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Filed by Schuler Homes, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed to be filed pursuant to Rule 14a-12
of the Securities Act of 1934
Subject: Schuler Homes, Inc.
Commission File No. 000-19891
[SCHULER HOMES, INC. LOGO]
NEWS RELEASE
For Further Information:
James K. Schuler President & CEO (808) 521-5661
Pamela S. Jones Senior Vice President (808) 521-5661
of Finance & CFO
FOR RELEASE: Tuesday, September 12, 2000; 5:00 P.M. EASTERN
SCHULER HOMES, INC. AND PRIVATELY-HELD WESTERN PACIFIC HOUSING ANNOUNCE MERGER.
Honolulu, Hawaii -- Schuler Homes, Inc. (NASDAQ: SHLR) today announced that it
has agreed to merge with privately-held Western Pacific Housing, effectively
doubling the size of the Company. The merger will create a well-diversified
national homebuilder focused on the Western United States that will rank among
the top 15 homebuilders in the United States and among the leaders in its
markets - 6th in the robust California market, and in the top 3 in Colorado,
Hawaii, Washington and Oregon, with a growing presence in Arizona.
For the 12 months ended June 30, 2000, Schuler Homes and Western Pacific
together delivered 4,663 homes, generating more than $1.1 billion in revenues.
As of June 30, 2000, the combined company had approximately 1,642 homes in
backlog, with an aggregate sales value of $449 million, a 38% year-over-year
increase, and controlled over 27,000 building lots in 187 communities.
Western Pacific was founded in 1993 to take advantage of a resurging California
housing market. Its investors include Apollo Real Estate Advisors, Blackacre
Capital Management and Highridge Partners. Western Pacific is the six largest
homebuilder in California and has a strong market presence in major population
centers of Northern and Southern California. Schuler Homes, Inc., founded in
1988 and a public company since 1992, has long been a leading homebuilder in the
Hawaii market and in 1996 began implementing a strategy to diversify its
operations into strong Western United States markets. Through the acquisition of
four regional homebuilders and two start-up operations, Schuler has established
a major market presence in Colorado, Washington, and Oregon, and a growing
presence in Northern and Southern California and Arizona.
This transaction continues Schuler's strategy of diversifying its operations to
encompass the top markets in the Western United States. The combined company
will continue to market its homes under both the Schuler and Western Pacific
names to retain the benefits of strong brand identification in the two
companies' markets.
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"We are very pleased to be combining forces with Western Pacific, a successful,
well-established, high-quality builder in California, which is among the fastest
growing housing markets in the United States," commented James K. Schuler,
President and CEO of Schuler Homes, who will remain President and CEO of the
combined entity. "This combination takes the Company to a new level in terms of
scale, market penetration, financial resources and management depth, merging two
companies with proud traditions, proven track records and profit margins which
are among the highest in the industry. We are positioned well for future growth
in some of the top residential markets in the United States."
"We are pleased to merge our homebuilding operations with Schuler Homes, a
company that enjoys a solid reputation. We are very impressed with the quality
of the homes they build, the strength and depth of their management team and
their reputation in the capital markets," said Eugene S. Rosenfeld, Chairman,
CEO and founder of Western Pacific. In addition, Mr. Rosenfeld, who will become
Co-Chairman of the combined company, commented "This transaction will also allow
our investors the opportunity to enjoy the benefits of ownership in a
publicly-traded company that will be ranked among nationally recognized builders
in terms of its profitability and capitalization."
In light of the strong Western United States economy and the improving Hawaii
real estate market, the combined company intends to continue expanding
operations in its various markets. In contemplation of the merger, Schuler Homes
plans to increase its product offerings in Hawaii by adding projects in various
areas on the islands of Oahu, Maui, Kauai and Hawaii, while reducing its
investment in longer term land parcels in areas where it has a concentration of
land. This will result in an after-tax accounting write-down of approximately
$22 million during the quarter ending September 30, 2000.
Following the merger, James K. Schuler will be President, CEO and Co-Chairman of
the combined company, and Eugene S. Rosenfeld will serve as Co-Chairman.
To effectuate the merger, a newly-formed holding company will acquire the
operations of Western Pacific and Schuler. Existing Schuler shareholders will
exchange their shares of Schuler Homes, Inc. common stock (approximately 20.1
million shares in the aggregate) for shares of Class A common stock of the
holding company on a 1-to-1 basis. The Class A stock will have rights equivalent
to the existing Schuler common stock. Western Pacific's investors will transfer
their interests in Western Pacific in exchange for approximately 20.1 million
shares of Class B common stock of the holding company. The Class B stock will
have 0.5 votes per share and be convertible into Class A stock on a 1-to-1 basis
upon sale or upon the occurrence of certain events. The Class A shareholders
will be entitled to elect the majority of the holding company's nine directors.
The transaction is structured to be tax-free to Schuler shareholders and is
expected to close in December, 2000 or early 2001 following the receipt of
required regulatory and shareholder approvals and subject to customary closing
conditions. Upon completion of the merger, the holding company will be named
Schuler Homes, Inc. and will have a March 31 fiscal year end.
James K. Schuler, the holder of approximately 52% of Schuler's outstanding
common stock, has agreed to vote such shares in favor of the transaction.
Salomon Smith Barney is representing Schuler Homes in this transaction.
Schuler Homes will be holding a conference call on Wednesday, September 13,
2000 at 11:30 am EDT, to discuss the merger. This call will be hosted by
James K. Schuler, President and Chief Executive Officer and Pamela S. Jones,
Senior Vice President of Finance and Chief Financial Officer of Schuler
Homes, as well as Eugene S. Rosenfeld, Chairman and Chief Executive Officer
and Thomas Connelly, Senior Vice President and Chief Financial Officer of
Western Pacific Housing. The call is open to all interested parties and will
broadcast live over the internet via WWW.STREETEVENTS.COM. The dial-in number
is 800.967.7141. The international dial-in number is 719.457.2630. For those
who are not available to listen to the live broadcast, a replay will be
available shortly after the call on the Streetevents web site.
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Schuler Homes Inc. designs, constructs, markets and sells single-family
residences, townhomes and condominiums primarily to entry-level and first-time
and second-time move-up buyers. The Company operates in seven geographic
markets: Arizona, Colorado, Hawaii, Northern California, Oregon, Southern
California and Washington, and closed the sales of 2,643 units during the year
ended December 31, 1999, generating revenues of approximately $506.8 million.
Western Pacific designs, builds and markets single-family attached and
detached homes to first-time and first and second move-up buyers in the
suburban California markets including San Diego, Orange County, the Inland
Empire, Los Angeles, Ventura County, the San Francisco Bay area and the
Sacramento valley. In the latest fiscal year ended March 31, 2000, Western
Pacific closed the sales of 1,693 new homes generating revenues of
approximately $550.9 million through five divisions that are geographically
diversified within each of the major metropolitan markets in California.
Certain statements in this press release may be "forward-looking statements" as
defined by the Private Securities Litigation Reform Act of 1995. Such statements
involve risks, uncertainties and other factors that may cause actual results to
differ materially from those which are anticipated. Such factors include, but
are not limited to, changes in general economic conditions, the market for homes
generally and in areas where the company has developments, the availability and
cost of land suitable for residential development, materials prices, labor
costs, interest rates, consumer confidence, competition, environmental factors
and government regulations affecting the Company's operations. See the Company's
Annual Report on Form 10-K for the year ended December 31, 1999 for further
discussion of these and other risks and uncertainties applicable to the
Company's business.
In connection with their proposed merger, Schuler Homes and Western Pacific will
file a Registration Statement with the Securities and Exchange Commission, and a
Joint Proxy Statement/Prospectus will be included in that Registration
Statement. Other materials relating to the merger also will be filed with the
Securities and Exchange Commission. INVESTORS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS, REGISTRATION STATEMENT AND OTHER RELEVANT DOCUMENTS TO BE
FILED WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Materials filed with the SEC will be available electronically, without charge,
at an internet site maintained by the SEC. The address of that site is
HTTP://WWW.SEC.GOV. In addition, the Joint Proxy Statement/Prospectus filed with
the SEC by Schuler Homes will be mailed to their shareholders and may be
obtained without charge upon request to Schuler Homes, Inc., attention Pamela S.
Jones, (808) 521-5661.
-End-
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