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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
to
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
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CONRAIL INC.
(Name of Subject Company)
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CONRAIL INC.
(Name of Person(s) Filing Statement)
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Common Stock, par value $1.00 per share
(including the associated Common Stock Purchase Rights)
(Title of Class of Securities)
208368 10 0
(CUSIP Number of Class of Securities)
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Series A ESOP Convertible Junior Preferred Stock, without par value
(including the associated Common Stock Purchase Rights)
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
-----------------------------
James D. McGeehan
Corporate Secretary
Conrail Inc.
2001 Market Street
Two Commerce Square
Philadelphia, Pennsylvania 19101
(215) 209-4000
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
With a copy to:
Robert A. Kindler, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
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<PAGE>
INTRODUCTION
Conrail Inc. ("Conrail") hereby amends and supplements its
Solicitatio Recommendation Statement on Schedule 14D-9, originally
filed on December 6, 1996, and amended on December 12, 1996 and
December 20, 1996 (as amended, the "CSX Schedule 14D-9") with respect
to an offer by Green Acquisition Corp., a Pennsylvania corporation
("Purchaser") and a wholly owned subsidiary of CSX Corporation, a
Virginia corporation ("CSX"), to purchase up to an aggregate of
18,344,845 Shares of Conrail. Capitalized terms not defined herein
have the meanings assigned thereto in the CSX Schedule 14D-9.
Item 6. Recent Transactions and Intent with Respect to
Securities.
Item 6(a) of the Schedule 14D-9 is hereby amended by
amending and restating such item in its entirety as follows:
(a) During the past 60 days, neither Conrail nor any
subsidiary of Conrail has effected a transaction in the Shares. On
November 20, 1996, certain officers and directors tendered Shares
(including shares of Common Stock and Preferred Stock) to Purchaser in
the First Offer and on November 21, 1996, Purchaser purchased a
portion of such Shares equal to the announced proration factor of
23.45% at $110 per Share. Those transactions are set forth in the
table below.
Number of Number of
Number of Common Number of Preferred
Common Shares Preferred Shares
Shares purchased by Shares purchased by
Name and Title of tendered in Purchaser in tendered in Purchaser in
Officer or Director First Offer First Offer First Offer First Offer
- ------------------- ----------- ------------ ---------- ------------
David B. Lewis
Director 1,200 281 -- --
John C. Marous
Director 800 188 -- --
Raymond T. Schuler
Director 7,921 1,858 -- --
Lucy S. Amerman
Vice President
Risk Management -- -- 1,836 431
<PAGE>
Number of Number of
Number of Common Number of Preferred
Common Shares Preferred Shares
Shares purchased by Shares purchased by
Name and Title of tendered in Purchaser in tendered in Purchaser in
Officer or Director First Offer First Offer First Offer First Offer
- ------------------- ----------- ------------ ---------- ------------
Cynthia A. Archer
Senior Vice President
Intermodal 2,141 501 3,316 778
Dennis A. Arouca
Vice President
Labor Relations 5,107 1,197 2,375 557
Ronald J. Conway
Senior Vice President
Operations 253 59 2,441 572
Timothy P. Dwyer
Senior Vice President
Unit Trains 10,500 2,462 2,135 501
Gerald T. Gates
Vice President
Customer Support 2,947 691 2,065 484
Hugh J. Kiley
Vice President
Service Design &
Planning -- -- 1,912 448
David M. LeVan
Chairman, President &
CEO 30,062 7,050 2,523 592
Craig R. MacQueen
Vice President
Corporate
Communications 96 22 1,758 412
Donald W. Mattson
Vice President
Controller 5,126 1,202 2,380 558
Thomas J. McFadden
Treasurer -- -- 1,167 274
<PAGE>
Number of Number of
Number of Common Number of Preferred
Common Shares Preferred Shares
Shares purchased by Shares purchased by
Name and Title of tendered in Purchaser in tendered in Purchaser in
Officer or Director First Offer First Offer First Offer First Offer
- ------------------- ----------- ------------ ---------- ------------
John A. McKelvey
Vice President
Service Delivery 13,520 3,171 2,358 553
William B. Newman
Vice President
Government Affairs &
Washington Counsel 13,440 3,853 2,483 582
Frank H. Nichols
Senior Vice President
Organizational
Performance 4,996 1,172 2,271 533
Timothy T. O'Toole
Senior Vice President
Finance 4,592 1,078 2,272 533
Lester M. Passa
Vice President
Logistics & Corporate
Strategy -- -- 1,914 449
Albert M. Polinsky
Vice President
Information Systems 385 90 1,875 440
John P. Sammon
Senior Vice President
Core Service Group 5,254 1,232 2,146 503
John M. Samuels
Vice President
Operating Assets 3,745 879 2,340 549
George P. Turner
Senior Vice President
Automotive 1,108 260 2,179 511
<PAGE>
Number of Number of
Number of Common Number of Preferred
Common Shares Preferred Shares
Shares purchased by Shares purchased by
Name and Title of tendered in Purchaser in tendered in Purchaser in
Officer or Director First Offer First Offer First Offer First Offer
- ------------------- ----------- ------------ ---------- ------------
Bruce B. Wilson
Senior Vice President
Law 33,253 7,798 2,494 585
In addition, during the past 60 days, certain of the
foregoing officers exercised stock options and shmultaneously with
such exercise sold a portion of the newly issued Shares in the market.
Those transactions are tabulated below.
Date of Number of Stock Number of Shares
Officer Transaction Options Exercised Sold/Sale Price
------- ----------- ------------------ ---------------
Cynthia A. Archer 11/19/96 11,438 5,990/$95.9050
3,307/$95.8080
Dennis A. Arouca 11/19/96 15,510 11,132/$95.9050
Timothy P. Dwyer 11/19/96 30,500 21,705/$95.9050
Gerald T. Gates 11/18/96 16,875 9,375/$96.2750
5,695/$95.8180
Hugh J. Kiley 11/19/96 1,950 1,950/$95.9250
John A. McKelvey 11/19/96 5,332 5,332/$96.0000
William B. Newman 11/20/96 30,400 17,875/$95.8180
John M. Samuels 11/19/96 9,375 6,818/$95.9050
Bruce B. Wilson 11/18/96 65,716 41,302/$95.9150
On November 19, 1996, Mr. Kiley sold an additional 63.52
Shares at $95.9250 per Share. On December 27, 1996, Mr. McKelvey
disposed of 40 Shares in a charitable donation.
<PAGE>
Item 8. Additional Information to be Furnished.
Item 8 of the CSX Schedule 14D-9 is hereby amended and
supplemented by adding the following text at the end thereof:
On December 10, 1996 and December 12, 1996, Conrail and CSX
published advertisements, copies of which are attached hereto as
Exhibits (a)(14) and (a)(15), respectively, and are incorporated
herein by reference.
On December 27, 1996, Norfolk filed a Petition for
Declaratory Order with the Surface Transportation Board (the "STB"),
claiming that certain provisions of the Second Amendment constitute an
unauthorized acquisition of control by CSX over Conrail. In such
petition, Norfolk requests that the STB take expedited action to issue
a declaratory order that certain provisions of the Merger Agreement
are void and unenforceable. In the event that a decision cannot be
reached substantially before January 17, 1997, Norfolk requests that
the STB issue a temporary cease and desist order barring Conrail from
holding the Pennsylvania Special Meeting on January 17, 1997 or
barring CSX from requiring the trustee of the Voting Trust to vote any
Shares of Conrail held in the Voting Trust in favor of opting out of
Subchapter E or in favor of the Merger until the STB is able to
decide.
On December 30, 1996, each of Conrail and CSX filed an
interim reply with the STB opposing Norfolk Southern's request for
interim coercive relief.
On January 2, 1997, CSX and Purchaser, through the Voting
Trust, sold 85,000 shares of Common Stock (with proxies for the
Pennsylvania Special Meeting) through brokerage transactions on the
New York Stock Exchange. 3,500 of such shares of Common Stock were
sold at $99 1/8 per share of Common Stock; 66,500 of such shares of
Common Stock were sold at $99 per share of Common Stock; and 15,000 of
such shares of Common Stock were sold at $98 7/8 per share of Common
Stock. CSX has stated that such transactions were effected through
Wasserstein Perrella Co., Inc., the dealer manager for the Offer, who
will receive normal and customary brokerage commissions in connection
therewith. While CSX and Conrail continue to believe that the claims
of Norfolk and the shareholder plaintiffs in the pending litigation
brought by such parties are without
<PAGE>
merit, such transactions were effected to moot certain contentions in
such litigation that shares of Common Stock owned by CSX should be
aggregated with shares of Common Stock owned by directors and certain
officers of Conrail for purposes of the PBCL.
Item 9. Materials to be filed as Exhibits.
Item 9 of the CSX Schedule 14D-9 is hereby amended and
supplemented by adding the following text thereto:
(a)(14) Text of advertisement published by Conrail and CSX on
December 10, 1996.
(a)(15) Text of advertisement published by Conrail and CSX on
December 12, 1996.
<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.
CONRAIL INC.
By /s/ Timothy T. O'Toole
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Name: Timothy T. O'Toole
Title: Senior Vice President--Finance
Dated as of January 3, 1997
<PAGE>
EXHIBIT INDEX
Exhibit Description Page No.
- ------- ----------- --------
*(a)(1) Offer to Purchase dated December 6, 1996
(incorporated by reference to Exhibit (a)(1) to
CSX's and Purchaser's Tender Offer Statement on
Schedule 14D-1 dated December 6, 1996, as
amended (the "CSX 14D-1")).........................
*(a)(2) Letter of Transmittal (incorporated by reference
to Exhibit (a)(2) to the CSX
14D-1).............................................
*(a)(3) Text of press release issued by CSX dated
December 6, 1996 (incorporated by reference to
Exhibit (a)(7) to the CSX 14D-1)...................
*(a)(4) Letter to shareholders of Conrail dated December
6, 1996............................................
*(a)(5) Form of Summary Advertisement dated December 6,
1996 (incorporated by reference to Exhibit
(a)(5) to the CSX 14D-1)...........................
*(a)(6) Opinion of Lazard Freres & Co. LLC (incorporated
by reference to Exhibit (a)(14) to the
Solicitatio Recommendation Statement on Schedule
14D-9 of Conrail dated October 16, 1996, as
amended, relating to the First Offer (the "First
14D-9"))...........................................
*(a)(7) Opinion of Morgan Stanley & Co. Incorporated
(incorporated by reference to Exhibit (a)(15) to
the First 14D-9)...................................
*(a)(8) Text of press release issued by Conrail and CSX
dated December 10, 1996............................
*(a)(9) Opinion of Lazard Freres & Co. LLC dated
December 18, 1996..................................
*(a)(10) Opinion of Morgan Stanley & Co. Incorporated
dated December 18, 1996............................
*(a)(11) Supplement to the Offer to Purchase dated
December 19, 1996 (incorporated by reference to
Exhibit (a)(15) to the 14D-1)......................
*(a)(12) Text of press release issued by CSX and Conrail
dated December 19, 1996............................
<PAGE>
Exhibit Description Page No.
- ------- ----------- --------
*(a)(13) Text of press release issued by Conrail dated
December 20, 1996..................................
(a)(14) Text of advertisement published by Conrail and
CSX on December 10, 1996...........................
(a)(15) Text of advertisement published by Conrail and
CSX on December 12, 1996...........................
(b) Not applicable.....................................
*(c)(1) Agreement and Plan of Merger dated as of October
14, 1996 (incorporated by reference to Exhibit
(c)(1) to CSX's and Purchaser's Tender Offer
Statement on Schedule 14D-1 dated October 16,
1996, as amended, relating to the First Offer
(the "First CSX 14D-1"))...........................
*(c)(2) First Amendment to Agreement and Plan of Merger
dated as of November 5, 1996 (incorporated by
reference to Exhibit (c)(7) to the First CSX
14D-1).............................................
*(c)(3) Conrail Stock Option Agreement dated as of
October 14, 1996 (incorporated by reference to
Exhibit (c)(2) to the First CSX 14D-1).............
*(c)(4) CSX Stock Option Agreement dated as of October
14, 1996 (incorporated by reference to Exhibit
(c)(3) to the First CSX 14D-1).....................
*(c)(5) Voting Trust Agreement dated as of October 15,
1996 (incorporated by reference to Exhibit
(c)(4) to the First CSX 14D-1).....................
*(c)(6) Employment Agreement of Mr. LeVan dated as of
October 14, 1996 (incorporated by reference to
Exhibit (c)(5) to the First 14D-9).................
*(c)(7) Change of Control Agreement of Mr. LeVan dated
as of October 14, 1996 (incorporated by
reference to Exhibit (c)(6) to the First
14D-9).............................................
<PAGE>
Exhibit Description Page No.
- ------- ----------- --------
*(c)(8) Answer and Defenses of Conrail, CSX and the
individual defendants to Second Amended
Complaint, and Counterclaim of Conrail and CSX
in Norfolk Southern et al. v. Conrail Inc. et
al., filed on December 5, 1996, in the United
States District Court for the Eastern District
of Pennsylvania (incorporated by reference to
Exhibit (c)(8) to the Solicitatio Recommendation
Statement on Schedule 14D-9 of Conrail dated
November 6, 1996, as amended, relating to the
Norfolk Offer).....................................
*(c)(9) Pages 4-5 and 9-14 of Conrail's Proxy Statement
dated April 3, 1996 (incorporated by reference
to Exhibit (c)(7) to the First 14D-9)..............
*(c)(10) Second Amendment to Agreement and Plan of Merger
dated as of December 18, 1996 (incorporated by
reference to Exhibit (c)(6) to the 14D-1)..........
*(c)(11) Form of Amended and Restated Voting Trust
Agreement (incorporated by reference to Exhibit
(c)(7) to the 14D-1)...............................
- ---------------------
* Previously filed
EXHIBIT (a)(14)
[Advertisement]
You Can't Take Norfork Southern
To Get To The Truth.
Their Lines Don't Go There.
They say desperate people take desperate measures. Which is why
Norfolk Southern is trying to inspire fear by not being honest about
the proposed Conrail-CSX merger.
The fact is, the Conrail-CSX merger is about a marriage of
equals, not a hostile takeover. About more competition, not less.
About increasing choices for shippers, not decreasing them. About
opening more markets, not closing them. Most of all, it's about more
business and more job opportunities.
The Conrail-CSX merger is about truth--not scare tactics,
intellectual dishonesty, empty promises and analytical double-talk.
The truth is:
o The Conrail-CSX merger of equals is about commitment and strong
roles for all the constituents of both companies, including
Conrail's employees. Conrail and CSX take great pride in the
positive relationships they have with their employees.
o Only Conrail and CSX have committed to protecting employee
interests by creating a board composed of equal number of
directors from both companies; a succession plan that insures
their representation among management; and to locating the
corporate headquarters of the new company in Philadelphia.
o The Conrail and CSX pension plans--if combined--would have more
than $100 million in excess assets, based on the latest published
data.
o Conrail and CSX have committed to make arrangements to grant
fair and reasonable railroad access to ensure NO reduction in
competition.
o CSX is a safe...very safe railroad. The CSX train accident rate
is the lowest of all Class I railroads. And, Conrail's rate of
improvement is among the best in the industry, and it has the
lowest number of crossing accidents of all Class I railroads.
<PAGE>
That doesn't mean we are satisfied with our safety records; but
it does mean our safety programs successfully focus not only on
the well-being of our employees, but also on safely meeting the
needs of our customers and the communities we serve.
Here's the bottom line:
The Conrail-CSX combination has the resources to spur
unprecedented growth. In options for shippers. In opportunities for
employees. In benefits for everyone. And those are the real facts!
[Conrail logo] [CSX logo]
CARRYING AMERICA INTO THE FUTURE
CSX is not soliciting, and this advertisement does not constitute a
solicitation of, any proxy, vote or consent as to any matter. In
addition, this advertisement does not constitute an offer to sell or
buy, or the solicitation of an offer to sell or buy, any securities.
EXHIBIT (a)(15)
[Advertisement]
Yes, I want to be part of one of the world's leading freight companies.
Yes, I want what's best for America's economy.
Yes, I want to have better access to global markets.
Yes, I want to do what's best for the environment.
Yes, I want railroads to be more competitive with trucks.
Yes, I want to have less congestion on the nation's highways.
Yes, I want to have more direct and efficient railroads.
Yes, I want to invest in America's future.
Yes, I support the merger of Conrail and CSX.
[Conrail logo] [CSX logo]
CARRYING AMERICA INTO THE FUTURE
CSX is not soliciting, and this advertisement does not constitute a
solicitation of, any proxy, vote or consent as to any matter. In
addition, this advertisement does not constitute an offer to sell or
buy, or the solicitation of an offer to sell or buy, any securities.
