIONAL LIMITED
OFFER TO PURCHASE FOR CASH UP TO 850,000 ORDINARY SHARES
AT A PURCHASE PRICE NOT GREATER THAN $14.50
NOR LESS THAN $12.75 PER SHARE
AS SET FORTH IN SECTION 3 OF THE OFFER TO PURCHASE, THIS FORM OR A PHOTOCOPY
OF IT MUST BE USED TO ACCEPT THE OFFER (AS DEFINED BELOW) IF:
(a) certificates for Ordinary Shares, par value $0.01 per share (the
"Shares"), of DSG International Limited, a British Virgin Islands
corporation (the "Company"), are not immediately available; or
(b) the procedure for book-entry transfer cannot be completed on a timely
basis; or
(c) time will not permit the Letter of Transmittal or other required
documents to reach the Depositary referred to below before the
Expiration Date (as defined in Section 1 of the Offer to Purchase
referred to below.)
This form or a photocopy of it, signed and properly completed, may be
delivered by hand or transmitted by telegram, facsimile transmission or mail,
to the Depositary by the Expiration Date. See Section 3 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Facsimile Transmission: By Hand or Overnight
Reorganization (201) 329-8936 Courier:
Department Reorganization
Department
Midtown Station
Confirm Receipt of Notice of Guaranteed Delivery:
P.O. Box 798 (201) 296-4209 (or) 120 Broadway-13th Floor
New York, NY 10018 (201) 296-4381 New York, NY 10271
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN ONE OF THOSE SHOWN
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
ONE OF THOSE LISTED ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby tenders to DSG International Limited, a British
Virgin Islands corporation, at the price per Share indicated below, net to the
seller in cash, upon the terms and subject to conditions set forth in the
Company's Offer to Purchase, dated November 13, 1996 (the "Offer to
Purchase"), and the related Letter of Transmittal (which together constitute
the "Offer"), receipt of which is hereby acknowledged Ordinary
Shares, par value $0.01 per Share.
<PAGE>
PRICE (IN DOLLARS ) PER SHARE AT
WHICH SHARES ARE BEING TENDERED
- --------------------------------------------------------------------------------
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE,
USE A SEPARATE LETTER OF TRANSMITTAL FORM FOR
EACH PRICE SPECIFIED.
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES.
[_] $12.750 [_] $13.125 [_] $13.500 [_] $13.875 [_] $14.250
[_] $12.875 [_] $13.250 [_] $13.625 [_] $14.000 [_] $14.375
[_] $13.000 [_] $13.375 [_] $13.750 [_] $14.125 [_] $14.500
<PAGE>
ODD LOTS
(SEE INSTRUCTION 2 OF THE LETTER OF TRANSMITTAL)
To be completed ONLY if Shares are being tendered by or on behalf of a
Person owning beneficially, as of the close of business on the Expiration
Date, an aggregate of fewer than 100 Shares.
The undersigned either (check one box):
[_will]be the beneficial owner as of the close of business on the Expiration
Date of an aggregate of fewer than 100 Shares; or
[_is]a broker, dealer, commercial bank, trust company or other nominee that:
(a) is tendering, for the beneficial owners thereof, Shares with respect to
which it is the record owner, and
(b) believes, based upon representations made to it by such beneficial
owners, that each such person will be the beneficial owner as of the
close of business on the Expiration Date, of an aggregate of fewer than
100 Shares.
In addition, the undersigned is tendering Shares either (check one box):
[_at]the Purchase Price (as defined in the Offer), as the same shall be
determined by the Company in accordance with the terms of the Offer
(persons checking this box need not indicate the price per Share above);
or
[_at]the price per Share indicated above under "Price (in Dollars) Per Share
at Which Shares Are Being Tendered" in this Notice of Guaranteed Delivery.
<PAGE>
Certificate No(s). SIGN HERE
(if available) ______________________ Signature(s) ________________________
Signature(s) ________________________
_____________________________________
Name(s) _____________________________
If Shares will be tendered by book- (Please Print)
entry transfer:
Address _____________________________
Name of Tendering Institution: ______ _____________________________________
_____________________________________ Zip Code
Account No. ______________________ at Area Code and Tel. No. ______________
[_]The Depository Trust Company
[_]Philadelphia Depository Trust Company
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the Stock Transfer Association's approved medallion
program (such as STAMP, SEMP or MSP) or which is a commercial bank or trust
company having an office or correspondent in the United States, hereby (i)
represents that the undersigned has a net long position in Shares or
equivalent securities within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended, at least equal to the Shares tendered, (ii)
represents that such tender of Shares complies with Rule 14e-4, and
(iii) guarantees to deliver to the Depositary, at one of its addresses set
forth above, Share certificates evidencing the Shares tendered hereby, in
proper form for transfer, or confirmation of book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company; in each case with delivery of a Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
and any other required documents, all within three Nasdaq trading days of the
date hereof.
- ------------------------------------- _____________________________________
Name of Firm Authorized Signature
_____________________________________ _____________________________________
Address Title
_____________________________________ Name ________________________________
Zip Code Please Type or Print
Area Code and Tel. No. ______________ Date _________________________ , 1996
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
DSG INTERNATIONAL LIMITED
OFFER TO PURCHASE FOR CASH UP TO 850,000 ORDINARY SHARES
AT A PURCHASE PRICE NOT GREATER THAN $14.50
NOR LESS THAN $12.75 PER SHARE
- -------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 13, 1996,
UNLESS THE OFFER IS EXTENDED
- -------------------------------------------------------------------------------
November 13, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
DSG INTERNATIONAL LIMITED, a British Virgin Islands corporation (the
"Company") has appointed us to act as Dealer Manager in connection with its
offer to purchase up to 850,000 Ordinary Shares par value $0.01 per share (the
"Shares") at a price, net to the seller in cash, not greater than $14.50 nor
less than $12.75 per Share, upon the terms and subject to the conditions set
forth in the Company's Offer to Purchase, dated November 13, 1996, and in the
related Letter of Transmittal (which together constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the Offer,
determine a single price per Share (not greater than $14.50 nor less than
$12.75 per Share) that it will pay for Shares (the "Purchase Price") properly
tendered and not withdrawn pursuant to the Offer, taking into account the
number of Shares so tendered and the prices specified by tendering
shareholders that will allow it to buy 850,000 Shares (or such lesser number
of Shares as are properly tendered and not withdrawn) at prices not greater
than $14.50 nor less than $12.75 per Share pursuant to the Offer. All Shares
properly tendered and not withdrawn at prices at or below the Purchase Price
prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) will be purchased at the Purchase Price, net to the Seller in cash,
upon the terms and subject to the conditions of the Offer, including the
proration terms thereof. See Section 1 of the Offer to Purchase.
If, prior to the Expiration Date, more than 850,000 Shares (or such greater
number of Shares as the Company elects to purchase) are properly tendered and
not withdrawn at or below the Purchase Price, the Company will, upon the terms
and subject to the conditions of the Offer, accept Shares for purchase first
from Odd Lot Owners (as defined in Section 2 of the Offer to Purchase) who
properly tender their Shares at or below the Purchase Price and then on a pro
rata basis from other shareholders whose Shares are properly tendered and not
withdrawn at or below the Purchase Price. See Introduction and Section 1 of
the Offer to Purchase.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 7 OF THE OFFER TO PURCHASE.
<PAGE>
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase, dated November 13, 1996;
2. Letter to Clients who are shareholders which may be sent to your
clients for whose accounts you hold Shares registered in your name or in
the name of your nominee, with space provided for obtaining such clients'
instructions with regard to the Offer;
3. Letter to shareholders of the Company, dated November 13, 1996 from
Brandon Wang, Chairman and Chief Executive Officer.
4. Letter of Transmittal for your use and for the information of your
clients (together with accompanying Substitute Form W-9 and guidelines);
and
5. Notice of Guaranteed Delivery to be used to accept the Offer if the
Share certificates and all other required documents cannot be delivered to
the Depositary by the Expiration Date or if the procedure for book-entry
cannot be completed on a timely basis.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, DECEMBER 13, 1996, UNLESS THE OFFER IS EXTENDED.
No fees or commission will be payable to brokers, dealers or any person for
soliciting tenders of Shares pursuant to the Offer other than fees paid to the
Dealer Manager, the Information Agent or the Depositary as described in
Section 16 of the Offer to Purchase. The Company will, however, upon request,
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to the beneficial owners of Shares
held by you as a nominee or in a fiduciary capacity. The Company will pay or
cause to be paid any stock transfer taxes applicable to its purchase of
Shares, except as otherwise provided in Instruction 7 of the Letter of
Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be
sent to the Depositary with certificate(s) representing the tendered Shares,
or confirmation of the book-entry transfer of the tendered Shares, all in
accordance with the instructions set forth in the Letter of Transmittal and
the Offer to Purchase.
As described in Section 3 of the Offer to Purchase tenders may be made
without the concurrent deposit of stock certificates or concurrent compliance
with the procedure for book-entry transfer if such tenders are made by or
through a broker or dealer which is a member firm of a registered national
securities exchange, a member of the Stock Transfer Association's approved
medallion program (such as STAMP, SEMP or MSP) or a commercial bank or trust
company having an office, branch or agency in the United States. Certificates
for Shares so tendered (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the "Book-Entry Transfer
Facilities" described in Section 3 of the Offer to Purchase), together with a
properly completed and duly executed Letter of Transmittal and any other
documents required by the Letter of Transmittal must be received by the
Depositary within three Nasdaq National Market System trading days after
timely receipt by the Depositary of a properly completed and duly executed
Notice of Guaranteed Delivery.
Any inquiries you may have with respect to the Offer should be addressed to
the Dealer Manager or the Information Agent at their respective addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.
<PAGE>
Additional copies of the enclosed material may be obtained from the
Information Agent, D.F. King & Co., Inc., telephone: (212) 269-5550 (collect).
Very truly yours,
SALOMON BROTHERS INC
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE
DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF
THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH
AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
DSG INTERNATIONAL LIMITED
OFFER TO PURCHASE FOR CASH UP TO 850,000 ORDINARY SHARES
AT A PURCHASE PRICE NOT GREATER THAN $14.50
NOR LESS THAN $12.75 PER SHARE
To Our Clients who are Shareholders:
Enclosed for your consideration are the Offer to Purchase dated November 13,
1996, and the related Letter of Transmittal (which together constitute the
"Offer") in connection with the Offer by DSG International Limited, a British
Virgin Islands corporation (the "Company"), to purchase up to 850,000 Ordinary
Shares, par value $0.01 per share (the "Shares"), at a price, net to the
seller in cash, not greater than $14.50 nor less than $12.75 per Share, upon
the terms and subject to the conditions set forth in the Offer.
The Company will, upon the terms and subject to the conditions of the Offer,
determine a single price per Share that it will pay for the Shares (the
"Purchase Price") properly tendered and not withdrawn pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified
by tendering shareholders of the Shares that will allow it to buy 850,000
Shares (or such lesser number of Shares as are properly tendered and not
withdrawn) at prices not greater than $14.50 nor less than $12.75 per Share
pursuant to the Offer. All Shares properly tendered prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) at prices at or below
the Purchase Price and not withdrawn will be purchased at the Purchase Price,
net to the seller in cash, upon the terms and subject to the conditions of the
Offer, including the proration terms described in the Offer to Purchase. The
Company will return all other Shares, including Shares tendered at prices
greater than the Purchase Price and Shares not purchased because of proration.
See Section 1 of the Offer to Purchase.
Upon the terms and subject to the conditions of the Offer, in the event that
prior to the Expiration Date, more than 850,000 Shares (or such greater number
of Shares as the Company elects to purchase) are properly tendered and not
withdrawn at or below the Purchase Price, the Company will accept Shares for
purchase first from Odd Lot Owners (as defined in Section 2 of the Offer to
Purchase) whose Shares are properly tendered at or below the Purchase Price
(and not withdrawn) and then on a pro rata basis from all other shareholders
whose Shares are properly tendered at or below the Purchase Price (and not
withdrawn). See Instruction and Section 1 of the Offer to Purchase.
WE ARE THE OWNER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. AS SUCH, WE
ARE THE ONLY ONES WHO CAN TENDER YOUR SHARES, AND THEN ONLY PURSUANT TO
YOUR INSTRUCTIONS. WE ARE SENDING YOU THE LETTER OF TRANSMITTAL FOR YOUR
INFORMATION ONLY; YOU CANNOT USE IT TO TENDER SHARES WE HOLD FOR YOUR
ACCOUNT.
Please instruct us as to whether you wish us to tender any or all of the
Shares we hold for your account on the terms and subject to the conditions of
the Offer.
We call your attention to the following:
1. You may tender Shares at prices not greater than $14.50 nor less than
$12.75 per Share, as indicated in the attached Instruction Form, net to you
in cash.
2. You may designate the priority in which your Shares shall be purchased
in the event of proration.
3. The Offer is not conditioned upon any minimum number of Shares being
tendered.
<PAGE>
4. The Offer, proration period and withdrawal rights will expire at 12:00
Midnight, New York City time, on Friday, December 13, 1996, unless the
Company extends the Offer.
5. The Offer is for 850,000 Shares, constituting approximately 11% of the
Company's outstanding Shares as of November 12, 1996.
6. Tendering shareholders will not be obliged to pay any brokerage
commissions, solicitation fees or, subject to Instruction 7 of the Letter
of Transmittal, stock transfer taxes on the Company's purchase of Shares
pursuant to the Offer.
7. If you beneficially hold, as of the close of business on the
Expiration Date, an aggregate of fewer than 100 Shares, and you instruct us
to tender on your behalf all such Shares at or below the Purchase Price
before the Expiration Date and check the box captioned "Odd Lots" in the
attached Instruction Form, the Company, upon the terms and subject to the
conditions of the Offer, will accept all such Shares for purchase before
proration, if any, of the purchase of other Shares properly tendered at or
below the Purchase Price.
8. If you wish to tender portions of your Shares at different prices you
must complete a separate Instruction Form for each price at which you wish
to tender each such portion of your Shares. We must submit separate Letters
of Transmittal on your behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your Instruction Form to us is
enclosed. If you authorize us to tender your Shares, we will tender all such
Shares unless you specify otherwise on the attached instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT
US TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF
THE OFFER. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, DECEMBER 13, 1996, UNLESS
THE COMPANY EXTENDS THE OFFER.
As described in Section 1 of the Offer to Purchase, if prior to the
Expiration Date more than 850,000 Shares (or such greater number of Shares as
the Company elects to purchase) are properly tendered and not withdrawn at or
below the Purchase Price, the Company will accept Shares for purchase at the
Purchase Price in the following order of priority:
(a) first, all Shares properly tendered at or below the Purchase Price
prior to the Expiration Date (and not withdrawn) by any Odd Lot Owner (as
defined in the Offer to Purchase), who:
(1) tenders all Shares beneficially owned by such Odd Lot Owner at or
below the Purchase Price (partial tenders will not qualify for this
preference); and
(2) completes the section entitled "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) then, after purchase of all the foregoing Shares, all other Shares
properly tendered at or below the Purchase Price, before the Expiration
Date (and not withdrawn) on a pro rata basis, if necessary (with
adjustments to avoid purchases of fractional Shares).
The Offer is not being made to, nor will the Company accept tenders from or
on behalf of, holders of Shares in any jurisdiction in which the Offer or its
acceptance would not comply with the securities or Blue Sky laws of such
jurisdiction. In any jurisdiction in which the securities or Blue Sky laws
require the Offer to be made by a licensed broker or dealer, the Offer is
being made on the Company's behalf by Salomon Brothers Inc as Dealer Manager
or one or more registered brokers or dealers licensed under the law of such
jurisdiction.
<PAGE>
INSTRUCTION FORM WITH RESPECT TO THE
DSG INTERNATIONAL LIMITED
OFFER TO PURCHASE FOR CASH UP TO 850,000 ORDINARY SHARES
AT A PURCHASE PRICE NOT GREATER THAN $14.50
NOR LESS THAN $12.75 PER SHARE
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated November 13, 1996, and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the Offer by DSG
International Limited, a British Virgin Islands corporation (the "Company"),
to purchase up to 850,000 Ordinary Shares, par value $0.01 per share (the
"Shares"), at a price, net to the seller in cash, not greater than $14.50 nor
less than $12.75 per Share, upon the terms and subject to the conditions of
the Offer.
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer, determine a single price per Share
that it will pay for the Shares (the "Purchase Price") properly tendered and
not withdrawn pursuant to the Offer, taking into account the number of Shares
so tendered and the prices specified by tendering shareholders of the Shares
that will allow it to buy 850,000 Shares (or such lesser number of Shares as
are properly tendered and not withdrawn) at prices not greater than $14.50 nor
less than $12.75 per Share pursuant to the Offer. All Shares properly tendered
at prices at or below the Purchase Price and not withdrawn will be purchased
at the Purchase Price, net to the seller in cash, upon the terms and subject
to the conditions of the Offer, including the proration terms described in the
Offer to Purchase. The Company will return all other Shares, including Shares
tendered at prices greater than the Purchase Price and Shares not purchased
because of proration. See Section 1 of the Offer to Purchase.
The undersigned hereby instruct(s) you to tender to the Company the number
of Shares indicated below held by you for the account of the undersigned, upon
the terms and subject to the conditions set forth in the Offer to Purchase and
the related Letter of Transmittal.
[_]By checking this box, all Shares held by us for your account will be
tendered. If fewer than all Shares are to be tendered, please check the box
and indicate below the aggregate number of Shares to be tendered by us.
Shares*
- --------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
ODD LOTS
(SEE INSTRUCTION 8 OF THE LETTER OF TRANSMITTAL)
[_By]checking this box, the undersigned represents that the undersigned will
be the beneficial owner as of the close of business on the Expiration Date
of an aggregate of fewer than 100 Ordinary Shares and is instructing the
holder to tender all such Shares.
In addition, the undersigned is tendering Shares either (check one box):
[_at]the Purchase Price, as the same shall be determined by the Company in
accordance with the terms of the Offer (persons checking this box need not
indicate the price per Share below); or
[_at]the price per Share indicated below under "Price (in Dollars) Per Share
at Which Shares Are Being Tendered" on this Instructional Form.
PRICE (IN DOLLARS ) PER SHARE AT
WHICH SHARES ARE BEING TENDERED
- --------------------------------------------------------------------------------
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE,
USE A SEPARATE INSTRUCTION FORM FOR
EACH PRICE SPECIFIED.
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES.
[_] $12.750 [_] $13.125 [_] $13.500 [_] $13.875 [_] $14.250
[_] $12.875 [_] $13.250 [_] $13.625 [_] $14.000 [_] $14.375
[_] $13.000 [_] $13.375 [_] $13.750 [_] $14.125 [_] $14.500
SIGNATURE BOX
Signature(s) ________________________________________________________________
Dated _______________________________________________________________________
Name(s) and Address(es) _____________________________________________________
-----------------------------------------------------------------------------
(Please Print)
Account Number ______________________________________________________________
Area Code and Telephone Number ______________________________________________
Taxpayer Identification or Social Security Number ___________________________
<PAGE>
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated November
13, 1996, and the related Letter of Transmittal. The Offer is being made to all
holders of Shares. The Offer is not being made to, nor will tenders be accepted
from, or on behalf of, holders of Shares in any jurisdiction in which making or
accepting the Offer would violate that jurisdiction's laws. In those
jurisdictions whose securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Company by Salomon Brothers Inc, as Dealer Manager, or one or more
registered brokers or dealers licensed under the laws of such jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
BY
DSG INTERNATIONAL LIMITED
850,000 OF ITS ORDINARY SHARES
AT A PURCHASE PRICE NOT GREATER THAN
$14.50 NOR LESS THAN $12.75 PER SHARE
DSG Interational limited, a British Virgin Islands corporation (the "Company"),
invites its shareholders to tender 850,000 Ordinary Shares, par value $0.01 per
share (the "Shares"), at prices not greater than $14.50 nor less than $12.75 per
Share, net to the seller in cash, specified by such shareholders, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated November
13, 1996 (the "Offer to Purchase") and in the related Letter of Transmittal
(which together constitute the "Offer").
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON DECEMBER 13, 1996,
UNLESS THE OFFER IS EXTENDED.
The Company will determine a single per share price (not greater than
$14.50 nor less than $12.75 per Share) that it will pay for Shares validly
tendered pursuant to the Offer and not withdrawn (the "Purchase Price"), taking
into account the number of Shares so tendered and the prices specified by
tendering shareholders. The Company will select the Purchase Price that will
enable it to buy 850,000 Shares (or such lesser number of Shares as are validly
tendered at prices not greater than $14.50 nor less than $12.75 per Share)
pursuant to the Offer. The Company will purchase all Shares validly tendered at
prices not greater than $14.50 nor less than $12.75 per Share pursuant to the
Offer. The Company will purchase all Shares validly tendered at prices at or
below the Purchase Price and not withdrawn, upon the terms and subject to the
conditions of the Offer, including the provisions relating to proration and
conditional tenders described below. The Purchase Price will be paid in cash,
net to the seller, with respect to all Shares purchased. Shares tendered at
prices in excess of the Purchase Price and Shares not purchased because of
proration and conditional tender will be returned.
Upon the terms and subject to the conditions of the Offer, if more than
850,000 Shares have been validly tendered at or below the Purchase Price and not
withdrawn on or prior to the Expiration Date, the Company will purchase Shares
in the following order of priority: (a) first, all Shares validly tendered at or
below the Purchase Price and not withdrawn on or prior to the Expiration Date by
any shareholder who owned beneficially an aggregate of fewer than 100 Shares as
of the close of business on November 12, 1996 and who validly tenders all of
such Shares (partial and conditional tenders will not qualify for this
preference) and completes the box captioned Odd Lots" on the Letter of
Transmittal and, if applicable, the Notice of Guaranteed Delivery, and (b) then,
after purchase of all of the foregoing Shares, subject to the conditional tender
provisions described in Section 6 of the Offer to Purchase, all other Shares
validly tendered at or below the Purchase Price and not withdrawn on or prior to
the Expiration Date on a pro rata basis, if necessary (with appropriate
adjustments to avoid purchases of fractional Shares).
The Company believes that the purchase of its Shares at this time
represents an attractive investment opportunity that will benefit the Company
and its remaining shareholders. The Offer will afford to shareholders who are
considering the sale of all or a portion of their Shares the opportunity to
determine the price at which they are willing to sell their Shares and, in the
event the Company accepts such Shares, to dispose of Shares without the usual
transaction costs associated with a market sale. The Offer will also allow
qualifying shareholders owning beneficially fewer than 100 Shares to avoid the
payment of brokerage commissions and the applicable odd lot discount payable on
a sale of Shares in a transaction effected on a securities exchange.
Neither the Company nor its Board of Directors makes any recommendation to
any shareholder as to whether to tender all or any Shares. Each shareholder must
make his or her own decision as to whether to tender Shares and, if so, how many
Shares to tender and at what price. The Company has been informed that no
director or executive officer intends to tender Shares pursuant to the Offer
except that Terrence D. Daniels, a director of the Company, controls a company
that is the general partner of a fund that owns 210,000 Shares and that fund may
tender any or all of such Shares in the Offer.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after January 10, 1997 unless theretofore accepted
for payment as provided in the Offer to Purchase. To be effective, a written or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase and must specify the name of the person who tendered the Shares to be
withdrawn and the number of Shares to be withdrawn. If the Shares to be
withdrawn have been delivered to the Depositary, a signed notice of withdrawal
with signatures guaranteed by an Eligible Institution (as defined in Section 3
of the Offer to Purchase) (except in the case of Shares tendered by an Eligible
Institution) must be submitted prior to the release of such Shares. In addition,
such notice must specify, in the case of Shares tendered by delivery of
certificates, the name of the registered holder (if different from that of the
tendering shareholder) and the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn or, in the case of Shares
tendered by book-entry transfer, the name and number of the account at one of
the Book-Entry Transfer Facilities (as defined in the Offer to Purchase) to be
credited with the withdrawn Shares. Withdrawals may not be rescinded, and Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 8 of the Offer to Purchase at any time prior to
the Expiration Date.
The information required to be disclosed by Rule 13e-4(d)(1) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by reference.
Copies of the Offer to Purchase and the related Letter of Transmittal are
being mailed to recent holders of Shares and will be furnished to brokers, banks
and similar persons whose names, or the names of whose nominees, appear on the
Company's shareholder list or, if applicable, who are listed as participants in
a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read before any decision is made with
respect to the Offer.
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and addresses
listed below. Requests for additional copies of the Offer to Purchase, the
Letter of Transmittal or other tender offer materials may be directed to the
Information Agent and such copies will be furnished promptly at the Company's
expense. Shareholders may also contact their local broker, dealer, commercial
bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
D. F. KING & CO., INC.
77 Water Street
New York, NY 10005
(212) 269-5550 (Call Collect)
or (800) 714-3306 (Toll Free)
The Dealer Manager for the Offer is:
SALOMON BROTHERS INC
7 World Trade Center
New York, NY 10048
(212) 783-6467
NOVEMBER 14, 1996
<PAGE>
EXHIBIT (a)(8)
DSG INTERNATIONAL LTD.
NEWS RELEASE
DSG INTERNATIONAL LIMITED ANNOUNCED COMMENCEMENT OF OFFER TO REPURCHASE
UP TO 850,000 OF ITS ORDINARY SHARES
Duluth, Georgia, November 13/PRNewsire/--DSG International Limited
(NASDAQ: DSGIF) today announced the commencement of a "Dutch Auction" self
tender offer for up to 850,000 of its ordinary shares. The offer will expire at
midnight, Eastern Daylight Time, on December 13, 1996, unless the offer is
extended. Under the terms of the offer, the company will invite shareholders to
tender shares at prices between $12.75 and $14.50 per share, as specified by the
tendering shareholders. Based upon the number of shares tendered and the prices
specified by the tendering shareholders, the company will determine the single
per share price within that price range that will allow the company to buy
850,000 shares or such lesser number of shares as are properly tendered. The
company expects to fund the repurchase of the shares primarily from cash on hand
and bank borrowings. The company's ordinary share price closed at $11 7/8 on the
NASDAQ National Market System on November 12, 1996.
Salomon Bros. Inc. is acting as dealer manager in the offer. D.F. King
& Co., Inc. is acting as the information agent for the offer.
DSG International Limited and its predecessors have been in the business
of manufacturing and distributing disposable diapers since 1973. With
manufacturing plants in Hong Kong, California, Georgia, Australia, England,
Singapore, Canada, Switzerland, China and Thailand, the company distributes its
products throughout Asia, Australia, North America, and Europe. The Company
also produces private label disposable diapers, adult incontinence and feminine
napkins at certain operations. Its best selling brands include "Fitti(R)", "Pet
Pet(R)", "Cosies(R)", "Cosifits(R)", "Baby Love(R)", "Togs(R)", "Cares(R)",
"Vlesi(R)", "Dispo 123(TM)", "Laurelle(R)", and "Handy(TM)".
11/13/96
Contact: Peter Chang
(770) 497-9800
(DSGIF)
<PAGE>
EXHIBIT (b)
SOUTHTRUST
[LETTERHEAD OF SOUTHTRUST BANK OF GEORGIA, N.A.] BANK [LOGO]
November 4, 1996
Mr. Peter Chang
President
Associated Hygienic Products, LLC
4455 River Green Parkway
Duluth, Georgia 30136
Dear Peter:
We are very pleased to inform you that the proposed credit facilities as
outlined below have been approved by SouthTrust Bank of Georgia, National
Association (Lender) under the following terms and conditions subject to
completion of definitive loan documentation satisfactory to Lender.
SUMMARY OF TERMS
BORROWERS: Associated Hygienic Products, LLC, Associated Hygienic Products-
- ---------- Canada, and AHP Holdings, L.P. (collectively referred to as
"Borrowers")
LENDER: SouthTrust Bank of Georgia, N.A. ("Lender")
- -------
FACILITIES: Aggregate credit facilities of up to $25,000,000 allocated as
- ----------- follows:
FACILITY A:
A $10,000,000 Line of Credit Facility utilized to partially fund
a special one time $21,000,000 dividend to parent company, DSG
International Limited ("DSG"), and general working capital
needs. The Line of Credit Facility reduces to $5,000,000 on
December 31, 1997 and matures on April 30, 1998.
Advances under the Line of Credit will be based upon 80% of
eligible Accounts Receivable and 50% of eligible Inventory and
will be governed by a monthly Borrowing Base Certificate.
FACILITY B:
A 5-year, $15,000,000 Term Loan utilized to partially fund a
special one time $21,000,000 dividend to DSG and permanent
financing for Property, Plant and Equipment.
Advances under the Term Loan will be based upon 80% of the
appraised value of the real estate located in Duluth, Georgia,
100% of the cost of new machinery and equipment and net book
value of equipment located in Duluth, Georgia and Bell,
California.
<PAGE>
Mr. Peter Chang
November 4, 1996
Page 2
USE OF PROCEEDS: To fund a special one time $21,000,000 dividend to DSG.
- ----------------
AMORTIZATION: FACILITY A: Interest payable monthly in arrears; principal
- ------------- payable at maturity. Line of Credit facility reduces to
$5,000,000 on December 31, 1997.
FACILITY B: Principal repayment will be based upon an
amortization schedule of ten years. Principal and interest
will be paid monthly in arrears. Borrowers will also remit
50% of excess cash flow (as defined) to reduce loan
principal on an annual basis.
GUARANTOR: DSG.
- ----------
COLLATERAL: FACILITY A & B:
- -----------
Obligations of the Lender will be secured by all of the
Accounts Receivable and Inventory of the Borrower and all
Property, Plant and Equipment located at 4455 River Green
Parkway, Duluth, Georgia and 5640 Lindbergh Lane, Bell,
California. Lender will also record a second mortgage on all
assets located at 1185 Fast Colborne Street, Brantford,
Ontario.
All security interests and liens will be perfected by
appropriate filing of Uniform Commercial Code financing
statements and other filings or actions as deemed
appropriate by Lender's counsel. All facilities will be
cross-collateralized and cross-defaulted.
INTEREST RATE: FACILITY A: Borrower shall have the option of the following
- -------------- rates, calculated on the basis of a 360 day year:
. A floating annual rate equal to Lender's Base Rate; or
. A floating annual rate equal to 30, 90 or 180 day LIBOR
plus 1.75%.
(As an indication, all-in 30 day LIBOR rate is 7.13% as
of October 29, 1996.)
FACILITY B:
. A floating annual rate equal to Lender's Base Rate; or
. A floating annual rate equal to 30, 90 or 180 day LIBOR
plus 2.00%.
NOTE: WHEN BORROWER'S DEBT/TANGIBLE NET WORTH RATIO REACHES
2.0 OR LESS, LENDER WILL REDUCE THE SPREAD OVER THE LIBOR
RATE OPTION BY .50% P.A. ON BOTH FACILITY A AND B.
<PAGE>
Mr. Peter Chang
November 4, 1996
Page 3
ARRANGEMENT FEE: $50,000, payable at closing.
- ----------------
REPRESENTATIONS AND
- ------------------- Representations and warranties usually included in Lender's
WARRANTIES: loan agreement and others deemed appropriate by Lender to
- ----------- the specific transaction.
COVENANTS: Standard negative, affirmative and financial covenants
- ---------- usually included in Lender's loan agreements for financing,
and others deemed appropriate by Lender and its legal
counsel to the specific transaction, including, but not
limited to, the following.
o Financial covenants as follows:
o Minimum net income: $100,000/quarter.
o Minimum Tangible Net Worth: $1,000,000, increasing
by $2,000,000 at each Fiscal Year End.
o Maximum Debt/Tangible Net Worth:
6.00 at FYE 12/31/97,
3.00 at FYE 12/31/98,
2.00 at FYE 12/31/99 and thereafter.
o Minimum Fixed Charge coverage: 1.25 (including tax
distributions in numerator) measured on a rolling
four quarter basis.
o Maximum annual Capital Expenditures: $3,500,000
o No other debt except for trade debt in the normal course
of business and other obligations first consented to by
Lender.
o No mergers; acquisitions, divestitures, sale of assets,
change of business, creation of new subsidiary without
prior approval from Lender.
o No future dividends other than tax distributions until
Borrower's Debt/Tangible Net Worth reaches 2.0 or less.
However, Lender consents to allow a special one time
$21,000M dividend to DSG.
o No liens or security interests other than those existing
or consented to by Lender.
o No change in control.
<PAGE>
Mr. Peter Chang
October 20, 1996
Page 4
HAZARD INSURANCE: The Borrowers will insure all of its property,
- ----------------- equipment, and inventory for the full insurable value with
a company acceptable to the Lender, with the Lender named
as a loss payee with respect to the above-mentioned
assets.
REPORTING: Quarterly financial statements including Consolidated
- ---------- Balance Sheet and Income Statement within 45 days after
the end of each calendar quarter, and annual audited
financial statements within 120 days after the end of each
fiscal year of Borrowers, by independent certified public
accountants acceptable to Lender.
Quarterly compliance certificate certified by the
Controller or President to include all Financial,
Affirmative, and Negative covenants, within 45 days after
the end of each calendar quarter.
Monthly Borrowing Base Certificate and Accounts Receivable
aging report within 30 days after the end of each calendar
month.
CONDITIONS PRECEDENT
- --------------------
AT CLOSING: Including, but not limited to:
- -----------
o No material adverse change in the operations, financial
conditions or prospects of the Borrowers or Guarantor
prior to the funding date.
o Completion of documentation in form and substance
satisfactory to Lender and Lender's counsel, including
perfection of all security interests.
o No default under Lender's loan documents.
INDEMNIFICATION: Borrower will immediately indemnify and hold Lender
- ---------------- harmless from and against any and all claims, damages,
liabilities, costs and expenses (including legal fees,
expenses and disbursements) which may be incurred by or
asserted against the Lender in connection with or arising
out of any investigation, litigation or proceeding related
to the Facilities.
EXPENSES: Borrower will pay all out of pocket costs and expenses of
- --------- the Lender (including all legal fees, expenses and
disbursements and other actual third-party expense
reimbursements), and all audit, search, survey and filing
fees incurred or sustained by the Lender in connection
with this transaction.
<PAGE>
Mr. Peter Chang
November 4, 1996
Page 5
This financing commitment is valid only through December 4, 1996, unless
accepted prior to the closing of business on such date. Your acceptance,
indicated by your signing and returning the enclosed copy of this letter will
allow us to initiate the transaction closing process.
Peter, we appreciate the opportunity you have given SouthTrust to structure a
credit facility to meet the needs of your fine company, and we look forward to
working with you to close this transaction.
Sincerely,
/s/ Melinda M. Bergbom /s/ Kenneth W. Deere
Melinda M. Bergbom Kenneth W. Deere
Vice President Senior Vice President
Approved and accepted by:
ASSOCIATED HYGIENIC PRODUCTS, LLC
- -------------------------------------------
Peter Chang, President Date
