SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 18, 1998
Alamo Group Inc.
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(Exact name of Registrant as specified in its charter)
Delaware 0-21220 74-1621248
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1502 E. Walnut, Seguin, Texas 78155
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (830) 379-1480
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(Former address, if changed since last
report.)
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Item 5. Other Events
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At a Special Meeting of Stockholders held on November 18, 1998, the
Stockholders of Alamo Group Inc. (the "Company") adopted the Amended and
Restated Agreement and Plan of Merger dated as of September 4, 1998 among
The Company, WEC Company and AGI Acquisition Corp. (the "Merger
Agreement"). Of 8,628,501 votes cast, 8,303,758 were votes in favor of
adopting the Merger Agreement.
A press release dated November 19, 1998 is attached hereto as
exhibit 99.1. On November 18, 1998 and November 19, 1998, the Company
received letters relating to the Merger Agreement from WEC Company. On
November 20, 1998 the Company delivered a letter to WEC Company in
response to such correspondence. These letters are attached hereto as
exhibits 99.2, 99.3 and 99.4.
<PAGE>
Item 7(c). Exhibits
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Exhibit
Number Description
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99.1 Press Release dated November 19, 1998
99.2 Letter dated November 17, 1998 from WEC Company to the Company
99.3 Letter dated November 18, 1998 from WEC Company to the Company
99.4. Letter dated November 20, 1998 from the Company to WEC Company
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
ALAMO GROUP INC.
(Registrant)
By: /s/ Jim A. Smith
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Name: Jim A. Smith
Title: Executive Vice President
and Chief Financial Officer
Dated: November 20, 1998
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ALAMO GROUP INC.
EXHIBITS
TO CURRENT REPORT ON
FORM 8-K DATED November 2, 1998
Commission File Number 0-21220
<PAGE>
Exhibit Index
Exhibit
Number Description
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99.1 Press Release dated November 19, 1998
99.2 Letter dated November 17, 1998 from WEC Company to the Company
99.3 Letter dated November 18, 1998 from WEC Company to the Company
99.4 Letter dated November 20, 1998 from the Company to WEC Company
Exhibit 99.1
For: Alamo Group Inc.
Contact: Donald J. Douglass
Chairman and Chief Executive Officer
210-738-1339 or 203-966-0621
Jim A. Smith
Executive Vice President, Chief Financial
Officer
830-372-9618
For Immediate Release
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Morgen-Walke Associates:
June Filingeri/Jennifer Angell
Media Contact: Merridith Ingram/Eileen King
212-850-5600
ALAMO GROUP INC. STOCKHOLDERS APPROVE MERGER
WITH WOODS EQUIPMENT COMPANY SUBSIDIARY;
RECEIVES SUBSEQUENT LETTER FROM WOODS EQUIPMENT COMPANY
SEGUIN, Texas, November 19, 1998 - Alamo Group Inc. (NYSE:ALG)
announced today that at a Special Stockholders' Meeting held yesterday, its
stockholders approved the previously announced merger agreement between the
Company, WEC Company and AGI Acquisition Corp. WEC and AGI are subsidiaries of
privately held Woods Equipment Company. Alamo stockholders representing
approximately 85 percent of the shares outstanding voted in favor of the merger
agreement, which represents 96 percent of the votes cast.
The transaction is not expected to close until the first quarter of
next year and remains subject to the satisfaction of various conditions,
including the absence of any condition or material adverse change in the
financial or capital markets generally that would reasonably be expected to have
a material adverse effect on the syndication of leveraged bank credit facilities
or the consummation of high yield debt offerings. Based on current market
conditions and after discussions with its financial advisor in the merger, Alamo
believes that this condition is satisfied as of today. WEC disputes this view.
Another condition to closing that must be satisfied is the absence of
certain changes or events that would reasonably be expected to have a material
adverse effect on the Company. On November 18, after the adjournment of the
Special Stockholders' Meeting, the Company received a letter from WEC dated
November 17, in which WEC stated that "the numbers Alamo provided to WEC the
last several days clearly demonstrate that the material adverse effect condition
would ... not be currently satisfied, if WEC were required to make that
determination today." In addition to Alamo's previously reported results of
operations for its third quarter of 1998, the Company has also provided WEC with
certain financial estimates regarding the full year of 1998. These estimates
indicate that results for the full year 1998 will not achieve levels comparable
to those for the full year of 1997. This is based on the 1998 nine-months
results reported November 2, 1998 and the expectation of reduced shipments in
American operations in the fourth quarter. The Company noted, however, that it
does not believe that this decline is a reflection of any material adverse
effect on the Company or its prospects but rather a consequence of the innate
cyclicality of the agricultural industry, the effect of which has been
exacerbated by the severe drought in the areas which constitute the Company's
significant markets. Further, the Company's financial condition and prospects
remain on the same solid footing that existed a year ago and at the time the
merger agreement was signed, notwithstanding the impact of the cyclical decline
and drought referred to above. Accordingly, Alamo continues to believe that all
parties to the merger agreement are required to proceed towards consummating the
merger.
Alamo Group is a leader in the design, manufacture and distribution of
heavy duty, tractor-mounted mowing and vegetation maintenance equipment in
America and Europe. The Company has 1,088 employees in the U.S. and 352 in
Europe, and operates twelve manufacturing facilities. The corporate offices of
Alamo Group Inc. are located in Seguin, Texas, near San Antonio, and the
headquarters for its European operations is located in Salford Priors, England,
near Birmingham.
This release contains forward looking statements that are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward looking statements involve known and unknown risks and
uncertainties which may cause the Company's actual results in future periods to
differ materially from forecasted results. Among those factors which could cause
actual results to differ materially are the following: market demand, market
softness, competition, weather, seasonality, currency-related issues, and other
risk factors listed from time to time in the Company's SEC reports. The Company
does not undertake any obligation to update the information contained herein,
which speaks only as of this date.
# # #
Exhibit 99.2
WEC Company
November 17, 1998
Mr. Donald J. Douglass
Chief Executive Officer
Alamo Group Inc.
750 East Mulberry Street
Suite 401
San Antonio, Texas 78212
Dear Don:
As we have been discussing since Friday, WEC is concerned
about the condition of Alamo's business. The third quarter and year-to-date
results, preliminary revenue estimates for October and the revenue projections
for November and December that Alamo provided to WEC over the last two weeks
paint a bleak picture and are a far cry from the projections the Company gave to
WEC last August or even as recently as early October.
In Alamo's letter of October 21, you acknowledged that the
capital markets condition to WEC's obligation to close is not currently
satisfied, but asserted that no events have taken place that could reasonably be
expected to have a material adverse effect on the business, assets, financial
condition, value or prospects or results of operations of Alamo. Alamo's
compliance with this "no material adverse effect condition" will not, as a
practical matter, become relevant unless the capital markets improve
sufficiently to satisfy the capital markets condition before our merger
agreement terminates on January 31, 1999. While there is no assurance that
capital markets will sufficiently improve for the material adverse effect
condition to become an issue between us, the numbers Alamo provided to WEC the
last several days clearly demonstrate that the material adverse effect condition
would also not be currently satisfied, if WEC were required to make that
determination today. For example:
o Before WEC signed the merger agreement, Alamo projected its 1998 EBITDA
(excluding Rhino International) would be $32 million (or more than $34
million after certain adjustments). Although Alamo has not provided WEC
with updated EBITDA projections for the fourth quarter or the full
year, we infer from the data provided to us that Alamo's EBITDA
(excluding Rhino International) for the fourth quarter could be as low
as $2 million, missing EBITDA projections for the fourth quarter given
to WEC as recently as early October by 50% or more. For the full year,
it now appears that EBITDA (excluding Rhino International) could be as
low as $25 million, a shortfall of 21% from the projections given to us
before signing the merger agreement and well below the projections
given to us in early October.
o Backlog has also continued to fall sharply. At the end of September,
backlog levels were 24% lower than last year and, at the end of October
backlogs were 34% lower than last year.
WEC remains willing to wait to see if circumstances improve
sufficiently to complete the merger, but, when our two companies signed the
merger agreement, you asked for my commitment that, if "the deal ever took a
left turn," I should come to you to work out a solution that would enable the
deal to go forward on a mutually satisfactory basis. Based on that commitment, I
said to you last Friday and I suggest again that it is time for you and me to
sit down and discuss the impact of these events.
Very truly yours,
WEC Company
By: /s/ Paul Wood
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Chairman
cc: Joe Armbrust, Brown & Wood LLP
Paul Stefanick, Merrill Lynch
Exhibit 99.3
WEC Company
November 18, 1998
Mr. Donald J. Douglass
Chief Executive Officer
Alamo Group Inc.
750 East Mulberry Street
Suite 401
San Antonio, Texas 78212
Dear Don:
You have asked to review your draft press release.
Unless Alamo's performance substantially improves, WEC firmly
believes that Alamo will not be able to satisfy the "material adverse effect"
condition before the merger agreement terminates. In particular, the draft press
release's statement that the decline at the company is not a "material adverse
effect" but "rather a consequence of the innate cyclicality of the agricultural
industry" is misleading in at least two ways. First, any decline in the
agricultural industry, whether labeled cyclical or not, that materially and
adversely affects Alamo's financial condition, value, results and prospects
clearly constitutes a "material adverse effect" under the contract. Second, your
statement underplays the seriousness of the results and projections of which WEC
has learned since the merger agreement was executed, which show that Alamo's
condition, prospects and value are materially worse than a year ago and
materially worse than the projections and forecasts made before and since the
time of the merger agreement.
Many of our additional concerns about the statements in your
draft release are articulated in WEC's November 17 letter. Since you have told
us that you intend promptly to file the November 17 letter attached to a Form
8-K and thereby put it into the public domain, we request that you attach the
November 17 letter and this letter to the press release or incorporate the
substance of the letters into the press release.
<PAGE>
In addition, the draft release's statement that "after the
adjournment of the special meeting [of Alamo's shareholders on November 18], the
Company received a letter from WEC dated November 17" is misleading with regard
to the circumstances surrounding transmittal of WEC's November 17 letter to you.
First, the letter merely reflects the substance of several conversations I and
other representatives of WEC had with you and Alamo's representatives from
Friday, November 13, 1998, through Tuesday, November 17, 1998. Second, our fax
confirmations demonstrate that the fax was successfully delivered to your office
on November 17, 1998 at 5:40 p.m., to Merrill Lynch on November 17, 1998 at 5:44
p.m. and to Brown & Wood on November 17, 1998 at 5:48 p.m.
Chicago time.
Very truly yours,
WEC Company
By: /s/ Paul Wood by RWP
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Chairman
cc: Joe Armbrust, Brown & Wood LLP
Paul Stefanick, Merrill Lynch
Exhibit 99.4
November 20, 1998
Mr. Paul Wood
WEC Company
Madison Dearborn Partners, Inc.
Three First National Plaza
Chicago, IL 60602
Dear Paul:
With respect to your letters dated November 17 and November 18, 1998,
we have several observations. First, as you well know, Alamo's decline in
results for the first nine months of 1998 as compared with 1997 is
attributable primarily to the Rhino International settlement (which you
supported and to which WEC formally consented), this past summer's severe
drought in the South and Southwest and the onset of a cyclical decline (as
opposed to a decline that would be anticipated to have long-term effects) in
the agricultural industry, which occurs from time to time and is a normal and
expected cost of doing business in the agricultural equipment industry. These
events have not had a material adverse effect on Alamo's financial condition,
value, results or prospects.
We agree that actual results have fallen short of projections that we
have delivered to you before and since the date of the Merger Agreement.
However, as you must recall, you and your counsel requested several times
during the course of negotiations that Alamo make certain representations and
warranties concerning projections. We refused to do so on the basis that, as
we told you then, projections are speculative and subject to inherent
uncertainty. A shortfall in actual results versus projections, as to which we
made no warranty, does not demonstrate the existence of a material adverse
effect on anything.
For the record, I did not receive your letter of November 17 and
still have not received it. I received a fax from Brown & Wood LLP at 10:49
a.m. on November 18 while we were in the directors meeting after the special
shareholders meeting.
<PAGE>
Although your correspondence reflects an intent to avoid your
contractual obligations, we are of the view that we have a firm merger
agreement that requires all parties to work towards closing.
Very truly yours,
ALAMO GROUP INC.
/s/ Donald Douglass by JAS
Donald J. Douglass
Chairman
