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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Innovative Valve Technologies, Inc..
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(Name of Issuer)
Common Stock, $0.001 par value per share
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(Title of Class of Securities)
45767J106
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(CUSIP Number)
Mr. Colin Soule, General Counsel, Philip Services Corp., 100 King Street,
P.O. Box 2440, LCD 1, Hamilton, Ontario, Canada L8N 4J6
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
October 28, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and if
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 45767J106 PAGE 2 OF 7 PAGES
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1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
PHILIP SERVICES CORP.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP *
(a)
N/A (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS *
AF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) N/A
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
PROVINCE OF ONTARIO
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7 SOLE VOTING POWER
NUMBER OF 2,340,716
SHARES -------- ----------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH -------- ----------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 2,340,716
WITH -------- ----------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,340,716
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)EXCLUDES CERTAIN SHARES*
N/A [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.9%
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14 TYPE OF REPORTING PERSON *
CO
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* SEE INSTRUCTIONS BEFORE FILLING OUT
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CUSIP NO. 45767J106 PAGE 3 OF 7 PAGES
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SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock, par value $0.001
per share (the "Common Stock"), of Innovative Valve Technologies, Inc., a
Delaware corporation (the "Company"). The address of the principal executive
offices of the Company is 14900 Woodham Drive, Suite A-125, Houston, Texas
77073.
ITEM 2. IDENTITY AND BACKGROUND.
The reporting person is Philip Services Corp., a corporation
organized under the laws of the province of Ontario ("Philip"), whose principal
address is 100 King Street, P.O. Box 2440, LCD 1, Hamilton, Ontario Canada L8N
4J6. Philip is one of North America's leading suppliers of resource recovery and
industrial services. It has the largest integrated network of metals recovery
and industrial services operations in North America, servicing over 50,000
industrial and commercial customers from over 300 locations. The name, principal
occupation, employer and citizenship of each of the executive officers and
directors of Philip, are as follows. The business address of each is 100 King
Street, P.O. Box 2440, LCD 1, Hamilton, Ontario Canada L8N 4J6.
<TABLE>
<CAPTION>
PRINCIPAL
NAME OCCUPATION EMPLOYER CITIZENSHIP
---- ---------- -------- -----------
<S> <C> <C> <C>
Allen Fracassi President, Chief Executive Officer Philip Canadian
Philip Fracassi Executive Vice-President, Chief Philip Canadian
Operating Officer
Howard Beck Chairman of the Board Philip Canadian
Roy Cairns Attorney Chown, Cairns Canadian
Derrick Rolfe President and Chief Executive RM Capital Corp. Canadian
Officer
Norman Foster Director of Philip American
Felix Pardo President and Chief Executive Ruhr-American American
Officer Coal Corporation
</TABLE>
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CUSIP NO. 45767J106 PAGE 4 OF 7 PAGES
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<TABLE>
<CAPTION>
PRINCIPAL
NAME OCCUPATION EMPLOYER CITIZENSHIP
---- ---------- -------- -----------
<S> <C> <C> <C>
Herman Turkstra Attorney Turkstra, Mazza Canadian
Shinehoft, Mihailovich,
Associates
William E. Haynes Chairman, President and Chief Innovative Valve American
Executive Officer Technologies, Inc.
Robert Knauss Director Baltic International, American
U.S.A., Inc.
Robert Waxman President, Metals Recovery Group Philip Canadian
Marvin Boughton Executive Vice-President and Philip Canadian
Chief Financial Officer
Robert M. Chiste President, Industrial Services Group Philip American
Peter Chodos Executive Vice-President, Philip Canadian
Corporate Development
Antonio Pingue Executive Vice-President, Philip Canadian
Corporate & Government Affairs
Colin Soule Executive Vice President, Philip Canadian
General Counsel and
Corporate Secretary
John Woodcroft Executive Vice-President, Philip Canadian
Operations
</TABLE>
During the past five years none of the persons or entities listed above
has been convicted in a criminal proceeding nor has any of them been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which proceeding any of them was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Prior to the Company's being publicly traded with a class of
equity securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934 (the "Exchange Act"), Philip owned beneficially all the outstanding
preferred stock of the Company's predecessor, Safe Seal, Inc. ("SSI") for which
it paid $2 million in October 1995, and 1,701,713 shares of SSI common stock,
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CUSIP NO. 45767J106 PAGE 5 OF 7 PAGES
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which it acquired as follows: (i) in October 1995 it purchased 286,960 shares
from SSI for $500,000; (ii) in January 1997 it exercised warrants it had
received in October 1995 and July 1996 to purchase 1,361,536 shares; and (iii)
in June 1997 it purchased 53,217 shares in connection with the exercise of an
option granted in 1992 to a former SSI employee to purchase 68,001 shares of SSI
common stock. It had purchased the 1995 warrant for $100,000 and guaranteed the
repayment of a $2 million revolving line of credit to SSI in exchange for the
1996 warrant. In September 1996, Philip exercised the warrants for (i) $3.3
million aggregate principal amount of subordinated 8% promissory notes issued by
Philip and paid as partial consideration in an acquisition and (ii)
approximately $1 million in cash. As a result of the merger of SSI with and into
the Company, Philip received 850,858 shares of Company Common Stock for the SSI
common stock it owned, and 1,189,858 shares of Company Common Stock for the
repayment of debt and redemption of SSI preferred stock it owned. The source of
funds for the initial acquisition of those SSI shares was Allwaste, Inc., a
wholly owned subsidiary of Philip and the record owner of the shares
("Allwaste").
After the Company's initial public offering and the registration of its
Common Stock pursuant to Section 12 of the Exchange Act, Philip acquired on
October 28, 1997, an aggregate of 300,000 shares of Company Common Stock from
The Roger L. Miller Family Trust (275,000 shares) and Computerized Accounting &
Tax Services, Inc. (25,000 shares) at a cash purchase price per share equal to
96.5% of the initial per share price to the public in the offering. The sources
of funds for this $3,763,500 purchase were internally generated revenues and
Allwaste's existing commercial credit lines.
All of the above transactions are described in the Company's
Registration Statement on Form S-1, Registration No. 333-31617, declared
effective on October 22, 1997. All documents applicable to such transactions
were filed as exhibits to that registration statement.
ITEM 4. PURPOSE OF TRANSACTION.
Philip has acquired the shares of Company Common Stock for
investment purposes only. Philip does not currently plan to acquire beneficial
ownership of additional shares of Company Common Stock nor to dispose of any of
its current beneficial ownership in shares of Company Common Stock, nor to take
any other action enumerated in Item 4.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Philip beneficially owns 2,340,716 shares, or 29.9%, of the
outstanding Common Stock of the Company. Mr. Allen Fracassi, the president and
chief executive officer of Philip, has sole voting and dispositive power
respecting the shares of which Philip is the beneficial owner, subject to the
direction of Philip's board of directors.
Mr. William E. Haynes, a director of Philip, is the Chairman, President
and Chief Executive Officer of the Company. Mr. Haynes owns beneficially 307,131
shares, or 3.9%, of the outstanding stock of the Company, including 62,500
shares which he has the right to acquire pursuant to options exercisable under
the Company's 1997 Incentive Plan. Mr. Norman Foster, a director of Philip, owns
2,000 shares, and Mr. Robert M. Chiste, an executive officer of Philip, owns
40,000 shares of
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CUSIP NO. 45767J106 PAGE 6 OF 7 PAGES
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Company stock, representing less than 1% of the outstanding shares. Each of the
above named persons has the sole power to vote and to dispose of the shares
beneficially owned by him. None of the other individuals named in Item 2 owns
beneficially any shares of Company Common Stock.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Pursuant to a letter agreement dated as of September 19, 1997, by and
between Allwaste and NationsBanc Montgomery Securities, Inc., as representatives
for the underwriters for the initial public offering of the Company Common Stock
(the "IPO"), a copy of which is filed herewith as Exhibit 1, Philip agreed not
to sell or otherwise transfer the shares of Company Common Stock it owns for a
period of two years following the closing of the IPO, which occurred on October
28, 1997. In addition, pursuant to certain restrictions contained in the Funding
Agreement dated as of June 9, 1997, as amended and restated as of August 15,
1997 between the Company and Allwaste, a copy of which is filed herewith as
Exhibit 2 (the "Funding Agreement"), Philip may not voluntarily, except pursuant
to and in accordance with certain provisions of a Registration Rights Agreement
dated as of June 9, 1997 by and among Allwaste, the Company and certain other
holders of Common Stock, a copy of which is filed herewith as Exhibit 3 (the
"Registration Rights Agreement"), (i) sell, assign, exchange, transfer,
encumber, pledge, distribute, appoint or otherwise dispose of (a) any shares of
Common Stock issued on conversion or in repayment of the note issued pursuant to
the Funding Agreement or (b) any interest in (including any option to buy or
sell) any of those shares of Common Stock, in whole or in part; or (ii) engage
in any transaction, whether or not with respect to any shares of Common Stock or
any interest therein, the intent or effect of which is to reduce the risk of
owning the shares of Common Stock issued on conversion or in repayment of the
note (including, for example, engaging in put, call, short-sale, straddle or
similar market transactions).
The Registration Rights Agreement provides for "piggyback" registration
rights to Philip, such that following the applicable restricted period
(generally two years following the closing of the IPO), Philip may include any
shares of Common Stock owned by it in certain types of registrations by the
Company under the Securities Act of any Common Stock for its own account for
cash, subject to certain exceptions. The Company is generally required to pay
the costs associated with any such offering other than underwriting discounts
and commissions and transfer taxes attributable to the shares sold on behalf of
Philip. The Registration Rights Agreement provides that the number of shares of
Common Stock that must be registered on behalf of Philip is subject to
limitation if the managing underwriter or the Company's financial advisor, as
the case may be, determines that market conditions so require. The Company will
indemnify Philip thereunder, and Philip will indemnify the Company, against
certain liabilities in respect of any registration statement or offering that
includes shares pursuant to the Registration Rights Agreement.
Mr. Haynes is a party to a letter agreement dated as of September 19,
1997, with NationsBanc Montgomery Securities, Inc., as representatives for the
underwriters in the IPO, a copy of which is filed herewith as Exhibit 4, whereby
he has agreed not to sell or otherwise transfer the shares of Company Common
Stock owned by him for a period of one year following the closing of the IPO. In
addition, Mr. Haynes is also a party to the Registration Rights Agreement
described above, pursuant to which he has the registration rights, and is
subject to the limitations, cost sharing
<PAGE> 7
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CUSIP NO. 45767J106 PAGE 7 OF 7 PAGES
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and indemnification provisions, described therein. Of the 307,131 shares of
Company Common Stock owned by Mr. Haynes, 62,500 shares are subject to
exercisable options granted to him under the Company's 1997 Incentive Plan, and
are subject to the terms and conditions of that plan.
Other than the agreements and transactions described in response to
this Item 6, there are no contracts, arrangements, understandings or
relationships among the persons named in Item 2 or between such persons and any
person with respect to any securities of the Company.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. - Letter agreement dated as of September 19, 1997,
by and between Allwaste and NationsBanc Montgomery
Securities, Inc., as representatives for the
underwriters for the initial public offering of the
Company.
*Exhibit 2. - Funding Agreement dated as of June 9, 1997, as
amended and restated as of August 15,
1997 between the Company and Allwaste, Inc.
(Exhibit 4.9)
*Exhibit 3. - Registration Rights Agreement dated as of June 9,
1997 by and among Allwaste, Mr. Haynes, the Company
and certain other holders of Common Stock.
(Exhibit 4.2)
Exhibit 4. - Letter agreement dated as of September 19, 1997,
between Mr. Haynes and NationsBanc Montgomery
Securities, Inc., as representatives for the
underwriters.
*Exhibit 5. - 1997 Incentive Plan of the Company. (Exhibit 10.1)
* Incorporated by reference to the exhibit number shown in parentheses to the
Form S-1 Registration Statement, or amendment thereto, of Innovative Valve
Technologies, Inc., Registration Number 333-31617, declared effective on October
22, 1997.
SIGNATURE
After reasonable 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 6, 1997
Philip Services Corp.
By /s/ Colin Soule
---------------------------------------
(Signature)
Colin Soule, Secretary
(Name / Title)
<PAGE> 8
EXHIBIT INDEX
Exhibit 1. - Letter agreement dated as of September 19, 1997,
by and between Allwaste and NationsBanc Montgomery
Securities, Inc., as representatives for the
underwriters for the initial public offering of the
Company.
Exhibit 4. - Letter agreement dated as of September 19, 1997,
between Mr. Haynes and NationsBanc Montgomery
Securities, Inc., as representatives for the
underwriters.
<PAGE> 1
EXHIBIT 1
September 19, 1997
Montgomery Securities
Furman Selz LLC
As Representatives of the Several Underwriters
c/o Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
Innovative Valve Technologies, Inc.
14900 Woodham Drive, Suite A-125
Houston, Texas 77073
RE: Innovative Valve Technologies, Inc. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
common stock of The Safe Seal Company, Inc., a Texas corporation ("SSI"),
and/or shares of common stock of the Company (collectively, "Common Stock") or
securities convertible into or exchangeable or exercisable for Common Stock.
The Company proposes to carry out a public offering of Common Stock (the
"Offering") for which you will act as the representatives of the underwriters
for the Offering (the "Underwriters"). In connection with the Offering, SSI
will become a subsidiary of the Company through a merger of a subsidiary of
the Company with and into SSI (the "SSI Merger"). The undersigned recognizes
that the Offering will be of benefit to the undersigned and will benefit the
Company by, among other things, raising additional capital for its operations.
The undersigned acknowledges that you and the other Underwriters are relying
on the representations and agreements of the undersigned contained in this
letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that, except
for the conversion of shares of SSI common stock into shares of common stock
of the Company in the SSI Merger, the undersigned will not, without the prior
written consent of Montgomery Securities (which consent may be withheld in its
sole discretion), directly or indirectly, sell, offer, contract or grant any
option to sell (including without limitation any short sale), pledge,
transfer, establish an open "put equivalent position" within the meaning of
Rule 16a-l(h) under the Securities Exchange Act of 1934, as amended, or
otherwise dispose of (any such other action being hereinafter referred to as a
"Transfer") any shares of Common Stock, options or warrants to acquire shares
of Common Stock, or securities exchangeable or exercisable for or convertible
into shares of Common Stock currently or hereafter owned either of record or
beneficially (as defined in Rule 13d-3 under the Securities
<PAGE> 2
Exchange Act of 1934, as amended) by the undersigned (any such shares or
securities being hereinafter referred to as "Restricted Securities"), or
publicly announce the undersigned's intention to do any of the foregoing, for a
period commencing on the date hereof and continuing through the close of
trading on the date 180 days after the date of the final prospectus relating to
the Offering (the "Prospectus"). Furthermore, the undersigned also agrees that,
except for the conversion of shares of SSI common stock into shares of common
stock of the Company in the SSI Merger, the undersigned will not, without the
prior written consent of the Company (which consent may be withheld in its sole
discretion), directly or indirectly, Transfer any Restricted Securities, or
publicly announce the undersigned's intention to do so, for a period commencing
on the date hereof and continuing through the close of trading on the date that
is two years after the date of the Prospectus.
The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of any Restricted Securities held by the undersigned except in
compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives (i) any preemptive
rights that might otherwise be applicable to the shares of Common Stock to be
issued and sold by the Company in the Offering and (ii) any registration rights
relating to registration under the Securities Act of 1933, as amended, of any
Common Stock owned either of record or beneficially by the undersigned,
including any rights to receive notice of the Offering.
1 his agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives and assigns of the
undersigned and shall be for the benefit of the Company and the Underwriters.
ALLWASTE, INC.
By: /s/ Robert M. Chiste
--------------------
Name: Robert M. Chiste
Title: President
<PAGE> 1
EXHIBIT 4
September l9,1997
Montgomery Securities
Furman Selz LLC
As Representatives of the Several Underwriters
c/o Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
Innovative Valve Technologies, Inc.
14900 Woodham Drive, Suite A-125
Houston, Texas 77073
RE: Innovative Valve Technologies, Inc. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
common stock of The Safe Seal Company, Inc., a Texas corporation ("SSI"),
and/or shares of common stock of the Company (collectively, "Common Stock") or
securities convertible into or exchangeable or exercisable for Common Stock.
The Company proposes to carry out a public offering of Common Stock (the
"Offering") for which you will act as the representatives of the underwriters
for the Offenog (the "Underwriters"). In connection with the Offenng, SSI will
become a subsidiary of the Company through a merger of a subsidiary of the
Company with and into SSI (the "SSI Merger"). The undersigned recognizes that
the Offering will be of benefit to the undersigned and will benefit the
Company by, among other things, raising additional capital for its operations.
The undersigned acknowledges that you and the other Underwriters are relying
on the representations and agreements of the undersigned contained in this
letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that, except
for the conversion of shares of SSI common stock into shares of common stock
of the Company in the SSI Merger, the undersigned will not, without the prior
written consent of Montgomery Securities (which consent may be withheld in its
sole discretion), directly or indirectly, sell, offer, contract or grant any
option to sell (including without limitation any short sale), pledge,
transfer, establish an open "put equivalent position" within the meaning of
Rule 16a-l(h) under the Securities Exchange Act of 1934, as amended, or
otherwise dispose of (any such other action being hereinafter referred to as a
"Transfer") any shares of Common Stock, options or warrants to acquire shares
of Common Stock. Or securities exchangeable or exercisable for or convertible
into shares of Common Stock currently
<PAGE> 2
or hereafter owned either of record or beneficially (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended) by the undersigned (any
such shares or securities being hereinafter referred to as "Restricted
Securities"), or publicly announce the undersigned's intention to do any of the
foregoing, for a period commencing on the date hereof and continuing through the
close of trading on the date 180 days after the date of the final prospectus
relating to the Offering (the "Prospectus"). Furthermore, the undersigned also
agrees that, except for the conversion of shares of SSI common stock into shares
of common stock of the Company in the SSI Merger, the undersigned will not,
without the prior written consent of the Company (which consent may be withheld
in its sole discretion), directly or indirectly, Transfer any Restricted
Securities, or publicly announce the undersigned's intention to do so, for a
period commencing on the date hereof and continuing through the close of trading
on the date that is one year after the date of the Prospectus.
The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of any Restricted Securities held by the undersigned except in
compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives (i) any preemptive
rights that might otherwise be applicable to the shares of Common Stock to be
issued and sold by the Company in the Offering and (u) any registration rights
relating to registration under the Securities Act of 1933, as amended, of any
Common Stock owned either of record or beneficially by the undersigned,
including any rights to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives and assigns of the
undersigned and shall be for the benefit of the Company and the Underwriters.
WILLIAM E. HAYNES
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Printed Name of Holder
By: /S/ WILLIAM E. HAYNES
----------------------
Signature
- ------------------------------
Printed Name of Person Signing
(and indicate capacity of person
signing if signing as custodian,
trustee, or on behalf of an entity)
