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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-3/A
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
(Amendment No. 1)
HILITE INDUSTRIES, INC.
(NAME OF ISSUER)
HILITE INDUSTRIES, INC. SAMUEL M. BERRY
HILITE HOLDINGS, LLC CHRIS A. CURTO
HILITE MERGECO, INC. ARTHUR D. JOHNSON
JAMES E. LINEBERGER, JR. TRUST RONALD E. REINKE
GEOFFREY S. LINEBERGER TRUST DONALD M. MAHER
CHRISTOPHER LINEBERGER TRUST WILLIE VERCHER
THE BRADY FAMILY LIMITED PARTNERSHIP DR. KRISHNAMURTHY SUNDARARAJAN
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
431353 10 1
(CUSIP NUMBER OF CLASS OF SECURITIES)
Samuel M. Berry
President and Chief Operating Officer
Hilite Industries, Inc.
1671 S. Broadway
Carrollton, Texas 75006
(972) 242-2116
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
With Copies to:
Edward R. Mandell, Esq. Christopher M. Kelly, Esq.
Jordan A. Horvath, Esq. Patrick J. Leddy, Esq.
Parker Chapin Flattau & Klimpl, LLP Jones, Day, Reavis & Pogue
1211 Avenue of the Americas 901 Lakeside Avenue
New York, New York 10036 Cleveland, Ohio 44114
(212) 704-6000 (216) 586-3939
This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c)
under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the
Securities Act of 1933.
c. [X] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [ ]
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
$71,537,850 $14,308
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*For purposes of calculating fee only. This transaction applies to an aggregate
of 5,020,000 shares (sum of (i) 4,900,000 outstanding shares of common stock of
Hilite Industries, Inc. and (ii) 120,200 outstanding options to purchase shares
of common stock of Hilite Industries, Inc.).
Except as otherwise noted, the per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 is $14.25 per unit.
The proposed maximum aggregate value of transaction is $71,537,850.
The total fee is $14,308 paid by wire transfer on April 30, 1999 to the
designated lockbox depository maintained by the Commission at Mellon Bank. The
amount of the filing fee, calculated in accordance with Rule 0-11 promulgated
under the Securities Exchange Act of 1934, as amended, equals 1/50 of one
percent of the Common Stock to be acquired.
[x] 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: $14,308
Form or Registration No.: Schedule 13E-4
Filing Party: Hilite Industries, Inc.
Date Filed: May 3, 1999
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INTRODUCTION
This Amendment No. 1 to the Rule 13e-3 Transaction Statement (the
"Statement") on Schedule 13E-3 (the "Schedule 13E-3") is being filed by Hilite
Industries, Inc., a Delaware corporation (the "Company"), Hilite Holdings, LLC,
a Delaware limited liability company, Hilite Mergeco, Inc., a Delaware
corporation, the James E. Lineberger, Jr. Trust, the Geoffry S. Lineberger
Trust, the Christopher Lineberger Trust, The Brady Family Limited Partnership,
Samuel M. Berry, Chris A. Curto, Arthur D. Johnson, Ronald E. Reinke, Donald M.
Maher, Willie Vercher and Dr. Krishnamurthy Sundararajan, pursuant to Section
13(e) of the Securities Exchange Act of 1934, as amended, and Rule 13e-3
thereunder in connection with the tender offer by the Company for all the issued
and outstanding shares of its common stock, $0.01 par value per share (the
"Shares"), upon the terms and subject to the conditions set forth in the Offer
to Purchase dated May 3, 1999 (the "Offer to Purchase") and the related Letter
of Transmittal (which together constitute the "Offer"), copies of which were
attached to the Statement as Exhibits (d)(1) and (d)(2), respectively. The
Statement was initially filed with the Securities and Exchange Commission on May
3, 1999.
Capitalized terms used but not defined herein have the meanings
ascribed to such terms in the Offer to Purchase and the Statement.
ITEM 2. IDENTITY AND BACKGROUND.
Item 2(a)-(g) is being amended and supplemented by the following:
The following paragraph is hereby added after the second paragraph on
page 43 under "THE TENDER OFFER -- 15. Certain Information Concerning Buyer and
Merger Subsidiary" contained in the Offer to Purchase:
"Buyer was formed pursuant to an investment program among
Carreras, Kestner & Co., L.L.C., Carreras, Kestner Investors, L.L.C.,
Citicorp Venture Capital Corporation, Key Equity Capital
Corporation/Key Equity Partners 99 and Kelso & Company, L.P. Each
investor is a member of Buyer. Carreras, Kestner & Co., L.L.C., as the
manager of the investment program, was responsible for finding,
structuring, negotiating and causing Buyer to enter into the Merger
Agreement after receiving approval of the Transactions from an
investment board comprised of designees of the investors. The role of
the members of Buyer other than Carreras, Kestner & Co., L.L.C. in
connection with the Transactions has been, and will continue to be,
limited to funding their respective capital commitments with respect to
the equity portion of the financing."
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
Item 3(a)-(b) is hereby amended and restated by replacing the word
"proposals" with the word "presentations" in each place that is appears in the
first paragraph on page 4 under "SPECIAL FACTORS -- Background of the
Transaction" contained in the Offer to Purchase.
ITEM 4. TERMS OF THE TRANSACTION.
Item 4(a) is hereby amended and supplemented by the following:
The following two paragraphs are hereby added as the final two
paragraphs under "SPECIAL FACTORS -- Purposes and Reasons of the Company for the
Transactions" contained in the Offer to Purchase:
"The structure of the Transactions was the result of extensive
negotiations between Buyer and the Company. In connection with such
negotiations, Buyer indicated its desire to structure the Transactions
to qualify for recapitalization accounting. In order to induce Buyer to
proceed with the Transactions and to provide the Company's stockholders
with the benefits of Buyer's offer for the Company, the Company
ultimately agreed to proceed based on Buyer's proposed structure.
The Board of Directors decided to pursue the Transactions at
this time because of (i) the anticipated impact of certain trends
affecting the Company and its business, including automotive supplier
consolidation and the increasing importance of size and global presence
for continuous growth, (ii) the perceived undervaluation of the Shares
in the market, and (iii) the lack of liquidity for the Shares and the
determination that a private sale of the Company would likely provide
substantially greater value to the Company's stockholders than could be
obtained through the public market."
Item 4(a)-(b) is hereby amended and restated to incorporate by
reference the amendment to Item 3(a)-(b) set forth above.
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ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
Item 5(a)-(g) is hereby amended and supplemented to incorporate by
reference the amendments to Item 3(a)-(b) and Item 4(a) set forth above.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
Item 7(a) and (c) are hereby amended and restated to incorporate by
reference the amendments to Item 3(a)-(b)set forth above, and amended and
supplemented to incorporate by reference the amendments to Item 4(a) set forth
above.
Item 7(b) is hereby amended and supplemented by the following:
The following two paragraphs are hereby added after the first full
paragraph on page 8 of the Offer to Purchase under "SPECIAL FACTORS --
Recommendation of the Disinterested Directors and the Board; Fairness of the
Transactions":
"The Board and the Disinterested Directors determined that it
was not necessary to appoint a committee of independent directors or an
unaffiliated representative to act solely on behalf of the unaffiliated
stockholders of the Company for the purpose of negotiating the terms of
the Merger Agreement. In making such determination, the Board and the
Disinterested Directors carefully considered the fact that proposals to
acquire the Company were solicited on behalf of the Company prior to
any consideration of whether any stockholders would retain an equity
interest in the Surviving Corporation, and noted that the Disinterested
Directors are not employed by the Company and will have no financial
interest in the Company following consummation of the Merger. The
Disinterested Directors were given an opportunity to separately meet
with Bowles Hollowell and legal counsel and evaluate the fairness of
the Transactions to unaffiliated stockholders. Thereafter, all of the
Directors, including the Disinterested Directors, voted to approve the
Transactions.
In connection with its deliberations, the Board did not
consider, and did not request that Bowles Hollowell evaluate the
Company's liquidation value. The Board did not view the Company's
liquidation value to be a relevant measure of valuation, given that the
Offer Price significantly exceeded the book value per Share of the
Company, and it was the Board's view that the Company is more valuable
as a going concern than its net book value per Share. However, there
can be no assurance that the liquidation value would not produce a
higher valuation of the Company than its value as a going concern."
In addition, clause (i) in the subsection entitled Recommendation of
Disinterested Directors and the Board under "SPECIAL FACTORS -- Recommendation
of the Disinterested Directors and the Board; Fairness of the Transactions"
contained in the Offer to Purchase is hereby amended and restated to read in its
entirety as follows:
"(i) determined that the Offer and the Merger are fair to,
and in the best interests of, the stockholders of the
Company, whether affiliated or unaffiliated,"
Item 7(a), (c) and (d) are hereby amended and supplemented by the
following:
The following paragraph is hereby added as the final paragraph under
"SPECIAL FACTORS - Plans for the Company after the Transactions; Certain Effects
of the Transactions" contained in the Offer to Purchase:
"Additionally, the stockholders (other than the Continuing
Stockholders with respect to the retained Shares) will receive a
premium for their Shares above the all-time high trading price of the
stock, based upon historical share price data."
ITEM 8. FAIRNESS OF THE TRANSACTION.
Item 8(a)-(e) is hereby amended and supplemented by the following:
The last sentence of the subsection entitled Analysis of Selected
Public Company Trading and Financial Information under "SPECIAL FACTORS --
Opinion of Bowles Hollowell" contained in the Offer to Purchase is hereby
amended and restated to read in its entirety as follows:
"This analysis indicated multiples for the Selected Companies
of latest 12 months and estimated calendar 1999 EPS of 8.3x to 17.6x
(with a median of 13.5x) and 7.2x to 11.5x (with a median of 8.9x),
respectively, and latest 12 months revenues, EBIT and EBITDA of 0.6x to
1.7x (with a median of 0.9x), 8.2x to 12.2x (with a median of 10.0x)
and 4.7x to 8.6x (with a median of 6.3x), respectively. Implied
multiples for the Company
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based on the Offer Price of latest 12 months and estimated calendar
1999 EPS of 13.8x (based on latest 12 months EPS), 13.4x (based on
calendar 1999 EPS estimates as reported by First Call), respectively,
and latest 12 months revenues, EBIT and EBITDA of 1.0x, 9.7x and 6.8x,
respectively, compare favorably with the preceding multiples for the
Selected Companies. Although the implied multiple of EBIT is slightly
below the median EBIT multiple of the Selected Companies, the implied
multiple is well within the range of multiples for the Selected
Companies. Furthermore, Bowles Hollowell believes that implied
multiples of the Company based on the Offer Price compare favorably
with the multiples of the Selected Companies given the relatively small
size of the Company (market capitalization of $53.1 million) compared
to the Selected Companies (market capitalization ranging from $55.2
million to $7.8 billion, with a median of $651.1 million). Bowles
Hollowell believes its analysis of the Selected Companies supports its
conclusion as to the fairness of the Offer Price from a financial point
of view."
The last three sentences of the subsection entitled Analysis of
Selected Merger and Acquisition Transactions under "SPECIAL FACTORS -- Opinion
of Bowles Hollowell" contained in the Offer to Purchase are hereby amended and
restated to read in their entirety as follows:
"Implied multiples for the Company based on the Offer Price of
latest 12 months EPS revenues, EBIT, and EBITDA of 13.8x, 1.0x, 9.7x,
and 6.8x, respectively, compare favorably with the preceding multiples
for the Selected Merger and Acquisition Transactions. Bowles Hollowell
also compared the premiums paid in the Selected Merger and Acquisition
Transactions with the premium payable in the Transactions. The premiums
paid in the Selected Merger and Acquisition Transactions, based on the
target company's closing stock price 30 days prior to public
announcement of such transaction, were 5.3% to 78.1% (with a median of
40.5%). The premium payable in the Offer and the Merger, based on the
closing stock price of the Shares 30 days prior to the Board meeting
held on April 22, 1999 to evaluate the proposed Transactions, was
39.0%. Although the implied multiples of latest 12 months EPS and EBIT
and the premium payable are slightly below the median comparable
multiples of premium paid of the Selected Merger and Acquisition
Transactions, the implied multiples and premium payable are well within
the range of multiples and premiums paid of the Selected Merger and
Acquisition Transactions. Furthermore, Bowles Hollowell believes the
implied multiples and premium payable compare favorably to the Selected
Merger and Acquisition Transactions multiples and premiums paid given
the Company's small size (enterprise value of $69.1 million) compared
to the Selected Merger and Acquisition Transactions (enterprise value
ranging from $17.5 million to $6.6 billion, with a median of $110.0
million). Bowles Hollowell believes its analysis of Selected Merger and
Acquisition Transactions supports its conclusion as to the fairness of
the Offer Price from a financial point of view."
In addition, Item 8(a)-(e) is hereby amended and supplemented to
incorporate by reference the amendments to Item 7(b) set forth above, and Item
8(a)-(f) is hereby amended and restated to incorporate by reference the
amendments to Item 3(a)-(b) set forth above.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
Item 9(a)-(c) is hereby amended and restated to incorporate by
reference the amendments to Item 3(a)-(b) set forth above and amended and
supplemented to incorporate by reference the amendments to Items 7(b) and
8(a)-(e) set forth above.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
Item 12(a)-(b) is hereby amended and restated to incorporate by
reference the amendments to Item 3(a)-(b) set forth above and amended and
supplemented to incorporate by reference the amendments to Item 7(b) set forth
above.
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ITEM 14. FINANCIAL INFORMATION.
Item 14(a) is hereby amended and supplemented by the following:
The first sentence under "THE TENDER OFFER -- Section 9. Summary
Historical Financial Information" contained in the Offer to Purchase is hereby
amended and restated to read in its entirety as follows:
"The following table sets forth selected consolidated
financial data with respect to the Company for each of the five years
as of and for the years ended June 30, 1998 and should be read in
conjunction with the audited financial statements (including the
related notes thereto) included as Schedule IV to the Offer to
Purchase."
Furthermore, the following information regarding book value per Share
is hereby added after the last sentence under "THE TENDER OFFER -- Section 9.
Summary Historical Financial Information" contained in the Offer to Purchase:
"Shareholders' equity per share was $6.14 at March 31, 1999, compared
to $5.34 per share at June 30, 1998."
Item 14(b) is hereby amended and supplemented by the following:
The following sentence is hereby deleted from the first paragraph under
"SPECIAL FACTORS - Cautionary Statements Concerning Forward-Looking Statements
and Company Financial Projections" contained in the Offer to Purchase:
"Neither the Company nor any other party assumes any responsibility for
the accuracy or validity of the Projections."
In addition, certain projections set forth under "SPECIAL FACTORS -
Cautionary Statements Concerning Forward-Looking Statements and Company
Financial Projections" contained in the Offer to Purchase have been revised.
Specifically, the following paragraph is hereby added to the end of "SPECIAL
FACTORS - Cautionary Statements Concerning Forward-Looking Statements and
Company Financial Projections" contained in the Offer to Purchase:
"The above described projections were calculated based on the
following assumptions:
(i) The Company's sales department estimated monthly
quantity estimates for fiscal year 1999 and quarterly
quantity for fiscal years 2000 and 2001. The part
number sales estimates were based upon an annual
build rate of 15 million unit U.S. automotive
production. Based on that information, the existing
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standard cost in the Company's system was applied to
the related part numbers to calculate the standard
gross margin. For new programs that did not have a
standard cost in the Company's system, an estimated
cost was determined based upon bid estimates.
(ii) Material, labor and overhead variances were estimated
on a divisional basis based upon past experience and
other known factors. Gross margin was then computed
based upon these results. The gross margin
percentages were reviewed for consistency and
reasonableness.
(iii) Detailed selling, general and administrative expenses
were estimated based upon historical experience and
other known factors.
(iv) Interest was calculated on estimated loan balances
using scheduled interest rates with no fluctuations
expected in rates in the future.
(v) Taxes were applied on a straight 37.5% of the
Company's profit with respect to the Company's
Dallas, Texas operations and 38% at the Company's
subsidiary, North American Spring & Stamping, Inc.,
consistent with past practices."
SCHEDULE V TO THE OFFER TO PURCHASE.
The following footnote is hereby added after the Consolidated Statements of Cash
Flows as a footnote to Schedule V of the Offer to Purchase:
"1. The interim consolidated financial statements of the Company at
March 31, 1999 and for the three and nine-month period ended March 31,
1999, are unaudited, but include all adjustments (consisting of normal
recurring adjustments) which the Company considers necessary for a fair
presentation. The unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all
of the information and footnotes, and are not necessarily indicative of
the results that may be expected for the fiscal year ending June 30,
1999."
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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.
May 19, 1999
HILITE INDUSTRIES, INC.
/s/ SAMUEL M. BERRY
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By: Samuel M. Berry
President and Chief Operating Officer
HILITE HOLDINGS, LLC
/s/ JOSEPH W. CARRERAS
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By: Joseph W. Carreras
President
HILITE MERGECO, INC.
/s/ JOSEPH W. CARRERAS
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By: Joseph W. Carreras
President
JAMES E. LINEBERGER, JR., TRUST
/s/ JAMES E. LINEBERGER, JR.
----------------------------------------------
By: James E. Lineberger, Jr.
Trustee
GEOFFRY S. LINEBERGER TRUST
----------------------------------------------
/s/ JAMES E. LINEBERGER, JR.
By: James E. Lineberger, Jr.
Trustee
CHRISTOPHER LINEBERGER TRUST
/s/ JAMES E. LINEBERGER, JR.
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By: James E. Lineberger, Jr.
Trustee
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THE BRADY FAMILY LIMITED
PARTNERSHIP
/s/ DANIEL W. BRADY
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By: Daniel W. Brady
General Partner
/s/ SAMUEL M. BERRY
----------------------------------------------
Samuel M. Berry
/s/ CHRIS A. CURTO
----------------------------------------------
Chris A. Curto
/s/ ARTHUR D. JOHNSON
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Arthur D. Johnson
/s/ RONALD E. REINKE
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Ronald E. Reinke
/s/ DONALD M. MAHER
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Donald M. Maher
/s/ WILLIE VERCHER
----------------------------------------------
Willie Vercher
/s/ DR. KRISHNAMURTHY SUNDARARAJAN
----------------------------------------------
Dr. Krishnamurthy Sundararajan
