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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES ACT OF 1934
For the fiscal year ended January 3, 1998
COMMISSION FILE NUMBER 1-14330
POLYMER GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 57-1003983
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
4838 JENKINS AVENUE 29405
NORTH CHARLESTON, SOUTH CAROLINA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (803) 566-7293
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH NAME OF EACH EXCHANGE
CLASS OF STOCK: ON WHICH REGISTERED:
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Common Stock, par value $.01 per share New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the last 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the Company's voting stock held by
nonaffiliates as of March 18, 1998 was $214,895,061. As of March 18, 1998,
there were 32,000,000 shares of common stock, par value $.01 per share
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Notice of 1998 Annual Meeting of Stockholders and Proxy Statement--Part III
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PART 1
ITEM 1. BUSINESS
GENERAL
Polymer Group, Inc. (the "Company") is a leading worldwide manufacturer and
marketer of a broad range of nonwoven and oriented polyolefin products. The
Company's principal lines of business include industrial and specialty,
reusable wiping, medical and hygiene products. The Company believes that it is
the third largest producer of nonwovens as well as the largest producer of
spunbond and spunmelt products in the world and that it employs the most
extensive range of nonwovens technologies of any nonwovens producer, which
allows it to supply products tailored to customers' needs at competitive
prices. Nonwovens are flat, flexible porous sheets produced by interlocking
fibers or filaments or by perforating films. Nonwovens provide certain
qualities similar to those of textiles at a significantly lower cost. The
Company also believes that it is the largest producer of oriented polyethylene
materials in North America. Oriented polyolefin products include woven, slit
film fabrics, which are produced by weaving narrow tapes of slit film and are
characterized by high strength-to-weight ratios, and also include twisted slit
film or monofilament strands.
The Company supplies nonwovens to a number of the largest consumer products
manufacturers in the world and specifically targets market niches with high
margin, high value-added products. The Company has a global presence with an
established customer base in the three major developed markets of North
America, Europe and Japan, as well as in developing markets such as South
America and North Africa. The Company's product offerings are sold principally
to converters that manufacture a wide range of end-use products, such as
hospital surgical gowns and drapes, wound care sponges, multi-use wiping
cloths and towels, flexible industrial packaging, filtration media, electrical
insulation, cable wrap, alkaline battery cell separators, disposable diapers,
feminine hygiene products and automotive insulation products. The Company
supplies nonwovens to customers such as Johnson & Johnson for hygiene related
and healthcare products, including operating room gowns, and The Procter &
Gamble Company ("Procter & Gamble") for Pampers(R) and Luvs(R) diapers.
The Company is a leader in nonwovens and extrusion process technologies. The
Company operates twenty-one manufacturing facilities located in seven
countries and is currently the only nonwovens producer that utilizes
essentially all of the established nonwovens process technologies. The Company
believes that the quality of its manufacturing operations and the breadth of
its nonwovens process technologies give it a competitive advantage in meeting
the current and future needs of its customers and in leading the development
of an expanded range of applications for nonwovens. The Company continues to
make significant investments in advanced technology in order to increase
capacity, improve quality and develop new low-cost, high-value structures. The
Company currently operates four 4.2 meter advanced spunbond/meltblown/spunbond
("SMS") lines and a unique spunbond/meltblown/meltblown/spunbond ("SMMS") line
at its Waynesboro, Virginia facility, with commercial production expected to
begin in May 1998. This advanced technology allows the Company to produce
highly uniform structures with less material than conventional SMS technology.
The Company believes that its broad technological base gives it the capability
to design and manufacture products with optimal cost and functionality.
Working as a developmental partner with its major customers, the Company
utilizes its technological capabilities and depth of research and development
resources to develop and manufacture new products to specifically meet their
needs.
Management has built the Company through a series of capital expansions and
strategic business acquisitions that have broadened the Company's technology
base, increased its product lines and expanded its global presence. The
Company's strategic acquisitions have helped it to establish strong positions
in both the nonwoven and oriented polyolefin markets. Moreover, the Company's
consolidated resources have enabled it to better meet the needs of existing
customers, to reach emerging geographic markets and to exploit niche market
opportunities through customer-driven product development.
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HISTORY OF THE COMPANY
The Company was organized on June 16, 1994 and, effective June 24, 1994,
acquired a 100% ownership interest in PGI Polymer, Inc. ("PGI Polymer"), which
was incorporated in September 1992 by The InterTech Group, Inc. ("InterTech")
and Golder, Thoma, Cressey, Rauner, Inc. ("Golder, Thoma") to act as a holding
company for entities engaged in the development, manufacturing and marketing
of polyolefin products.
At the time of its formation, PGI acquired from InterTech approximately 27%
of the issued and outstanding shares of stock of Fabrene, Inc. ("Fabrene"), a
leading manufacturer of industrial and commercial oriented polyolefins. In
addition, in October 1992, through its wholly-owned subsidiary FiberTech
Group, Inc. ("FiberTech"), PGI acquired the Nonwoven Products Division (the
"Predecessor") of Scott Paper Company, a major supplier of nonwovens for
diapers and other hygiene products. Together, Fabrene and FiberTech offered
substantial representation in both the nonwoven and oriented polyolefin
markets.
In connection with the Company's formation (at which point it became the
100% parent owner of PGI Polymer), the Company purchased from Cydsa, S.A. all
of the outstanding shares of Bonlam, S.A. de C.V. ("Bonlam"), the largest
manufacturer of spunbond nonwoven fabrics in Mexico (the "Bonlam
Acquisition"). The Bonlam Acquisition not only presented the opportunity to
meet existing customers' needs in Mexico, but also provided the Company with
the additional nonwoven capacity necessary to meet growing demand in North
American and Latin American markets.
In March 1995, the Company purchased the Johnson & Johnson Advanced Material
Company and Chicopee B.V. (collectively, "Chicopee"), leading manufacturers
and marketers of nonwoven roll and converted products in North America and
Europe (the "Chicopee Acquisition"), and consummated certain other
transactions restructuring and financing transactions. Through the Chicopee
Acquisition, the Company gained substantial manufacturing and technological
resources, consumer market recognition of certain of Chicopee's branded
product lines and a significant presence in the nonwovens markets for wipes
and medical products.
In May 1996, the Company completed its initial public offering (the "IPO")
of 11.5 million shares of Common Stock at a price of $18.00 per share. In
connection with the IPO, the Company recapitalized its multiple classes of
common stock into a single class of common stock, and split the common stock
at an approximate 19.97 to 1 ratio. The Company also refinanced its
outstanding indebtedness by retiring a portion of its 12 1/4% Senior Notes due
2002 issued in 1994 and establishing its Amended and Restated Credit Facility,
dated May 15, 1996 (the "Old Credit Facility"), with the Chase Manhattan Bank
("Chase Bank").
In August 1996, the Company completed its acquisition of the business of PNA
Corp. and its wholly-owned subsidiary, FNA Polymer Corp. (collectively "FNA"),
a North Carolina based nonwovens producer (the "FNA Acquisition"). The
acquisition, which was financed through borrowings under the Old Credit
Facility, strengthened the Company's strategic position in the hygiene
materials market and broadened its offering of medical and agricultural
materials.
On July 3, 1997, the Company consummated its offering of $400,000,000 of 9%
Senior Subordinated Notes due 2007, amended its Amended and Restated Credit
Facility, dated May 15, 1996 (as amended, the "Credit Facility"), and
repurchased and retired all of its outstanding 12 1/4% Senior Notes due 2002.
Subsequent to the fiscal year ended January 3, 1998, the Company also
completed an additional offering of $200,000,000 of 8 3/4% Senior Subordinated
Notes due 2008, and acquired the Nonwovens Business (as defined) of Dominion
Textile Inc. and the Oriented Polymer Business (as defined) of a leading North
American manufacturer of polypropylene-based commercial twine and
polyethylene-based specialty knitted products. See "Recent Transactions."
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Unless otherwise indicated, the information set forth in Items 1 and 2 of
this Annual Report on Form 10-K reflects the inclusion of the Nonwovens
Business and the Oriented Polymer Business.
INDUSTRY OVERVIEW
The Company competes primarily in the worldwide market for nonwovens, which
is approximately a $7.5 billion market, according to industry sources. The
nonwovens industry began in the 1950s when paper, textile and chemical
technologies were combined to produce new fabrics and products with the
attributes of textiles but at a significantly lower cost. Today, nonwovens are
used in a wide variety of consumer, industrial and healthcare products as a
result of their superior functionality and relatively low cost.
The nonwovens industry has benefitted from substantial improvements in
technology over the past several years, which have increased the number of new
applications for nonwovens, and therefore increased demand. The Company
believes, based on industry sources, that demand in the developed markets of
North America, Western Europe and Japan will increase 4-5% in each of the next
five years, while the emerging markets are forecasted to grow at a rate of 8-
9% per annum. In the developed markets, growth will be driven primarily by new
applications for nonwovens, while growth in the emerging markets will be
volume driven as per capita income rises in these countries. According to
industry sources, worldwide consumption of nonwovens increased an average of
9% per annum from 1988 through 1994. The Company also believes that future
growth will depend upon the continuation of improvements in raw materials and
technology, which should result in the development of high-performance
nonwovens, leading to new uses and markets at a lower cost than alternative
materials.
Nonwovens are categorized as either disposable (approximately 85% of
worldwide consumer sales, according to industry sources), which is the
category in which the Company primarily competes, or durable (approximately
15% of worldwide consumer sales, according to industry sources). The largest
end uses for disposable nonwovens are for hygiene applications, including
disposable diapers, feminine sanitary protection, baby wipes and adult
incontinence products, and healthcare applications, including surgical gowns
and drapes and woundcare sponges and dressings. Other disposable end uses
include reusable wipes, filtration media, protective apparel and fabric
softener sheets. Durable end uses include apparel interlinings, furniture and
bedding construction sheeting, cable wrap, electrical insulation, alkaline
battery cell separators, automotive components, geotextiles, roofing
membranes, carpet backing, agricultural fabrics, durable papers and coated and
laminated structures for wallcoverings, upholstery, shoes and luggage.
The Company also competes in the North American market for oriented
polyolefin products. Chemical polyolefin products include woven, slit-film
fabrics produced by wearing narrow tapes of slit film and characterized by
high strength-to-weight ratios, and also include twisted slit film or
monofilament strands. While the broad uncoated oriented polyolefin market is
primarily focused on carpet backing fabric and, to a lesser extent,
geotextiles and bags, the markets in which the Company
primarily competes are made up of a large number of specialized products
manufactured for niche applications. These markets include demanding
industrial packaging applications such as lumberwrap, steel wrap and
fiberglass packaging, as well as high-strength protective coverings and
specialized components that are integrated into a variety of industrial and
consumer products.
COMPETITIVE STRENGTHS
The Company believes that it has a strong competitive position attributable
to a number of factors, including the following:
Technological Leadership. The Company believes it is a technological
leader in developing and manufacturing nonwovens and oriented polyolefin
products. The Company is currently the
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only nonwovens producer that utilizes all of the established nonwoven
process technologies and holds various patents on yield- and efficiency-
enhancing manufacturing processes. In addition, the Company enjoys
exclusive use of the proprietary APEX(R) structural web technology. The
depth and expertise of the Company's research and development staff have
enabled the Company to develop innovative products, frequently in response
to specific customer needs. In addition, the Company focuses its research
and development efforts on increasing its production capacity and improving
its production processes, developing innovative products for new markets
based on the Company's existing technologies, and developing new process
technologies to enhance existing business and to enter new markets. The
Company's multinational presence enables it to globally coordinate advanced
production initiatives and to co-develop new products directly with
international customers.
State-of-the-Art Manufacturing Capabilities. The Company believes that it
has state-of-the-art manufacturing capabilities in both its nonwovens and
oriented polyolefin product lines. As a result, the Company is one of the
lowest cost producers in the markets in which it participates. The Company
currently operates three state-of-the-art SMS lines, located at its
Waynesboro, Virginia, Mooresville, North Carolina and San Luis Potosi,
Mexico facilities, and a fourth is located at the DNS joint venture
facility. The Company is also undertaking the construction of a unique SMMS
line at its Waynesboro, Virginia facility, with commercial production
expected to begin in May 1998. The Company employs, among others,
manufacturing technology by Reifenhauser GmbH & Co., the recognized leader
in advanced SMS commercial equipment. Additionally, the Company continues
to enhance its production lines with internally developed, proprietary
manufacturing technologies.
Significant Market Share in Primary Markets. The Company has developed
significant market shares in its primary markets. For example, the Company
believes that it has a significant share of the noncaptive hygiene market
and the wipes market and that it is the leading North American manufacturer
of lumberwrap and oriented uncoated material used for lamination to paper
for the steel wrap market. The Company also believes that it is the leading
North American supplier in both the manufactured housing bottom board and
fiberglass packaging markets, as well as a global leader in the nonwovens
cable wrap and alkaline battery cell separator markets. The Company
believes it has been able to secure and maintain its position in these
markets as a result of its commitment to, and reputation for, innovation
and quality.
Experienced and Committed Management Team. The Company's senior
management team has significant experience in the manufacturing and
marketing of polyolefin products, with an average of 12 years of experience
in this industry. Management's experience includes acquiring and employing
assets at a low cost as well as increasing asset utilization and
productivity. Management also has a successful track record of acquiring,
improving and integrating complementary businesses into the Company. Senior
management currently owns approximately 23% of the common equity of the
Company.
Key Customer Relationships. The Company has successfully cultivated long-
term relationships with key customers, such as Johnson & Johnson and
Procter & Gamble, who are market leaders in their industries. The Company
currently works closely as a partner with Procter & Gamble and other
customers to develop advanced components for next generation disposable
diapers and other hygiene products. The Company has negotiated a favorable,
long-term supply agreement with Johnson & Johnson, under which it is the
exclusive provider of nonwoven fabric requirements for Johnson & Johnson
until March 2000 and, so long as the Company's prices remain competitive
with the marketplace, extends through March 2005. Similarly, the Company
enjoys an exclusive, long-term supply contract with Bulldog Bag Ltd. for
its oriented polyolefin product line. The Company's success in developing
and strengthening its relationships with these and other key customers is
attributable to its commitment to product quality, dedication to customer
technical service and ability to develop innovative applications for
existing products.
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By focusing on the Company's competitive strengths, management has
positioned the Company to address the current and future needs of the
nonwovens and oriented polyolefin markets by providing high value, low cost
products to converters and end-use customers in specialty niche application
markets on a global basis.
BUSINESS STRATEGY
The Company's goals are to continue to grow its core businesses while
developing new technologies to capitalize on a broad range of new high-margin
niche product opportunities and expanded geographic markets. The Company
intends to be the leading supplier in its chosen markets by delivering high-
quality products and services at competitive prices. To achieve these goals,
the Company's primary strategy focuses on:
Strategic Acquisitions. The Company continuously evaluates opportunities
to make acquisitions which complement and expand its core businesses or
which have the potential to increase market share and distribution
capability in high-margin complementary products. For example, on January
29, 1998, the Company completed the acquisition of the Nonwovens Business
(as defined) of Dominion Textile Inc. ("Dominion"), which served to
consolidate the Company's position as the leading supplier of spunbond and
spunmelt nonwovens in North America, to expand its presence in the rapidly
growing spunbond nonwovens market in Latin America and to develop a
significant operating base in the specialty dry-laid nonwovens market in
Western Europe. The Company believes that as a result of the Nonwovens
Acquisition, it is now the third largest producer of nonwovens in the world
as well as the largest producer of spunbond and spunmelt products in the
world. In addition, on March 16, 1998 the Company acquired the Oriented
Polymer Business (as defined) of a leading North American manufacturer,
which will expand the Company's product offerings and enhance raw materials
purchasing opportunities. See "Recent Transactions."
Continuous Improvement Aimed at Increasing Product Value and Reducing
Costs. The Company is committed to continuous improvements throughout its
business to increase product value and lower costs. The Company's product
design teams continuously seek to incorporate new materials and operating
capabilities that enhance or maintain performance specifications while
lowering the cost of raw materials used in the products. State-of-the-art
equipment, much of which has been developed internally and is proprietary
to the Company, has been designed and installed to continuously measure
process parameters and maintain very narrow tolerances, resulting in higher
levels of product consistency and reduced waste. The Company also holds
several patents protecting yield- and efficiency-enhancing manufacturing
processes developed by its research and development staff. As a result, the
Company's manufacturing processes utilize less material and produce a
higher quality finished product than many of its competitors. In addition,
the Company maintains a human resource program aimed at capturing
productivity gains through team building, formal training and employee
empowerment.
Development of High Value-Added Niche Products. The Company is committed
to investment in the development of products for high value-added niche
markets. One new offering is its Reticulon(R) brand apertured film, which
is used as a facing film on feminine hygiene products and in filtration
applications. The Company also recently introduced a new line of meltblown
materials for a wide range of wet and dry filtration applications. The
Company has taken steps to begin commercialization of additional medical
gown and drape technologies as well as new, high-margin wiping applications
incorporating antibacterial agents. Other recent developments include the
proprietary APEX(R) structural web technology, which is a surface-forming
process that produces nonwoven fabrics with intricate, three-dimensional
patterns. The Company believes its next generation nonwovens, produced
using the APEX(R) structural web technology and marketed under the brand
name MIRATEC(R), have the potential to replace certain woven and knit
applications at a lower cost. These advanced nonwovens are currently in
commercial production for Johnson &
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Johnson for medical applications such as woven-like gauze and surgical lap-
pads. The Company is actively developing market opportunities for
MIRATEC(R) in a variety of other applications, including home furnishings,
automotive headliners and filtration products.
Entrance into New Markets with Existing Products. The Company believes
that it has significant additional market opportunities for its existing
products. The Company is actively expanding its capabilities to take
advantage of the penetration and growth of its core products
internationally, particularly in developing countries. For example, the
Company has increased sales to Latin America, the Caribbean, New Zealand
and Australia. The Nonwovens Acquisition further enhanced the Company's
presence in Western Europe, Latin America, North Africa and the Far East.
Over the past five years, the Company's sales from manufacturing facilities
outside the United States have increased from approximately $28 million in
1993 to approximately $223 million in 1997. In addition, the Company has
expanded its technical marketing staff to pursue novel applications of its
current products with new segments of end users. For example, the Company
has developed a multimillion square meter market in Europe for a new
hygiene application by introducing a product and technology primarily used
as a wipe in North America.
Expansion of Capacity through Capital Projects. The Company continuously
evaluates opportunities to expand its existing production capacity and
enhance production technologies. Since 1992, the Company has invested in
capital improvements to debottleneck existing operations and to add new
capabilities and capacity. The latest of these projects are the state-of-
the-art SMMS line at the Waynesboro, Virginia facility, and the recently
completed 4.2 meter SMS line at the Mooresville, North Carolina facility.
The Mooresville facility began commercial production in the fourth quarter
of 1997 and now has committed capacity utilization in excess of 80%,
subject to completion of qualifying programs (a process previously
undergone at the San Luis Potosi facility). Once operating at full capacity
(which at present is fully committed), the Company believes that the SMMS
line at Waynesboro, which is expected to begin commercial production in May
1998, will be the most productive line in the world, producing 1.44 billion
square yards of nonwovens annually. The Company recently committed to
install a new, heavyweight APEX(R) line at its Benson, North Carolina
facility, which is expected to be commercialized in early 1999. In
addition, the Company's oriented polyolefin business has completed a series
of expansions and debottlenecking projects since 1990, which have
cumulatively increased capacity (exclusive of the capacity gained in the
Oriented Polymer Acquisition) by 57%. The expansions include facilities in
North Bay, Ontario, Portland, Oregon, Vancouver, British Columbia and
Albany, New York.
Through the implementation of its business strategy, management has achieved
an increase in net sales from $165.3 million in 1994 to $535.3 million in
1997. Management also achieved an increase in gross margins from 21.9% in 1994
to 24.9% in 1997, and an increase in earnings before interest, taxes,
depreciation and amortization ("EBITDA") from $23.9 million in 1994 to
approximately $99.0 million in 1997. At the same time, the Company has
continued to develop new, proprietary product technologies, to enter new
geographical customer markets and to expand its state-of-the-art manufacturing
facilities in North America, South America and Europe.
PRODUCTS
The Company develops, manufactures and sells a broad array of nonwovens,
oriented polyolefin products, conulated/apertured (perforated) films,
laminated composite structures, converted wipes and sorbent products. Sales
are focused in four general product categories that provide opportunities to
leverage the Company's advanced technology and substantial capacity. These
product categories include industrial and specialty, reusable wiping, medical
and hygiene products.
Marketing and research and development teams are committed to constant
product innovation in conjunction with, or at the request of, the Company's
customers. Close long-term relationships with
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end-use customers enable the Company to better understand its customers' needs
and have been a significant factor in the Company's success. In addition, the
research and development teams seek to develop high value-added specialty
products using existing assets in order to leverage the Company's capabilities
to produce high-margin products.
Industrial and Specialty Products
The industrial and specialty products category represented approximately
21%, 21% and 22%, or $111.5 million, $107.8 million and $94.0 million, of the
Company's 1997 net sales, 1996 net sales and 1995 net sales, respectively.
Demand for this product category is distributed among hundreds of end-use
applications. Some typical end uses include filtration media, home
furnishings, apparel interlinings, automotive insulation and interior fabrics,
agricultural fabrics, alkaline battery cell separators, cable wrap, electrical
insulation, protective coverings and flexible industrial packaging. The
Company's strength in engineering and extensive range of process technologies
are well-suited to meet the specialized functionality requirements in this
category. Customers typically have very specific performance and quality
requirements that demand efficient design and process conditions, both of
which are strategic strengths of the Company.
The Company produces a broad range of industrial and specialty products,
including alkaline battery cell separators, cable wrap, electrical insulation,
electronic clean room wipes, manufactured housing bottom board fabric (used to
enclose the underside of a manufactured home), home furnishing dust covers and
mattress pads, window coverings, protective apparel and specialized protective
coverings such as golf green covers, pool covers, salt pile covers, landfill
covers and athletic field covers. The Company also produces a variety of
flexible packaging products utilizing coated and uncoated oriented polyolefin
fabrics such as: Arbrene(R) and Lumber Guard(R) lumberwrap, which are used to
cover high-quality kiln dried lumber for shipping and storage; fiberglass
packaging tubes, which hold batts of insulation under compression for
efficient storage and shipping; balewrap for synthetic and cotton fibers;
steel and aluminum wrap, which are used to cover mill rolls; and coated
oriented bags for animal feed, specialty chemicals and mineral fibers. The
Company is a leading supplier of several of these products, including wetlaid
alkaline battery cell separators, oriented lumberwrap, fiberglass packaging
and bottom board fabric and cable wrap.
The Company also produces a variety of specialized niche products that
further augment the array of end use applications within this product
category. The Company expects that the majority of its long-term growth will
come in the industrial and specialty products category. The Company's current
primary industrial and specialty products and applications are summarized
below:
Product Application
Alkaline battery cell separators
Microporous rollgoods Liquid filtration
Kiara(R) Automotive insulation
Key Bak(R) Lumberwrap
Arbrene(R) and Lumber Guard(R) Housewrap
Airgard(R) Corrugated box reinforcement
Fab-Strip(TM) Protective coverings and laminated
Fabrene(TM) structures
Agricultural fabric Crop covers
Dust cover Furniture and bedding
Top Swell(TM) Water blocking cable wrap
Bale-lock Agricultural twine
The Company's industrial and specialty products are produced primarily using
wetlaid, adhesive bond, through-air fusible fiber bond, spunbond, oriented
polyolefin and lamination technologies. Specialized converting facilities
operated by the Company include a wide-width paper/nonwoven/film
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laminating and printing facility in Portland, Oregon and a thermal and
ultrasonic bonding facility in Vineland, New Jersey. The Company sells its
industrial products primarily to converters/distributors, except for alkaline
battery cell separators, fiberglass packaging, cable wrap, electrical
insulation, and lumberwrap in the U.S. Pacific Northwest, which are sold by
the Company's own sales team.
Wiping Products
The wiping products category represented approximately 20%, 17% and 17%, or
$105.2 million, $90.6 million and $73.0 million, of the Company's 1997 net
sales, 1996 net sales and 1995 net sales, respectively. The Company has a
complete line of wiping products used for food service, institutional, light
industrial, janitorial and consumer markets. In 1995, approximately 13%, or
two billion square yards, of North American nonwovens roll goods capacity was
used to produce wiping products. Wiping products are categorized as either
"premoistened/wet wipes" or "dry wipes." The Company primarily participates in
the "dry wipes" portion of the market, which the Company believes to have
greater potential for growth and to contain more opportunities for value-
added, specialty products. Within the "dry wipes" category, the three general
end-use products are food service wipes, consumer household wipes and
industrial and specialty wipes. The Company maintains a significant market
share in the food service and consumer categories and is a leading producer
for the industrial category. Industry sources estimate that the North American
volume growth for nonwovens used in disposable wipes will be approximately 7%
per annum through 2000.
Products within this category include branded and unbranded light to
heavyweight cloth wipes, towels and aprons marketed under the Chix(R), Chix
Plus(R), Chifonet(TM) and Lerette(TM) trademarks, medium to heavyweight open
weave towels marketed under the Fresh Guy(R) trademark and dry, pretreated,
water activated cleaning and sanitizing wipes for the food service industry,
marketed under the Quix(TM) trademark. Products for the industrial, janitorial
and institutional markets include light to heavy-duty towels and cloths sold
under a variety of trademarks including Worxwell(R), Durawipe(R), Masslinn(R)
and Stretch 'N Dust(R). Specialty wipes consist of products designed to meet
specialized customer requirements and specifications and include clean room
wipes used in the electronics, pharmaceutical and office equipment cleaning
industries, tack cloth used by automotive paint shops, and aerospace wipes for
solvent and sealant wiping, surface preparation and general purposes. The
Company produces multi-use kitchen wipes, including Colgate-Palmolive's
Handiwipes(R) brand pursuant to a long-term supply agreement. The Company also
markets a line of catering products in Europe, including banquet rolls, table
napkins and table cloths. The Company's primary wiping products and
applications are summarized below:
Application
Product
Food service
Chix(R) and Chix Plus(R) Heavyweight food service
Fresh Guy(R) Industrial
Durawipe(R) Sanitizing/food service
Quix(TM) Consumer and janitorial
Worxwell(R) Janitorial
Masslinn(R) Janitorial
Stretch 'N Dust(R) Specialized, clean rooms
Duralace(R) Consumer--Europe
Chifonet(TM) Food service--Europe
Lerette(TM) Catering--Europe
Napkins and tablecloths Consumer
Handiwipes(R) and Heavywipes(R)/1/
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/1/Handiwipes(R) and Heavywipes(R) are registered trademarks of Colgate
Palmolive. The Company produces wipes exclusively for Colgate-Palmolive under
a supply agreement.
The Company utilizes primarily dry form resin bonded and spunlace
technologies to manufacture its wiping products and also maintains dedicated
converting and packaging equipment. In North
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America, the Company has a long-term manufacturing and distribution agreement,
which extends through 2003, with Berkley Medical Resources Inc. ("BMR") in
Fairfield, Pennsylvania to convert, warehouse and distribute a wide range of
wiping products. The equipment used in the converting and packaging operations
is owned by the Company and operated solely for its benefit. In Europe, the
Company operates its own converting and packaging equipment within the Cuijk
manufacturing facility. The Company is a leading manufacturer and marketer of
wiping products as a result of its wide range of products, aggressive sales
and marketing team wide distribution base of dealers and food service
distributors and reputation for excellent customer and technical support,
including the ability to meet specific customer requirements.
Medical Products
The medical products category represented approximately 16%, 18% and 17%, or
$86.7 million, $91.7 million and $73.0 million, of the Company's 1997 net
sales, 1996 net sales and 1995 net sales, respectively. The Company's medical
products are used in the production of wound care sponges and dressings,
disposable surgical packs, apparel such as operating room gowns, drapes for
operating rooms and facemasks, shoecovers and headwear. Medical applications
represent the second largest market for nonwoven fabrics, with almost two
billion square yards consumed annually in the United States. Approximately 40%
of this demand is for disposable surgical packs, drapes and gowns, a market in
which Johnson & Johnson has a leading share.
Johnson & Johnson is the Company's primary customer for medical products
pursuant to a long-term supply agreement dated March 15, 1995 (the "Supply
Agreement"). The Supply Agreement grants the Company the exclusive right to
supply Johnson & Johnson with all of its nonwoven fabric requirements,
including those for its entire line of medical products as well as for other
disposable hygiene and wiping applications, for a period of five years, and,
provided that the Company's prices remain competitive with the marketplace,
extends for a period of an additional five years. During the first five-year
period, of which approximately two years still remain, the Company enjoys
significantly favorable pricing terms. In addition, other preferential terms
continue throughout the duration of the contract.
The Company believes, based on industry sources, that the North American
volume growth rate for nonwovens in medical applications will be approximately
2-4% per annum through 2000, with much of the growth coming from the expansion
of traditional product lines. A 1992 ruling by the Occupational Safety and
Health Administration ("OSHA") required that employers of healthcare workers
supply personal protective equipment to employees at risk of exposure to
infectious body fluids. Industry sources expect that OSHA rules will continue
to stimulate demand for protective applications for workers, including those
in funeral homes, linen services and law enforcement agencies in addition to
healthcare workers.
Surgical gowns and drapes containing a protective barrier against fluid
strike-through are the largest and fastest growing applications for nonwoven
fabrics in the medical products category. The Company produces Duralace(R)
spunlace fabric for this product group and treats the surface of the fabric to
give it high fluid repellency required for this application. The sponge and
dressing products are produced using spunlace apertured technologies and the
proprietary APEX(R) structural web technology. A recently developed product
using the APEX(R) structural web technology, Mirasorb(R), is a nonwoven sponge
that can replace woven gauze in some applications at considerably less cost.
The Company's primary medical products and applications are summarized below:
Product Application
Duralace(R) Surgical gowns and drapes
Mirasorb(R) Sponges
Nugauze(R) Nonwoven gauze
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Hygiene Products
The hygiene products category represented approximately 43%, 44% and 45%, or
$231.9 million, $231.2 million and $197.6 million, of the Company's 1997 net
sales, 1996 net sales and 1995 net sales, respectively. The Company produces a
variety of nonwoven materials for use in the production of diapers, training
pants, feminine sanitary protection, baby wet wipes and adult incontinence
products. Today, the Company's customers annually consume over two billion
square yards of nonwoven fabrics for hygiene products. The Company believes
that it has a significant share of the noncaptive North American topsheet
market. Industry sources estimate that the global growth rate for SMS and
spunbond nonwovens in hygiene applications will average 6-8% through 2000,
primarily due to an increase in the amount of nonwoven fabric per diaper,
increased unit demand from developing countries and the rise in use of adult
incontinence products. Volume growth for nonwovens for use in hygiene in North
America is expected to be 4-5% annually through 2000.
The Company has a broad product offering and provides customers with a full
range of specialized components for unique or distinctive products, including
the Isolite(TM) topsheet, Multi-Strike(TM) transfer layer, Soft Touch(TM)
backsheet fabric, Dry-Fit(TM) leg cuff fabric, Reticulon(R) sanitary
protection facings, absorbent pads for the Serenity(R)/1/ incontinence guard
and Carefree(R)/1/ panty shield and Ensorb(TM) absorbent cores. The Company
produces a spunlace "wet wipe" product for baby wipe applications in Europe
for Johnson & Johnson. This product fills the gap between standard nonwoven
wipes and a quality cloth wipe and has improved thickness and softness over
standard airlaid pulp products. The Company is the only supplier capable of
providing all of the thermal bond, adhesive bond, spunbond, SMS, coextruded
apertured films, through-air bond, spunlace and ultrasonic bond technologies
which are required in the manufacture of these products. The Company's primary
hygiene products and applications are summarized below:
Product Application
Coverstock
Isolite(TM) Transfer sublayer
Multi-Strike(TM) Clothlike backsheet
Soft Touch(TM) Leg cuff for diapers
Dry-Fit(TM) Sanitary protection facing
Reticulon(R) Absorbent cores
Ensorb(R) Topsheets
Novaspun Consumer--Europe
Baby wipes Protective apparel (solid barrier)
Poly-Safe(TM) Protective apparel (breathable
Poly-Breathe(TM) barrier)
- --------
/1/Serenity(R) and Carefree(R) are Johnson & Johnson trademarks. The Company
furnishes Johnson & Johnson with products used in the manufacture of these
products.
The Company has a significant relationship with Procter & Gamble and
supplies a full range of products to Procter & Gamble on a global basis. The
Company's marketing and research and development teams work closely as
partners with Procter & Gamble and other customers in the development of next
generation products. The Company believes that this technical support ensures
that the Company's products will continue to be incorporated into such
customers' future product designs. The Company also has significant
relationships with private-label producers of diaper products and is the
primary supplier to Johnson & Johnson Personal Products for its nonwoven
requirements for sanitary protection, tampon and adult incontinence products.
NEW PRODUCT DEVELOPMENT
The Company continually develops new products that incorporate the Company's
wide variety of technologies. The Company's research and development efforts
have been focused on increasing its
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production capacity and improving its production processes, developing
products based on the Company's existing technologies for new markets and
developing new process technologies to enhance existing businesses and allow
entry into new businesses. The depth and expertise of the Company's research
and development staff, who work closely with manufacturing and marketing
personnel, have enabled the Company to develop innovative products, frequently
in response to specific customer needs. In addition, the Company frequently
enters into collaborative partnerships with its customers to develop and
manufacture next-generation products in response to its customers' changing
needs. The Company believes that these developmental partnerships enhance
customer relationships by ensuring that the Company's products will continue
to be incorporated into its customers' future products. The Company also
utilizes in-plant pilot lines that are installed in its manufacturing
facilities in order to develop new products under real manufacturing
conditions prior to commercialization. The Company currently has several
projects in advanced stages of development that it believes will present the
potential for substantial growth.
APEX(R), a new surface-forming technology, has the potential to displace
traditional woven textile, knitted and composite products in many applications
because of its favorable price to value ratio. The advanced APEX(R) structural
web process produces low-cost textile replacement fabrics with intricate,
three-dimensional patterns marketed under the name MIRATEC(R). This
technology, which can be applied to most sheet structures fabricated from
fibers or films, enhances the Company's ability to gain competitive advantages
by increasing manufacturing efficiency and product differentiation. Pursuant
to an agreement with Johnson & Johnson, products for hygiene and healthcare
applications that are manufactured utilizing the APEX(R) structural web
technology may only be sold to Johnson & Johnson. In all other markets, such
as automotive headliners, home furnishings and filtration products, the
Company may manufacture and freely market products utilizing the APEX(R)
structural web technology.
The Company is at the forefront in the use of new generation resins, which
have the potential to produce stronger and thinner fabrics with advanced
performance characteristics such as elasticity, microporosity and surface
adhesion. The Company believes that its state-of-the-art equipment and
manufacturing processes will provide it with the flexibility to process these
advanced resins and allow it to be a leader in the introduction of these
materials for traditional as well as new end uses.
The Company has agreed in collaboration with Los Alamos National
Laboratories ("LANL") to develop and commercialize specific applications of
polymer filtration/metal separations in aqueous, solid and vapor-phase
matrices, which permit removal and recovery of specific metal ions based on
sophisticated polymer chemistry. Initial polymer filtration techniques relate
to the removal and recovery of metal ions from electroplating and metal
finishing process waste streams. Additional polymer filtration/metal
separations applications are being identified by the Company and LANL for
commercialization. These techniques have potential applications in commercial
and large-scale waste site cleanup and disposal. The Company currently markets
this product under the Metal-Set(R) brand name.
MARKETING AND SALES
The Company sells to over 1,000 customers in the domestic and international
marketplace. Approximately 58%, 20%, 12% and 10% of the Company's 1997 net
sales were to entities from manufacturing facilities in the United States,
Europe, Canada and Mexico, respectively. Johnson & Johnson, the Company's
largest customer, accounted for 26% of the Company's 1997 net sales while
Procter & Gamble accounted for 16% of net sales for the same period. Sales to
the Company's top 20 customers represented approximately 61% of the Company's
1997 net sales.
The Company sells primarily to manufacturers and converters, which
incorporate the Company's products into their finished goods. The Company
employs direct sales representatives, a number of whom are engineers and each
of whom has advanced technical knowledge of the Company's products
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and the applications for which they are used. The Company's sales
representatives are active in the Company's new product development efforts
and are strategically located in the major geographic regions in which the
Company's products are utilized. The oriented polyolefin products are sold
primarily through a well-established network of converters and distributors,
most of whom have been doing business with the Company (or its respective
predecessors) for more than 16 years. Converters add incremental value to the
Company's products and service the small order size requirements typical of
many end users.
In certain new high-margin niche markets, the Company has maintained control
over distribution by dealing directly with the end-use customer through its
sales representatives. The Company offers a broad range of high-quality
products, utilizing multiple technologies and materials, allowing its sales
force to offer customers what the Company believes is the widest range and
variety of nonwoven and oriented polyolefin products available to meet
customers' requirements from a single source. The Company has utilized its
broadened product base to market its products in high-value niche product
areas.
MANUFACTURING PROCESSES
General. The Company's competitive strengths include low-cost, high-quality
manufacturing processes and a broad range of process technologies, which allow
the Company to offer its customers the best-suited product for each respective
application. Additionally, the Company has made significant capital
investments in modern technology and has developed proprietary equipment and
manufacturing techniques. The Company believes that it exceeds industry
standards in productivity, reduction of variability and delivery lead time.
The Company has a wide range of manufacturing capabilities (many of which are
patented) that allow it to produce specialized products which, in certain
cases, cannot be reproduced in the market. Substantially all of the Company's
manufacturing sites have plant-wide real time control and monitoring systems
that constantly monitor key process variables using a sophisticated closed
loop system of computers, sensors and custom software.
Nonwovens. The Company believes that it has the most comprehensive array of
nonwoven manufacturing technologies in the industry. The Company has
capabilities spanning the entire spectrum of nonwoven technologies, including
the following manufacturing processes: spunbond, SMS, SMMS (commercial
production expected May 1998), thermal and adhesive bond, spunlace, wet-laid,
dry-laid, film extrusion and aperturing, through-air bond and ultrasonic bond
among other processes.
Nonwoven rollgoods typically have three process steps: web formation, web
consolidation or bonding and finishing. Web formation is the process by which
previously prepared fibers, filaments or films are arranged into loosely held
networks called webs, batts or sheets. In each process, the fiber material is
laid onto a forming or conveying surface, which may be dry, wet or molten. The
dry-laid process utilizes textile fiber processing equipment, called "cards,"
that have been specifically designed for high-capacity nonwoven production.
The carding process converts bales of entangled fibers into uniform oriented
webs that then feed into the bonding process. The wet-laid process utilizes
papermaking technology in which the fibers are suspended in a water slurry and
deposited onto a moving screen, allowing the water to pass through and the
fibers to collect. In a molten polymer-laid process, extrusion technology is
used to transform polymer pellets into filaments, which are laid on a
conveying screen and interlocked by thermal fusion. In this process, the fiber
formation, web formation and web consolidation are generally performed as a
continuous simultaneous operation, making this method very efficient.
Web consolidation is the process by which the fibers or film are bonded
together using either mechanical, thermal, chemical or solvent means. The
bonding method greatly influences the end products' strength, softness, loft
and utility. The principal bonding processes are thermal bond, resin
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or adhesive bond, hydroentanglement or spunlace, binder fiber or through-air
bond, calender, spunbond, meltblown, SMS, ultrasonic bond and needlepunch.
Thermal bond utilizes heated calender rolls with embossed patterns to point
bond or fuse the fibers together. In the resin bond process, an adhesive,
typically latex, is pad rolled onto the web to achieve a bond. Spunlace, or
hydroentanglement, uses high pressure water jets to mechanically entangle the
fibers. Through-air bonding takes place through the fusion of bi-component
fibers in a blown hot air drum. Spunbond and meltblown take advantage of the
melt properties of the resins and may use thermal fusion with the aid of
calender rolls. SMS and SMMS are integrated processes of combining spunbond
and meltblown sheets in a laminated structure, creating very strong,
lightweight and uniform fabrics. Ultrasonic bonding utilizes high-frequency
sound waves that heat the bonding sites. Needlepunch is a mechanical process
in which beds of needles are punched through the web, entangling the fibers.
Finishing, or post-treatment, adds value and functionality to the product
and typically includes surface treatments for fluid repellency, aperturing,
embossing, laminating, printing and slitting. Spunlace and resin bond systems
also have a post-treatment drying or curing step. Certain products also go
through an aperturing process in which holes are opened in the fabric,
improving absorbency.
Oriented Polyolefins. The oriented/film process begins with plastic resin,
which is extruded into a thin plastic film or into monofilament strands. The
film is slit into narrow tapes. The slit tapes or monofilament strands are
then stretched or "oriented," the process through which it derives its high
strength. The tapes are wound onto spools which feed weaving machines or
twisters. In the finishing process, the product is coated for water or
chemical resistance, ultraviolet stabilization and protection, flame
retardancy, color and other specialized characteristics. In the twisting
process, either oriented slit tapes or monofilament strands are twisted and
packaged on tightly spooled balls for distribution as agricultural and
commercial twine. The Company operates 160-inch and 80-inch coating lines that
have been equipped with the latest technology for gauge control, print
treating, lamination, anti-slip finishes and perforation. The 160-inch line is
one of only two lines of that size in North America. At its Portland, Oregon
facility, the Company extrudes specialized films which are used to laminate
the oriented product to paper and has the additional capability of printing up
to four colors on one of the widest printing presses in North America.
Outside Converting. The Company recently extended its long-term
manufacturing and distribution contract with BMR for an additional five years,
through August 2003. The agreement provides for BMR to convert, warehouse and
distribute a wide range of wiping products. Under the agreement, the Company
sells base fabrics produced at its Benson, North Carolina manufacturing
facility to BMR. BMR then cuts, folds and packages the fabric using Company-
owned machinery in a dedicated facility on behalf of the Company in accordance
with specifications. BMR distributes the products directly to the Company's
customers, while marketing, sales and order processing are the responsibility
of the Company. In Europe, the Company operates its own cutting, folding and
packaging machines at its Cuijk manufacturing facility.
COMPETITION
The Company's primary competitors in its industrial and specialty product
markets are: Du Pont, Freudenberg Nonwovens L.P. ("Freudenberg"), Kimberly-
Clark Corporation ("Kimberly-Clark"), Dexter Nonwovens Division, Kuraray Co.,
Ltd., Veratec (a subsidiary of International Paper Co.), Reemay Inc. (a
subsidiary of BBA Group plc), Lohmann GmbH & Company and Lantor International
for nonwoven products; and Intertape Polymer Group Inc. and Amoco Fabrics and
Fibers Co. for oriented polymer products. Generally, product innovation and
performance, quality, service and cost are the primary competitive factors,
with technical support being highly valued by the largest customers.
The Company's primary competitors in its wiping product markets are Du Pont
in nonwovens and paper producers such as Fort James Corporation ("Fort
James"), Atlantic Mills Inc. and Kimberly-
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Clark. In addition to like-kind products, the Company's wiping products also
compete with used rags and linen. Generally, cost, distribution and utility
are the principal factors considered in food service and janitorial end uses,
while product innovation, performance and technical support are the most
important factors for specialty and industrial wiping products.
The Company's primary competitors in its medical product markets are Du Pont
and FiberWeb Group, Inc. (a subsidiary of BBA Group plc) in the United States
and Freudenberg and Molnlycke AB in Europe. Price, distribution, variety of
product offerings and performance are the chief competitive factors in this
product category.
The Company's primary competitors in its hygiene product categories are
Veratec and FiberWeb Group, Inc. in North America, Corovin GmbH (a subsidiary
of BBA Group plc) and J.W. Suominen O.Y. in Europe and Uni-Charm Corp. in
Japan. Generally, product cost, technical capacity and innovation and customer
relationships are the most important competitive factors in these markets. The
Company believes that it is an industry leader in each of these categories.
A number of the Company's niche product applications are sold into select
specialized markets, and the Company believes that the size of such markets,
relative to the amount of capital required for entry, as well as the advanced
manufacturing processes and technical support required to service them,
present barriers to entry. There can be no assurance, however, that these
specialized markets, particularly as niche product applications become
standardized over time, will not attract additional competitors that could
have greater financial, technological, manufacturing and marketing resources
than the Company. See "Risk Factors--Competition in the Company's Markets."
RAW MATERIALS
The primary raw materials used in the manufacture of most of the Company's
products are polypropylene and polyester fiber, polyethylene and polypropylene
resin, and, to a lesser extent, rayon and tissue paper. The prices of
polypropylene and polyethylene are a function of, among other things,
manufacturing capacity, demand and the price of crude oil and natural gas
liquids. Historically, the prices of polypropylene and polyethylene resins
have fluctuated, such as in late 1994 and early 1995 when resin prices
increased by approximately 60%. The sharp increase was primarily due to short-
term interruptions in production capacity and increased demand as a result of
an expanding economy. By mid-1995, supply had increased, thereby reducing
prices. The Company expects that such price reductions will continue as
incremental capacity continues to be added. In 1996, polypropylene fiber
prices remained stable while resin prices, on average, trended lower.
Polyethylene resin prices were lower in the first half of 1996, but rose in
the second half of the year. Polyester fiber and resin prices experienced
substantial declines worldwide during 1996. Raw materials prices remained
stable to slightly lower in 1997.
There can be no assurance that the prices of polypropylene and polyethylene
will not increase in the future or that the Company will be able to pass on
such increases to its customers as it has generally been able to do in the
past. A significant increase in the prices of polyolefin resins that cannot be
passed on to customers could have a material adverse effect on the Company's
results of operations and financial conditions.
The Company's major supplier of polypropylene fiber is FiberVisions L.L.C.,
while its major supplier of polyethylene is Novacor Chemicals Inc. The
Company's major suppliers of rayon fiber are Lenzing Fibers Corp. and
Courtaulds Fibers, Inc., while its major suppliers of polyester are Wellman,
Inc. and E.I. Du Pont de Nemours & Co. ("Du Pont"). The Company primarily
purchases its polypropylene resin from Indelpro, S.A. de C.V., Montell North
America Inc. and Exxon Chemical Company, and purchases its tissue paper from
Crown Vantage Inc. As a result of the Nonwovens Acquisition, the Company is
also a purchaser of polyolefin films from Edison Plastics Company, a
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subsidiary of Blessings Corporation, polyester fiber from Swicofil A.G.
Textile Services and Du Pont, and polyacrylate powder (SAP) from Elf Atochem.
The Company believes that the loss of any one or more of its suppliers would
not have a long-term material adverse effect on the Company because other
manufacturers with whom the Company conducts business would be able to fulfill
the Company's requirements. However, the loss of the Company's suppliers
could, in the short term, adversely affect the Company's business until
alternative supply arrangements were secured. In addition, there is no
assurance that any new supply arrangements entered into by the Company will
have terms as favorable as those contained in current supply arrangements. The
Company has not experienced any significant disruptions in supply as a result
of shortages in raw materials.
ENVIRONMENTAL
The Company is subject to a broad range of federal, foreign, state and local
laws and regulations relating to the pollution and protection of the
environment. Among the many environmental requirements applicable to the
Company are laws relating to air emissions, wastewater discharges and the
handling, disposal and release of solid and hazardous substances and wastes.
Based on continuing internal review and advice from independent consultants,
the Company believes that it is currently in substantial compliance with
applicable environmental requirements.
The Company is also subject to laws, such as CERCLA, that may impose
liability retroactively and without fault for releases or threatened releases
of hazardous substances at on-site or off-site locations. The Company is not
aware of any releases for which it may be liable under CERCLA or any analogous
provision.
Actions by federal, state and local governments in the United States and
abroad concerning environmental matters could result in laws or regulations
that could increase the cost of producing the products manufactured by the
Company or otherwise adversely affect demand for its products. For example,
certain local governments have adopted ordinances prohibiting or restricting
the use or disposal of certain plastic products, such as certain of the
plastic wrapping materials which are produced by the Company. Widespread
adoption of such prohibitions or restrictions could adversely affect demand
for the Company's products and thereby have a material adverse effect upon the
Company. In addition, a decline in consumer preference for plastic products
due to environmental considerations could have a material adverse effect upon
the Company.
Most of the Company's manufacturing processes are mechanical and are
therefore considered to be environmentally benign. The polyolefin resins are
readily recyclable, and the Company maintains a network of recyclers to
receive post-industrial waste for certain of the Company's products. In
addition, each of the Company's manufacturing sites has equipment and
procedures for reclaiming a majority of internally generated scrap, thus
reducing the amount of waste sent to local landfills. As a result, the Company
does not currently anticipate any material adverse effect on its operations,
financial condition or competitive position as a result of its efforts to
comply with environmental requirements. Some risk of environmental liability
is inherent, however, in the nature of the Company's business, and there can
be no assurance that material environmental liabilities will not arise. It is
also possible that future developments in environmental regulation could lead
to material environmental compliance or cleanup costs.
PATENTS AND TRADEMARKS
The Company considers its patents, patent licenses and trademarks, in the
aggregate, to be of material importance to its business and seeks to protect
this proprietary know-how in part through United States and foreign patent and
trademark registrations. The Company maintains over 40
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registered trademarks and over 75 patents or patent licenses in the United
States. In addition, the Company maintains certain trade secrets for which, in
order to maintain the confidentiality of such trade secrets, it has not sought
patent protection.
INVENTORY AND BACKLOGS
Unfilled orders, excluding orders on hand not yet released for delivery, as
of January 3, 1998 and December 28, 1996 amounted to approximately $87.2
million and $76.8 million, respectively. The Company's unfilled order position
has increased over the past year as a result of the acquisition of the
Nonwovens Business (as defined).
RESEARCH AND DEVELOPMENT
The Company continually invests in research and development, focusing its
efforts on increasing production capacity, improving production processes, and
developing new product and process technologies. For the fiscal years ended
January 3, 1998, December 28, 1996 and December 30, 1995, the Company spent
approximately $9.6 million, $6.9 million and $6.4 million on research and
development.
SEASONALITY
Use and consumption of the Company's products exhibits some seasonality,
with lighter volumes generally experienced in the first quarter of the fiscal
year.
EMPLOYEES
As of January 3, 1998, the Company employed approximately 3,600 persons. Of
this total, approximately 1,600 employees are represented by labor unions or
trade councils that have entered into separate collective bargaining
agreements with the Company. Approximately 31% of the Company's labor force is
covered by collective bargaining agreements which will expire in 1998. The
Company considers its employee relations to be very good.
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RECENT TRANSACTIONS
8 3/4% NOTES
On March 5, 1998, the Company issued $200 million of 8 3/4% Senior
Subordinated Notes due 2008 (the "8 3/4% Notes") to Chase Securities Inc.
("Chase") in a transaction not registered under the Securities Act in reliance
upon an exemption under the Securities Act pursuant to an indenture dated as
of March 1, 1998 among the Company, the guarantors named therein and Harris
Trust & Savings Bank, as trustee. Chase subsequently placed the 8 3/4% Notes
with qualified institutional buyers in reliance on Rule 144A under the
Securities Act. The 8 3/4% Notes accrue interest from their original issuance
date at a rate of 8 3/4% per annum, and have customary provisions regarding
redemption, changes in control, ranking, asset sales and other restrictive
covenants. The 8 3/4% Notes are unsecured senior subordinated indebtedness of
the Company and are subordinated in right of payment to all existing and
future senior indebtedness of the Company.
THE NONWOVENS TRANSACTIONS
On January 29, 1998, the Company consummated the Nonwovens Acquisition and
the Nonwovens Acquisition Refinancing. The Nonwovens Acquisition and Nonwovens
Acquisition Refinancing are collectively referred to as the "Nonwovens
Transactions."
The Nonwovens Acquisition
On December 19, 1997, pursuant to the terms of its Offer to Purchase dated
October 29, 1997, as amended (the "Dominion Tender Offer"), DT Acquisition
Inc., a special purpose subsidiary formed by the Company ("DT Acquisition")
completed the purchase of 98% of the outstanding Common Shares of Dominion for
Cdn$14.50 per share and 96% of the outstanding First Preferred Shares of
Dominion for Cdn$150 per share. On December 29, 1997, DT Acquisition acquired
an additional 331,207 Common Shares. The Company had previously announced that
it had entered into a Purchase Agreement, dated October 27, 1997, with Galey &
Lord, Inc. ("Galey") to sell the denim and career wear business of Dominion
(the "Apparel Fabrics Business") to Galey following the consummation of the
Dominion Tender Offer. The Dominion Tender Offer was financed with $215
million of borrowings under DT Acquisition's $600 million senior secured
credit facilities, and subordinated advances of $141 million, $69 million and
$25 million by Galey, ZB Holdings, Inc. ("ZB Holdings"), and the Company,
respectively. ZB Holdings is a wholly-owned subsidiary of InterTech, an
affiliate of the Company wholly-owned by Jerry Zucker and James G. Boyd.
On January 29, 1998, DT Acquisition acquired the remaining Common Shares and
First Preferred Shares of Dominion in a compulsory acquisition effectuated
pursuant to section 206 of the Canada Business Corporation Act, and acquired
all outstanding Second Preferred Shares pursuant to a notice of redemption
issued December 29, 1997. Dominion then underwent a "winding up" pursuant to
which all assets of Dominion were transferred to DT Acquisition, all
liabilities of Dominion were assumed by DT Acquisition and all of the
outstanding Common Shares and First Preferred Shares held by DT Acquisition
were redeemed. Pursuant to the 2003 Tender Offer and the 2006 Tender Offer
(each as defined), DT USA (as defined), a wholly-owned subsidiary of Dominion
and the issuer of the 2003 Notes and the 2006 Notes, accepted for purchase all
2003 Notes and 2006 Notes validly tendered and not revoked. Immediately
thereafter, the Apparel Fabrics Business was sold to Galey for approximately
$464.5 million, including related fees and expenses, and the Company acquired
(the "Nonwovens Acquisition") the assets and liabilities of Dominion that
comprised the nonwovens and industrial fabrics operations of Dominion (the
"Nonwovens Business"). The Company borrowed approximately $326.6 million under
the Amended Credit Facility to finance the Nonwovens Acquisition, for which it
paid a gross price of approximately $351.6 million, including related fees and
expenses. In connection with the sale of the Apparel Fabrics Business and the
Nonwovens Business, DT Acquisition repaid the subordinated advance from ZB
Holdings in full.
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The primary operations of the Nonwovens Business are conducted through Poly-
Bond Inc. ("Poly-Bond"), Nordlys S.A. ("Nordlys"), DIFCO Inc. ("DIFCO"), Geca-
Tapes B.V. ("Geca") and Dominion Nonwovens Sudamerica S.A. ("DNS"). Poly-Bond,
based in Waynesboro, Virginia, is a leading manufacturer of spunbond and
spunmelt composite nonwovens used in disposable diapers, adult incontinence
and feminine hygiene products. Nordlys, based in Bailleul, France,
manufactures dry-laid nonwovens for industrial applications such as cable
wrap, liquid filtration, medical end-uses, and electrical insulation. DIFCO,
based in Magog, Quebec, produces custom designed technical fabrics. Geca,
based in Tilburg, Netherlands, manufactures nonwovens products for industrial
applications such as cable wrap. DNS produces spunbond and spunmelt nonwovens
to serve hygiene markets in countries that are participants in the Mercosur
free trade agreement.
The Nonwovens Acquisition Refinancing
On January 29, 1998, in connection with the Nonwovens Acquisition, the
Company amended its Credit Facility to provide for a $125.0 million secured
term loan and to modify certain terms of the revolving portion of the Credit
Facility. The Amended Credit Facility provides for revolving credit facilities
with an aggregate commitment of up to $325.0 million. All indebtedness under
the Amended Credit Facility is guaranteed on a joint and several basis by each
of the Company's direct and indirect domestic subsidiaries. All indebtedness
and related guarantees under the Amended Credit Facility are secured by (i) a
lien on substantially all of the assets of the Company and its domestic
subsidiaries, (ii) a pledge of all or a portion of the stock of the domestic
subsidiaries of the Company and of certain non-domestic subsidiaries of the
Company, (iii) a lien on substantially all of the assets of direct foreign
borrowers (to secure direct borrowings by such borrowers), and (iv) a pledge
of secured intercompany notes issued to the Company or one of its subsidiaries
by certain non-domestic subsidiaries. See "Description of Certain
Indebtedness--Amended Credit Facility."
Concurrent with the sale of the Apparel Fabrics Business, and pursuant to
the 2003 Tender Offer, DT USA purchased approximately $145.6 million of its
$150.0 million outstanding 8 7/8% Guaranteed Senior Notes due 2003 for total
consideration in cash equal to $1,065.32 per $1,000 principal amount, plus
accrued interest. At the same time, pursuant to the 2006 Tender Offer, DT USA
purchased approximately $124.5 million of its $125.0 million outstanding 9
1/4% Guaranteed Senior Notes due 2006 for total consideration in cash of
$1,138.50 per $1,000 principal amount, plus accrued interest. Pursuant to both
the 2003 Tender Offer and the 2006 Tender Offer (each as defined), DT USA
received the requisite consents from tendering holders to amend the indentures
under which the 2003 Notes and the 2006 Notes were issued to eliminate
substantially all of the covenants contained therein and paid a consent fee,
included in the respective total consideration discussed above, to holders who
tendered their notes and delivered consents prior to the expiration of the
consent solicitations. See "Description of Certain Indebtedness--2003 Notes
and 2006 Notes."
The Company's amendment to the Credit Facility resulting in the Amended
Credit Facility and repurchase of the 2003 Notes and 2006 Notes pursuant to
the 2003 Tender Offer and 2006 Tender Offer are collectively referred to as
the "Nonwovens Acquisition Refinancing."
THE ORIENTED POLYMER ACQUISITION
On March 16, 1998, the Company acquired (the "Oriented Polymer Acquisition")
the manufacturing and business assets of a leading North American manufacturer
of polypropylene-based commercial twine and polyethylene-based specialty
knitted products (the "Oriented Polymer Business"). The aggregate purchase
price of the assets to be purchased and liabilities to be assumed was
approximately $47.0 million.
19
<PAGE>
THE JUNE REFINANCING
In the June Refinancing (the "June Refinancing"), the Company (i) refinanced
its outstanding indebtedness under its 12 1/4% Senior Notes by consummating
(a) the June Offering and subsequent September Exchange Offer, and (b) the
Senior Notes Tender Offer and Consent Solicitation, and (ii) entered into the
Credit Facility.
The Private Placement and September Exchange Offer
On July 3, 1997, the Company issued $400 million of 9% Senior Subordinated
Notes due 2007 (the "Privately Placed Notes") to Chase in a transaction not
registered under the Securities Act in reliance upon an exemption under the
Securities Act (the "Private Placement") pursuant to an indenture dated as of
July 1, 1997 among the Company, the guarantors named therein and Harris Trust
& Savings Bank, as trustee (the "9% Notes Indenture"). Chase subsequently
placed the Privately Placed Notes with qualified institutional buyers in
reliance under Rule 144A under the Securities Act. The Privately Placed Notes
accrued interest from their original issuance date at the rate of 9% per
annum, and had substantially similar provisions with respect to redemption
(including optional redemption in the first three years in connection with one
or more Public Equity Offerings (as defined herein), changes in control,
ranking, Asset Sales (as defined herein) and other restrictive covenants. The
Privately Placed Notes were unsecured senior subordinated obligations of the
Company and were subordinated in right of payment to all existing and future
Senior Indebtedness of the Company.
Pursuant to a Registration Statement on Form S-4 (Reg. No. 333-32605) filed
with the Commission on August 1, 1997 and declared effective on September 3,
1997, the Company offered to exchange $1,000 principal amount of its 9% Senior
Subordinated Notes due 2007, Series B (the "9% Notes") for each $1,000
principal amount outstanding of the Privately Placed Notes (the "September
Exchange Offer"). The September Exchange Offer was undertaken to comply with
certain Registration Rights granted to holders of the Original Notes in
connection with the Private Placement pursuant to the Registration Rights
Agreement dated July 3, 1997. The form and terms of the 9% Notes offered in
the September Exchange Offer are the same as the form and terms of the
Privately Placed Notes (which they replaced) except that (i) the 9% Notes bear
a Series B designation, (ii) the 9% Notes have been registered under the
Securities Act and, therefore, do not bear legends restricting the transfer
thereof, and (iii) the holders of the 9% Notes are not entitled to any
registration rights. The September Exchange Offer was consummated on October
3, 1997, with all $400 million principal amount of Privately Placed Notes
being tendered for exchange. As a result, the Company currently has $400
million of 9% Notes outstanding; no Privately Placed Notes remain outstanding.
Senior Notes Tender Offer and Consent Solicitation
In connection with the Private Placement, pursuant to an independent Offer
to Purchase and Consent Solicitation Statement dated June 5, 1997, the Company
offered to repurchase all, but not less than a majority, of its outstanding 12
1/4% Senior Notes due 2002 (the "Senior Notes") at a price equal to $1,103.64
per $1,000 aggregate principal amount of Senior Notes (the "Senior Notes
Tender Offer and Consent Solicitation"). The price was calculated based on (i)
the present value on the payment date of $1,061.25 per $1,000 principal amount
of each Senior Note (the amount payable on July 15, 1998, the first date on
which the Senior Notes were redeemable) plus accrued interest payable through
July 15, 1998, using a discount factor equal to the sum of (x) 5.77% (the
yield on the 8 1/4% U.S. Treasury Note due July 15, 1998 as of 2:00 p.m., New
York City Time, on June 18, 1997, the tenth business day preceding the
expiration date of the offer), plus (y) 75 basis points, minus $10.00 per
$1,000 principal amount of Senior Notes. Each tendering holder also received
accrued and unpaid interest up to, but not including, the date on which
payment for accepted Senior Notes was made.
20
<PAGE>
The Company also solicited consents from the tendering holders of Senior
Notes to certain proposed amendments to the Senior Notes indenture which
eliminated substantially all of the protective covenants contained in that
indenture. Holders who timely consented to the proposed amendments received a
consent payment equal to 1% of their principal amount of Senior Notes ($10.00
per $1,000 principal amount). In response to the Senior Notes Tender Offer and
Consent Solicitation, which was consummated on July 3, 1997, the Company
received tenders of, and consents relating to, all of its outstanding Senior
Notes.
Credit Facility
As part of the June Refinancing, the Company and certain of its subsidiaries
entered into revolving credit facilities (the "Credit Facility"), dated July
3, 1997, with a group of lenders and with Chase Bank, as administrative agent
(the "Agent"), by amending and restating its original credit facility dated
May 15, 1996 (the "Old Credit Facility"). Prior to the amendment consummated
in connection with the Nonwovens Acquisition, the Credit Facility provided for
aggregate borrowings of up to $325.0 million.
THE FNA ACQUISITION
On August 14, 1996, PGI Polymer, a Delaware corporation and wholly owned
subsidiary of the Company, completed the FNA Acquisition by acquiring the
business of PNA Corp., a North Carolina corporation, and its wholly owned
subsidiary FNA Polymer Corp. The acquisition was consummated pursuant to the
terms of a Stock Purchase Agreement dated as of July 15, 1996 among Pertropar
S.A., a corporation incorporated under the laws of the Federal Republic of
Brazil, Alicorno Comercio e Servicios Lda., a corporation incorporated under
the laws of Madeira, and PGI Polymer, and was accounted for using the purchase
method of accounting. Total consideration paid in the transaction was $48
million, as determined in negotiations among the parties to the Stock Purchase
Agreement, and was financed through borrowings under the Company's Old Credit
Facility and working capital.
FNA produced and continues to produce polypropylene fabrics for the
nonwovens industry utilizing spunbond and SMS technologies. Among other assets
acquired in the FNA Acquisition, the Company purchased FNA's modern
manufacturing facility, which was built in 1992 and expanded in 1994. The FNA
Acquisition strengthened the Company's strategic position in the hygiene
materials market and broadened its offering of medical and agricultural
materials.
INITIAL PUBLIC OFFERING AND RECAPITALIZATION
In May 1996, the Company completed the Initial Public Offering (the "Initial
Public Offering"), in which the Company offered and sold 11.5 million shares
of Common Stock at a price of $18.00 per share. Net proceeds to the Company
after underwriting fees and discounts approximated $190.8 million. Pursuant to
the Recapitalization Agreement dated May 6, 1996, all of the warrants to
acquire shares of Class C Common Stock were exercised and the outstanding
shares of Class A Common Stock, Class B Common Stock and Class C Common Stock
were converted into a single class of Common Stock concurrently with the
Initial Public Offering. In connection with the Initial Public Offering, the
Company's Board of Directors approved an approximately 19.97 to 1 stock split.
In addition, the Company (i) effectively repaid all outstanding indebtedness
under the FiberTech and Chicopee credit facilities and terminated such credit
facilities, redeemed $50.0 million principal amount of the Senior Notes at
premium of 112.25% plus accrued, but unpaid, interest and entered into the Old
Credit Facility, consisting of a $200.0 million term loan and a $125.0 million
revolving credit facility, (ii) redeemed the preferred stock of Chicopee, Inc.
for approximately $46.9 million, and (iii) redeemed the Company Preferred
Stock for approximately $10.5 million.
21
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
AMENDED CREDIT FACILITY
General. In connection with the Nonwovens Acquisition, the Company, the
other "Borrowers" named therein and the "Domestic Non-Borrower Guarantors"
named therein entered into the Amended Credit Facility (the "Amended Credit
Facility") with a group of lenders (the "Lenders") and with Chase Bank, as
Agent, by amending the Credit Facility. The Amended Credit Facility provides
for secured revolving credit borrowings with aggregate commitments of up to
$325,000,000 and a term loan of $125,000,000. Subject to certain terms and
conditions set forth in the Amended Credit Facility, a portion of the Amended
Credit Facility may be used for letters of credit. A portion of the Amended
Credit Facility may be denominated in Dutch guilders and in Canadian dollars.
All indebtedness under the Amended Credit Facility (including any hedging
arrangements provided by a Lender) is guaranteed, on a joint and several
basis, by each and all of the direct and indirect domestic subsidiaries of the
Company.
Security. The Amended Credit Facility and the related guarantees are secured
by (i) a lien on substantially all of the assets of the Company and its
domestic subsidiaries, (ii) a pledge of all or a portion of the stock of the
domestic subsidiaries of the Company and of certain non-domestic subsidiaries
of the Company, (iii) a lien on substantially all of the assets of direct
foreign borrowers (to secure direct borrowings by such borrowers), and (iv) a
pledge of certain secured intercompany notes issued to the Company or one of
its subsidiaries by non-domestic subsidiaries.
Maturity; Prepayment. The revolving credit portion of the Amended Credit
Facility terminates in June 2003. The term loan portion terminates in December
2005. The loans will be subject to mandatory prepayment out of proceeds
received in connection with certain casualty events, asset sales and debt
issuances.
Interest Rates. The interest rate applicable to borrowings under the Amended
Credit Facility shall be based on, in the case of U.S. dollar denominated
loans, the Base Rate referred to therein or the Eurocurrency Base Rate
referred to therein for U.S. dollars, at the Company's option, plus a
specified margin. In the event that a portion of the Amended Credit Facility
is denominated in Dutch guilders, the applicable interest rate shall be based
on the applicable Eurocurrency Base Rate referred to therein for Dutch
guilders, plus a specified margin. In the event that a portion of the Amended
Credit Facility is denominated in Canadian dollars, the applicable interest
rate shall be based on the Canadian Base Rate referred to therein (plus a
specified margin) or the Bankers' Acceptance Discount Rate referred to therein
at the Company's option. The applicable margin for loans bearing interest
based on the Base Rate or Canadian Base Rate will range from 0% to 1.25% and
for loans bearing interest on a Eurocurrency Rate will range from 0.75% to
2.50%, based on the Company's ratio of total consolidated indebtedness to
consolidated EBITDA calculated on a rolling four quarter basis.
Covenants; Events of Default. The Amended Credit Facility contains covenants
and events of default customary for financings of this type.
8 3/4% NOTES
On March 5, 1998, the Company issued $200 million of the 8 3/4% Notes to
Chase in a transaction not registered under the Securities Act in reliance
upon an exemption under the Securities Act pursuant to an indenture dated as
of March 1, 1998 among the Company, the guarantors named therein and Harris
Trust & Savings Bank, as trustee. Chase subsequently placed the 8 3/4% Notes
with qualified institutional buyers in reliance on Rule 144A under the
Securities Act. The 8 3/4% Notes accrue interest from their original issuance
date at a rate of 8 3/4% per annum, and have customary provisions regarding
redemption, changes in control, ranking, asset sales and other restrictive
covenants. The 8 3/4% Notes are unsecured senior subordinated indebtedness of
the Company and are subordinated in right of payment to all existing and
future senior indebtedness of the Company.
22
<PAGE>
9% NOTES
On July 3, 1997, the Company issued the Privately Placed Notes to Chase in a
transaction not registered under the Securities Act in reliance upon an
exemption under the Securities Act pursuant to the 9% Notes Indenture. Chase
subsequently placed the Privately Placed Notes with qualified institutional
buyers in reliance on Rule 144A under the Securities Act. The Privately Placed
Notes accrued interest from their original issuance date at the rate of 9% per
annum, and had substantially similar provisions as the Notes with respect to
redemption (including optional redemption in the first three years in
connection with one or more Public Equity Offerings (as defined herein)),
changes in control, ranking, Asset Sales (as defined herein) and other
restrictive covenants. The Privately Placed Notes were unsecured senior
subordinated obligations of the Company and were subordinated in right of
payment to all existing and future Senior Indebtedness of the Company.
On September 3, 1997, pursuant to Registration Statement on Form S-4 (Reg.
No. 333-32605) filed with the Commission on August 1, 1997 and declared
effective on September 3, 1997 (the Company offered to exchange $1,000
principal amount of the 9% Notes for each $1,000 principal amount outstanding
of the Privately Placed Notes. The September Exchange Offer was undertaken to
comply with certain Registration Rights granted to holders of the Privately
Placed Notes in connection with the June Offering pursuant to the Registration
Rights Agreement dated July 3, 1997. The form and terms of the 9% Notes
offered in the September Exchange Offer are the same as the form and terms of
the Privately Placed Notes (which they replaced) except that (i) the 9% Notes
bear a Series B designation, (ii) the 9% Notes have been registered under the
Securities Act and, therefore, do not bear legends restricting the transfer
thereof, and (iii) the holders of the 9% Notes are not entitled to any
registration rights. The September Exchange Offer was consummated on October
3, 1997, with all $400 million principal amount of Privately Placed Notes
being tendered for exchange. As a result, the Company currently has $400
million of 9% Notes outstanding; no Privately Placed Notes remain outstanding.
The 9% Notes Indenture contains several covenants, including: limitations on
indebtedness; limitations on certain restricted payments; limitations on
transactions with affiliates; restrictions on the disposition of proceeds of
asset sales; limitations on liens; limitations on dividend and other payment
restrictions affecting certain subsidiaries; limitations on guarantees by
certain subsidiaries; and limitations on mergers, sales of assets, etc.
2003 NOTES AND 2006 NOTES
On November 1, 1993, Dominion Textile (USA) Inc. ("DT USA"), a subsidiary of
Dominion, issued $150.0 million of 8 7/8% Guaranteed Senior Notes due 2003
(the "2003 Notes") pursuant to an indenture, dated as of November 1, 1993,
among DT USA, Dominion, as the Parent Guarantor, and First Union National
Bank, as successor trustee (the "2003 Notes Indenture"). On April 1, 1996, DT
USA issued an additional $125.0 million of 9 1/4% Guaranteed Senior Notes due
2006 (the "2006 Notes") pursuant to an indenture, dated as of April 1, 1996,
among DT USA, Dominion and First Union National Bank, as successor trustee
(the "2006 Notes Indenture"). Both the 2003 Notes and 2006 Notes are senior
Indebtedness of DT USA and are guaranteed on a joint and several basis by DT
USA and Dominion. DT USA became a wholly-owned subsidiary of Polymer Group,
Inc. in connection with the Nonwovens Acquisition.
On December 23, 1997, following the initial take-up of Dominion shares by DT
Acquisition in the Dominion Tender Offer, DT USA made tender offers to
purchase any and all outstanding 2003 Notes and 2006 Notes (the "2003 Tender
Offer" and "2006 Tender Offer," respectively), and solicited consents to
certain proposed amendments to the 2003 Notes Indenture and 2006 Notes
Indenture. The tender of notes in the 2003 Tender Offer and 2006 Tender Offer
was contingent upon such
23
<PAGE>
holder's consent to the proposed amendments to the 2003 Notes Indenture and
the 2006 Notes Indenture, until, in each case, such time that the requisite
number of consents to approve the proposed amendments had been obtained and a
supplemental indenture relating thereto had been executed. The proposed
amendments eliminated substantially all of the protective covenants in each of
the 2003 Notes Indenture and the 2006 Notes Indenture.
The total consideration offered for each validly tendered 2003 Note and
properly delivered consent was $1,065.32, which was equal to the present value
of $1,043.75 (the amount for which each 2003 Note could be repurchased at
November 1, 1998, its earliest call date) and any interest payments due from
the payment date to such call date, discounted using the yield rate of a
chosen reference security plus a fixed spread. The total consideration offered
for each validly tendered 2006 Note and properly delivered consent was
$1,138.50, which was equal to the present value of $1,046.25 (the amount for
which each 2003 Note could be repurchased at April 1, 2001, its earliest call
date), and any interest payments due from the payment date to such call date,
discounted using the yield rate of a chosen reference security plus a fixed
spread. Holders who tendered in the 2003 Tender Offer and the 2006 Tender
Offer prior to each respective expiration date for consents also received a
consent payment equal to 1% of the outstanding principal amount of notes
tendered (included in the total consideration described above).
On January 16, 1998, DT USA made a separate, unconditional offer to purchase
any and all outstanding 2003 Notes at a price equal to 101% of their aggregate
principal amount (the "Change of Control Offer"). The Change of Control Offer
was made solely for the purpose of satisfying certain provisions of the 2003
Indenture, which require such an offer to be made within 30 days of a change
in control of DT USA or Dominion. The Change of Control Offer expired on March
17, 1998.
On January 28, 1998, the expiration date for the 2003 Tender Offer and the
2006 Tender Offer, DT USA accepted for repurchase $145.6 million of 2003 Notes
and $124.5 million of 2006 Notes. DT USA currently has $4.4 million aggregate
principal amount of 2003 Notes and $0.5 million aggregate principal amount of
2006 Notes outstanding. DT USA accepted for repurchase $25,000 of the
remaining 2003 Notes in the Change of Control Offer. DT USA intends to
exercise its rights under Article IV of the 2003 Notes Indenture and Article
IV of the 2006 Notes Indenture to satisfy and discharge the 2003 Notes and the
2006 Notes at the permitted times described therein.
SAFE HARBOR STATEMENT
This Form 10-K contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In addition, from time to time,
the Company or its representatives have made or may make forward-looking
statements orally or in writing. Such forward-looking statements may be
included in, but not limited to, various filings made by the Company with the
Securities and Exchange Commission, press releases or oral statements made
with the approval of an authorized executive officer of the Company. Actual
results could differ materially from those projected or suggested in any
forward-looking statements as a result of a variety of factors and conditions.
The following factors could cause actual results to differ materially from
historical results or those anticipated: adverse economic conditions,
competition in the Company's markets, fluctuations in raw material costs, and
other risks detailed in documents filed by the Company with the Securities and
Exchange Commission, including the Company's Registration Statement on Form S-
4, declared effective on September 3, 1997, and Registration Statement on Form
S-1, declared effective on May 9, 1996.
24
<PAGE>
ITEM 2. PROPERTIES
The Company and its subsidiaries operate the following principal
manufacturing plants and other facilities, all of which are owned, except as
noted. All of the Company's owned properties are subject to liens in favor of
the lenders under the Company's credit facilities.
<TABLE>
<CAPTION>
TOTAL
LOCATION SQUARE FEET PRINCIPAL FUNCTION
-------- ----------- ------------------
<S> <C> <C>
North Little Rock, Arkansas 364,000 Manufacturing
(Plant 1)..................
North Little Rock, Arkansas 119,000 Manufacturing and Warehousing
(Plant 2)..................
Rogers, Arkansas............ 126,000 Manufacturing
Rogers, Arkansas............ 15,000(1) Warehousing
Gainesville, Georgia........ 121,000(1) Manufacturing and Warehousing
Dayton, New Jersey.......... 30,000(2) Administration
Landisville, New Jersey..... 245,000 Manufacturing, Sales, Marketing and
Research and Development
Vineland, New Jersey........ 83,500(3) Manufacturing
Benson, North Carolina...... 469,000 Manufacturing, Sales, Marketing and
Warehousing
Raleigh, North Carolina..... 5,300(1) Administration
Mooresville, North Carolina. 73,500 Manufacturing, Sales, Marketing and
Warehousing
Portland (Clackamas), 30,000 Manufacturing
Oregon.....................
North Charleston, South 4,500(3) Corporate
Carolina...................
Waynesboro, Virginia........ 175,000 Manufacturing, Warehousing, Marketing
and Research and Development
Waynesboro, Virginia........ 125,500 Warehousing
Buenos Aires, Argentina..... 79,000(4) Manufacturing, Marketing, Warehousing
and Administration
Vancouver, British Columbia. 60,000(1) Manufacturing
Mississauga, Ontario........ 2,900(1) Sales and Marketing
North Bay, Ontario.......... 350,000 Manufacturing
North Bay, Ontario.......... 80,000(1) Warehousing
Bailleul, France............ 305,584 Manufacturing, Marketing, Warehousing
and Administration
Neunkirchen, Germany........ 108,000 Manufacturing, Sales and Marketing
Guadalajara, Mexico......... 6,200(1) Sales, Marketing and Warehousing
Monterrey, Mexico........... 2,325(1) Sales, Marketing and Warehousing
Mexico City, Mexico......... 9,850(1) Sales, Marketing and Warehousing
San Luis Potosi, Mexico..... 100,000 Manufacturing and Marketing
Cuijk, The Netherlands...... 364,000 Warehousing, Manufacturing, Sales,
Marketing, Warehousing and Research
and Development
Tilburg, Netherlands........ 29,052 Manufacturing, Marketing, Warehousing
and Administration
Denton, Manchester 12,500 Manufacturing, Warehousing and
(England).................. Administration
Albany, New York............ 60,000 Manufacturing and Warehousing
Magog, Quebec............... 990,100 Manufacturing, Marketing, Warehousing
and Administration
Sherbrooke, Quebec.......... 16,823 Warehousing
Kingman, Kansas............. 182,000 Manufacturing, Marketing, Warehousing
and Administration
Clearfield, Utah............ 100,000 Manufacturing and Warehousing
</TABLE>
25
<PAGE>
- --------
(1) Leased.
(2) The Company owns this 239,200 square foot facility, leasing it to an
unaffiliated tenant, and subleases 30,000 square feet from such tenant.
The tenant can terminate the Company's sublease upon 12 months' notice.
(3) Leased from entities affiliated with one of the Company's stockholders.
See "Certain Relationships and Related Transactions."
(4) Joint venture (DNS) with Sauler Group (50% interest).
ITEM 3. LEGAL PROCEEDINGS
The Company is currently a party to various claims and legal actions which
arise in the ordinary course of business. The Company believes such claims and
legal actions, individually and in the aggregate, will not have a material
adverse effect on the business, financial condition or results of operations
of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is traded on the New York Stock Exchange, symbol
PGH. The Company has never paid or declared a cash dividend on its common
stock, nor does the Company expect to pay any cash dividends in the
foreseeable future. The following table sets forth for the calendar periods
indicated the high and low market prices of the Company's common stock.
<TABLE>
<CAPTION>
1997
-------------
HIGH LOW
------ ------
<S> <C> <C>
First Quarter............................................... $15.88 $13.25
Second Quarter.............................................. 16.13 12.00
Third Quarter............................................... 16.25 12.75
Fourth Quarter.............................................. 15.25 9.31
<CAPTION>
1996
-------------
HIGH LOW
------ ------
<S> <C> <C>
Second Quarter (a).......................................... $20.50 $17.50
Third Quarter............................................... 17.38 12.00
Fourth Quarter.............................................. 14.50 12.50
</TABLE>
- --------
(a) From May 9, 1996
TITLE OF CLASS
Common Stock, $.01 par value
As of April 1, 1998, there were 159 holders of record.
26
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth certain historical financial information of
the Company. The statement of operations data for each of the five years in
the period ended January 3, 1998 and the balance sheet data as of January 3,
1998, December 28, 1996, December 30, 1995, December 31, 1994 and January 1,
1994 have been derived from audited financial statements. The table should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the financial statements of the Company
and related notes thereto and other information included elsewhere in this
Annual Report on Form 10-K.
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------------------------------
JANUARY 3, DECEMBER 28, DECEMBER 30, DECEMBER 31, JANUARY 1,
1998 1996 1995 1994 1994
---------- ------------ ------------ ------------ ----------
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $ 535,267 $521,368 $437,638 $165,333 $121,473
Cost of goods sold...... 402,058 389,013 333,606 129,071 97,291
--------- -------- -------- -------- --------
Gross profit........... 133,209 132,355 104,032 36,262 24,182
Selling, general and
administrative
expenses............... 74,600 70,207 61,744 20,699 13,022
--------- -------- -------- -------- --------
Operating income....... 58,609 62,148 42,288 15,563 11,160
Other (income) expense:
Interest expense, net.. 30,499 33,641 37,868 13,216 4,387
Investment income--
(gain) on marketable
securities, net....... (11,880) -- -- -- --
Foreign currency
transaction (gains)
losses, net........... (452) 2,955 22,811 17,332 1,363
Income taxes........... 13,009 10,730 5,216 3,353 1,970
--------- -------- -------- -------- --------
Income (loss) before
extraordinary item.... 27,433 14,822 (23,607) (18,338) 3,440
Extraordinary item,
(loss) from
extinguishment of
debt................... (12,005) (13,932) -- (4,372) --
--------- -------- -------- -------- --------
Net income (loss)....... $ 15,428 $ 890 $(23,607) $(22,710) $ 3,440
Redeemable preferred
stock dividends and
accretion.............. -- (3,020) (4,839) (1,209) (2,480)
--------- -------- -------- -------- --------
Net income (loss)
applicable to common
stock.................. $ 15,428 $ (2,130) $(28,446) $(23,919) $ 960
========= ======== ======== ======== ========
Income (loss) before
extraordinary item per
common share--basic.... $ 0.86 $ 0.43 $ (1.39) $ (0.95) $ 0.05
========= ======== ======== ======== ========
Income (loss) before
extraordinary item per
common share--diluted.. $ 0.86 $ 0.43 $ (1.39) $ (0.95) $ 0.05
========= ======== ======== ======== ========
Average common shares
outstanding............ 32,000 27,688 20,500 20,500 20,500
========= ======== ======== ======== ========
OPERATING AND OTHER DATA:
Cash provided by
operating activities... $ 18,362 $ 36,097 $ 11,556 $ 17,386 $ 6,888
Cash (used in) investing
activities............. (491,901) (86,422) (333,208) (61,375) (6,958)
Cash provided by (used
in) financing
activities............. 485,953 64,391 327,636 58,482 (1,038)
Gross margin (a)........ 24.9% 25.4% 23.8% 21.9% 19.9%
EBITDA (b).............. $ 98,921 $ 98,915 $ 72,122 $ 23,864 $ 16,115
EBITDA margin (c)....... 18.5% 19.0% 16.5% 14.4% 13.3%
Depreciation and
amortization........... $ 40,312 $ 36,767 $ 29,834 $ 8,348 $ 4,955
Capital expenditures.... 60,144 26,739 47,842 11,341 6,505
BALANCE SHEET DATA (AT
END OF PERIOD):
Cash and cash
equivalents............ $ 50,190 $ 37,587 $ 18,088 $ 13,828 $ 2,694
Working capital
(deficit).............. 220,025 93,154 61,558 31,060 (5,786)
Total assets............ 1,627,753 708,115 637,981 241,942 103,187
Total debt, excluding
short-term bridge
financing.............. 745,136 382,242 450,878 190,814 57,562
Minority interest....... 54,730 -- -- -- --
Redeemable preferred
stock, dividends and
accretion.............. --- -- 44,339 -- 31,603
Shareholders' equity
(deficit).............. 199,090 195,918 13,752 2,220 (592)
</TABLE>
See Notes to Selected Consolidated Financial Data.
27
<PAGE>
NOTES TO SELECTED CONSOLIDATED FINANCIAL DATA
(a) Gross margin represents gross profit as a percentage of net sales.
(b) EBITDA is defined as operating income plus depreciation, amortization and
Mexican statutory employee profit sharing and is presented because it is
generally accepted as providing useful information regarding a company's
ability to service and/or incur debt. EBITDA should not be considered in
isolation from or as a substitute for net income, cash flows from
operating activities and other consolidated income or cash flow statement
data prepared in accordance with generally accepted accounting principles
or as a measure of profitability or liquidity.
(c) EBITDA margin represents EBITDA as a percentage of net sales.
28
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the percentage relationships to net sales of
certain income statement items.
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------
JANUARY 3, DECEMBER 28, DECEMBER 30,
1998 1996 1995
---------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales by product category:
Hygiene............................... 43.3% 44.4% 45.1%
Medical............................... 16.2 17.6 16.7
Wiping................................ 19.7 17.4 16.7
Industrial and specialty.............. 20.8 20.6 21.5
----- ----- -----
100.0% 100.0% 100.0%
Cost of goods sold.................... 75.1 74.6 76.2
----- ----- -----
Gross profit........................ 24.9 25.4 23.8
Selling, general and administrative
expenses............................. 13.9 13.4 14.1
----- ----- -----
Operating income...................... 11.0 12.0 9.7
Other (income) expense:
Interest expense, net............... 5.7 6.5 8.7
Investment income, (gain) on
marketable securities, net......... (2.2) -- --
Foreign currency transaction (gains)
losses, net........................ (.1) 0.5 5.2
----- ----- -----
Income (loss) before income taxes and
extraordinary item................... 7.6 5.0 (4.2)
Income taxes.......................... 2.5 2.1 1.2
----- ----- -----
Income (loss) before extraordinary
item................................. 5.1 2.9 (5.4)
Extraordinary item, net of income tax
benefit.............................. (2.2) (2.6) --
----- ----- -----
Net income (loss)..................... 2.9% 0.3% (5.4)%
===== ===== =====
</TABLE>
COMPARISON OF YEAR ENDED JANUARY 3, 1998 AND DECEMBER 28, 1996
NET SALES
Net sales increased approximately $14.0 million, or 2.7%, from $521.4
million in 1996 to $535.3 million in 1997.
Hygiene product sales increased approximately $0.7 million from $231.2
million in 1996 to $231.9 million in 1997. Net sales increased $8.1 million
primarily as a result of the acquisition of FNA and $9.5 million as a result
of growth in adhesive bond fabric sales and customer contractual obligations.
Net sales in the hygiene category was unfavorably impacted by $16.9 million
due to weaker European foreign currency translation rates and lower thermal
bond product sales as customers converted to spunbond materials faster in 1997
compared to 1996.
Medical product sales decreased 5.4%, or approximately $5.0 million, from
$91.7 million in 1996 to $86.7 million in 1997. This decrease was a result of:
(i) lower net raw material costs passed through to customers in the form of
lower average selling prices, (ii) unfavorable European foreign currency
translation rates, and (iii) other net decreases, including lower exports of
surgical gown and drape fabric, which were partially offset by sales increases
attributable to the acquisition of FNA and customer contractual obligations.
Within the wiping product category, sales increased 16.1%, or $14.6 million,
from $90.6 million in 1996 to $105.2 million in 1997 despite unfavorable
foreign currency translation rates in Europe. Improved sales in this product
category were driven by higher volumes of food service and specialty wiping
products and by growth in rollgood sales and geographic and product line
extensions.
29
<PAGE>
Sales in the industrial and specialty product category increased 3.4%, or
$3.7 million, from $107.8 million in 1996 to $111.5 million in 1997. Sales
growth was attributable to the acquisition of FNA and increased sales of woven
slit films offset by unfavorable European foreign currency translation rates
and lower sales of products for home fashions, automotive and apparel
interlining applications.
GROSS PROFIT
Gross profit increased to $133.2 million in 1997 versus $132.4 million in
1996. The approximate $0.8 million increase in gross profit over 1996
reflected the benefit of the acquisition of FNA offset by volume declines
attributable to unforeseeable delays at two key customers, higher
manufacturing costs associated with program ramp-up delays in Europe and
reduced overhead absorption as a result of lower thermal bond volume offset
somewhat by lower raw material costs.
Raw material costs in 1997 were approximately $236.0 million, or 44.1% of
net sales, compared to $240.1 million, or 46.1% of net sales, in 1996. This
decrease reflects the continued trend in lower raw material costs, offset
somewhat by higher levels of material usage in North America and Europe.
Direct labor costs were $42.3 million, or 7.9% of net sales in 1997, compared
to $39.3 million, or 7.6% of net sales in 1996. Overhead costs were $109.5
million, or 20.9% of net sales, in 1996 versus $123.8 million, or 23.1% of net
sales, in 1997. The increase in overhead costs between 1997 and 1996 results
from higher depreciation on completed capital expenditures, incremental
overhead associated with the acquisition of FNA and unfavorable manufacturing
costs associated with program ramp-up delays and lower thermal bond volume.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were 13.9% of net sales, or
$74.6 million, in 1997 compared to 13.4% of net sales, or $70.2 million, in
1996. Research and development expense was $9.6 million in 1997 compared to
$6.9 million in 1996.
OTHER
Interest expense in 1997 decreased $3.1 million, from $33.6 million in 1996
to $30.5 million in 1997. Interest expense as a percentage of net sales
decreased from 6.5% in 1996 to 5.7% in 1997. The decrease in interest expense
is principally due to a lower average amount of indebtedness outstanding in
1997 prior to the refinancing of the Company's indebtedness in June of 1997.
The Company recorded net investment income related to its gain on marketable
securities of $11.9 million during 1997.
Net foreign currency transaction gains were approximately $0.5 million in
1997 compared to foreign currency losses of approximately $3.0 million in
1996. The Company provided for income taxes of approximately $13.0 million in
1997, representing an effective tax rate of 32.2% before extraordinary item.
The provision for income taxes at the Company's effective rate differed from
the provision for income taxes at the statutory rate due primarily to the
utilization of net operating loss carryforwards and to tax strategies
initiated at the time of the Company's Initial Public Offering in 1996.
INCOME BEFORE EXTRAORDINARY ITEM
The Company's income before extraordinary item was $27.4 million, or $.86
per common share, as compared to $14.8 million, or $.43 per common share in
1996. The approximate $12.6 million increase between 1997 and 1996 is
attributable to net investment income gains of $11.9 million, lower interest
expense and a lower effective tax rate, offset by reduced overhead absorption
due to lower thermal bond volume, offset somewhat by lower raw material costs,
higher manufacturing costs associated with program ramp-up delays in Europe
and volume declines associated with delays at certain key customers.
30
<PAGE>
EXTRAORDINARY ITEM
The Company recorded one-time charges of $12.0 million, net of taxes, for
the write-off of previously capitalized debt issue costs and premiums paid in
connection with the refinancing of its indebtedness in June of 1997.
COMPARISON OF YEAR ENDED DECEMBER 28, 1996 AND DECEMBER 30, 1995
NET SALES
Net sales for 1996 were $521.4 million, a 19.1% increase over net sales of
$437.6 million in 1995.
Hygiene product sales increased $33.6 million to $231.2 million in 1996,
from $197.6 million in 1995. Sales of hygiene products made with spunbond and
SMS, adhesive bond and apertured film technologies increased by $28.5 million
in 1996. Driving the internal growth of hygiene products was the SMS expansion
in San Luis Potosi, Mexico and rising demand for apertured film facings,
partially offset by declining thermal bond volume and the discontinuation of
purchased spunbond from a former joint venture partner.
Medical product sales increased $18.7 million to $91.7 million in 1996, from
$73.0 million in 1995. The Company's medical business benefited from a high
level of unit volume growth during the year,
offset by a decrease in average unit selling prices as a result of the pass
through of lower raw material costs. The net increase in total medical sales
between 1996 and 1995 attributable to volume growth was $7.5 million, or
10.2%, offset by price reductions of $5.9 million related to lower material
cost. Growth in medical sales attributable to the acquisition of FNA and
Chicopee were $17.2 million.
Wiping product sales were $90.6 million in 1996, compared to $73.0 million
in 1995, reflecting an increase of $17.6 million. Revenue growth in the wipes
category was principally due to inclusion of a full year of Chicopee
operations.
Sales of industrial and specialty products were $107.8 million in 1996,
compared to $94.1 million in 1995, up 14.6% due primarily to the acquisitions
of FNA and Chicopee. In addition, industrial and specialty product revenue
grew in 1996 as a result of (i) new product introductions such as decal
backings, apparel interlinings, window coverings and landscape fabrics, and
(ii) growth in established product lines such as microporous separators, crop
covers, home furnishings, clean room rollgoods and industrial protective
coverings.
GROSS PROFIT
Gross profit was $132.4 million, or 25.4% of net sales, compared to $104.0
million, or 23.8% of net sales in 1995. The improvement in gross profit as a
percentage of sales was largely due to lower raw material costs. Additionally,
the Company increased its gross margins as a result of improvements in
manufacturing efficiencies and material utilization and a mix shift to greater
value added products. The Company has improved material utilization primarily
by reducing waste, controlling weight variation and designing lower basis
weight products. Overhead expenses increased from 19.9% of net sales in 1995
to 20.9% of net sales in 1996 as a result of higher depreciation on completed
capital expenditures and transitional overhead associated with the integration
of value-added production in the hygiene product category.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $70.2 million in 1996,
compared with $61.7 million in 1995, an increase of $8.5 million primarily due
to the FNA Acquisition in August 1996 and a full year of expenses related to
the Chicopee operations, compared with nine and one half months in
31
<PAGE>
1995. As a percentage of net sales, selling, general and administrative
expenses decreased to 13.4% in 1996 from 14.1% in 1995. Research and
development expense was $6.9 million in 1996 compared to $6.4 million in 1995.
OTHER
Interest expense decreased $4.3 million from $37.9 million in 1995 to $33.6
million in 1996. Interest expense as a percentage of net sales decreased to
6.5% in 1996 from 8.7% in 1995. These decreases are principally due to a lower
average amount of indebtedness outstanding in 1996. Net foreign currency
transaction losses were approximately $3.0 million in 1996 versus $22.8
million in 1995. In 1996, the Company's European operations incurred net
foreign currency transaction losses of $6.2 million which were offset by net
foreign currency transaction gains of $3.3 million within the Company's
Mexican operation. The Initial Public Offering and the recapitalization
consummated concurrently therewith eliminated the majority of the Company's
United States dollar intercompany debt, effectively reducing the Company's
exposure to foreign currency fluctuations.
INCOME BEFORE EXTRAORDINARY ITEM
Income before extraordinary item was $14.8 million in 1996 versus a loss
before extraordinary item of $(23.6) million in 1995. Income before
extraordinary item was favorably impacted during 1996 by increased
profitability attributable primarily to volume increases within the hygiene
and industrial and specialty product categories. Offsetting the effects of
improved gross profit were foreign currency transaction losses of
approximately $3.0 million in 1996. The Company provided for income taxes of
$10.7 million during 1996, representing an effective tax rate of approximately
42%. Unfavorably impacting net income in the prior year was a higher effective
tax rate resulting from foreign losses which did not give rise to a
corresponding tax benefit.
EXTRAORDINARY ITEM
As a result of the recapitalization effected concurrently with the Initial
Public Offering, the Company recorded one-time charges of approximately $13.9
million, net of taxes, related to the write-off of previously capitalized debt
issue costs and prepayment penalties paid in connection with the repurchase of
$50.0 million in principal of outstanding Senior Notes.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING ACTIVITIES
During 1997, the Company's operations generated $18.4 million of cash. The
Company's working capital increased $126.8 million, from $93.2 million at
December 28, 1996 to $220.0 million at January 3, 1998. Cash and equivalents
were $50.2 million at January 3, 1998 as compared to $37.6 million at December
28, 1996. This increase arose principally from higher net income in 1997.
At December 28, 1996, the Company had $36.1 million of cash, compared to
$11.6 million during 1995, an increase of $24.5 million. This increase was
attributable to a higher level of operating income in 1996 and lower interest
costs due to a lower average amount of indebtedness outstanding in 1996. The
Company's working capital increased $31.6 million, or 51.3%, from $61.6
million in 1995 to $93.2 million in 1996, mainly as a result of increases in
accounts receivable and inventories offset by increased accounts payable and
accrued expenses. Cash and equivalents and marketable securities were $48.5
million at December 28, 1996 as compared to $22.9 million at December 30,
1995, a net increase of $25.6 million.
32
<PAGE>
INVESTING AND FINANCING ACTIVITIES
Capital expenditures for 1997 totaled $60.1 million, an increase of $33.4
million over 1996 due primarily to expansion of adhesive bond and reticulon
capacity, and a new 4.2 meter wide SMS line at the Company's Mooresville,
North Carolina plant site. Commercialization of this new line was completed
during the fourth quarter of 1997. For fiscal 1998, the Company has budgeted
approximately $31.0 million for sustaining capital expenditures and
approximately $52.0 million for margin-enhancing capital expenditures.
On July 3, 1997, the Company refinanced its outstanding indebtedness by: (i)
consummating the offering of the Privately Placed Notes and the tender offer
and related consent solicitation for its Senior Notes; and (ii) amending and
restating its then existing credit facility. In connection with consummation
of the June Refinancing, the Company recorded one-time charges of $12.0
million (net of tax) for the write-off of previously capitalized debt issue
costs and premiums paid with respect to the repurchase of the Senior Notes.
On December 19, 1997, DT Acquisition completed the purchase of approximately
98% of the outstanding common shares of Dominion for Cdn$14.50 per share and
approximately 96% of the outstanding first preferred shares of Dominion for
Cdn$150 per share. Additionally, on December 29, 1997, DT Acquisition acquired
an additional 331,207 common shares. The acquisition, which was accounted for
using the purchase method of accounting, was financed with $215.9 million of
borrowings under DTA's $600.0 million senior secured credit facilities, and
subordinated advances of $141.0, $69.0, and $25.0 million by Galey, ZB
Holdings and the Company, respectively.
On January 29, 1998, DT Acquisition acquired all remaining common and
preferred shares of Dominion which then underwent a "winding up." All assets
of Dominion were transferred to DT Acquisition, all liabilities of Dominion
were assumed by DT Acquisition and all outstanding common shares and first
preferred shares held by DT Acquisition were redeemed. Immediately thereafter,
pursuant to a purchase agreement dated October 27, 1997, and a Master
Separation Agreement dated January 29, 1998, the Apparel Fabrics Business was
sold to Galey for approximately $464.5 million, including related fees and
expenses, and the Company acquired the Nonwovens Business of Dominion for
approximately $351.6 million, including fees and expenses. Concurrently, DT
USA purchased approximately $145.6 million of its $150.0 million outstanding 8
7/8% Guaranteed Senior Notes due 2003. At the same time, DT USA purchased
approximately $124.5 million of its $125.0 million outstanding 9 1/4%
Guaranteed Senior Notes due 2006. In addition, on January 29, 1998 and in
connection with acquisition of the Nonwovens Business, the Company amended its
credit facility to provide a term loan of $125.0 million and a revolving
credit commitment of $325.0 million.
On March 5, 1998 the Company issued $200 million of 8 3/4% Senior
Subordinated Notes due 2008.
On March 16, 1998, the Company acquired the manufacturing and business
assets of a leading North American manufacturer of polypropylene-based,
commercial twine and polyethylene-based specialty knitted products for
approximately $47.0 million.
On May 15, 1996, the Company completed the Initial Public Offering, in which
it offered and sold 11.5 million shares of common stock at an offering price
of $18.00 per share. Net proceeds to the Company after underwriting fees and
related costs were $190.8 million.
The Company believes that based on current levels of operations and
anticipated growth, its cash from operations, together with other available
sources of liquidity, including but not limited to, borrowings under the
Amended Credit Facility, will be adequate over the next several years to make
required debt payments, including interest thereon, permit anticipated capital
expenditures and fund the Company's working capital requirements.
33
<PAGE>
EFFECT OF INFLATION
Inflation generally affects the Company by increasing the cost of labor,
equipment and new materials. The Company does not believe that inflation has
had any material effect on the Company's results of operations.
FOREIGN CURRENCY
The Company manufactures certain of its products in Germany, Canada, Mexico,
France, England and the Netherlands. The Company accounts for and reports
translation of foreign currency transactions and foreign currency financial
statements in accordance with FAS 52. Since the Company's substantial foreign
operations expose it to the risk of exchange rate fluctuations, if foreign
currency denominated revenues are greater than costs, the translation of
foreign currency denominated costs and revenues into dollars will improve
profitability when the foreign currency strengthens against the dollar and
will reduce profitability when the foreign currency weakens. In addition, the
remeasurements of foreign currency denominated assets and liabilities into
dollars gives rise to foreign exchange gains and losses which are included in
the determination of net income.
DERIVATIVES
The Company does not use derivative financial instruments for trading
purposes. Such products are used only to manage well-defined interest rate and
certain foreign currency risks, as discussed below. Premiums paid for
purchased interest rate cap agreements are charged to expense over the rate
cap period. Charges to expense in 1997 and 1996 related to derivative products
were not significant.
The Company may enter into financial instruments, which are limited in
duration and scope, to manage its exposure to fluctuations of foreign currency
rates. These instruments are used for hedging purposes and are employed in
connection with an underlying asset, liability, firm commitment or anticipated
transaction. Gains and losses on hedges of existing assets and liabilities are
included in the carrying amounts of those assets or liabilities and are
ultimately recognized in income as part of those carrying amounts. Gains and
losses related to qualifying hedges of firm commitments or anticipated
transactions are also deferred and recognized in income or as adjustments of
carrying amounts when the hedged transaction occurs. Gains and losses, if any,
on financial instruments that do not qualify as hedges for accounting purposes
are recognized in the determination of net income.
NEW ACCOUNTING STANDARDS
In 1997, Statement No. 128, "Earnings Per Share" ("FAS 128") was issued. FAS
128 replaced the calculation of primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effect of options, warrants and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts for all periods have been presented, and where appropriate, restated
to conform to the FAS 128 requirements.
In 1997, Statement No. 130, "Reporting Comprehensive Income" ("FAS 130") was
issued. FAS 130 is effective for fiscal years beginning after December 15,
1997 and requires new rules for the reporting and display of comprehensive
income and its components. FAS 130 requires unrealized gains or losses on the
Company's available for sale securities and foreign currency translation
adjustments, which prior to adoption were reported separately as a component
of shareholders' equity, to be included in other comprehensive income. The
Company will adopt the new requirements in 1998.
In 1997, Statement No. 131, "Disclosure about Segments of an Enterprise and
Related Information" ("FAS 131"), which is effective for years beginning after
December 15, 1997, was issued. FAS 131 establishes standards for the way that
public business enterprises report information about
34
<PAGE>
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. The Company will
adopt the new requirements in 1998.
ENVIRONMENTAL
The Company is subject to a broad range of federal, foreign, state and local
laws and regulations relating to the pollution and protection of the
environment. Among the many environmental requirements applicable to the
Company are laws relating to air emission, wastewater discharges and the
handling, disposal and release of solid and hazardous substances and wastes.
Based on continuing internal review and advice from independent consultants,
the Company believes that it is currently in substantial compliance with
environmental requirements. The Company is also subject to laws, such as the
Federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"), that may impose liability retroactively and without fault
for releases of hazardous substances at on-site or off-site locations. The
Company is not aware of any releases for which it may be liable under CERCLA
or any analogous provision. As a result, the Company does not currently
anticipate any material adverse effect on its operations, financial condition
or competitive position as a result of its efforts to comply with
environmental requirements. Some risk of environmental liability is inherent,
however, in the nature of the Company's business, and there can be no
assurance that material environmental liabilities will not arise.
YEAR 2000
The Company has made an initial assessment of certain computer systems'
compatibility with the "Year 2000" issue and has determined that it will need
to modify or replace portions of its software so that its computer systems
will function properly with respect to dates in the Year 2000 and beyond. The
Company presently believes that with modifications to existing software and
conversions to new software, the Year 2000 issue will not pose significant
operational problems for its computer systems. The Company will utilize both
internal and external resources to reprogram, or replace, and test the
software for the Year 2000 modifications. Management does not currently expect
the total costs of the year 2000 conversion project to be material to the
financial condition of the Company taken as a whole. The costs of the project
and the date on which the Company believes it will complete the Year 2000
modifications are based on management's best estimates, which were derived
utilizing assumptions of future events, including the continued availability
of certain resources, third party modification plans and other factors.
However, there can be no guarantee that these estimates will be achieved and
actual results could differ from those anticipated. Specific factors that
might cause material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes and similar uncertainties.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Not applicable.
35
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<S> <C>
Report of Ernst & Young LLP, Independent Auditors.......................... 37
Consolidated Balance Sheets as of January 3, 1998 and December 28, 1996.... 38
Consolidated Statements of Operations for the fiscal years ended January 3,
1998, December 28, 1996 and December 30, 1995............................. 39
Consolidated Statements of Shareholders' Equity for the fiscal years ended
January 3, 1998, December 28, 1996 and December 30, 1995.................. 40
Consolidated Statements of Cash Flows for the fiscal years ended January 3,
1998, December 28, 1996 and December 30, 1995............................. 41
Notes to Consolidated Financial Statements for the fiscal years ended
January 3, 1998, December 28, 1996 and December 30, 1995.................. 42
</TABLE>
36
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Polymer Group, Inc.
We have audited the accompanying consolidated balance sheets of Polymer
Group, Inc. as of January 3, 1998 and December 28, 1996 and the related
consolidated statements of operations, shareholders' equity, and cash flows
for each of the three years in the period ended January 3, 1998. Our audits
also included the financial statements schedule listed in the Index at Item
14(a). These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Polymer
Group, Inc. at January 3, 1998 and December 28, 1996 and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended January 3, 1998 in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.
Ernst & Young LLP
Greenville, South Carolina
March 25, 1998
37
<PAGE>
POLYMER GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28,
ASSETS 1998 1996
------ ---------- ------------
<S> <C> <C>
Current assets:
Cash and equivalents................................ $ 50,190 $ 37,587
Marketable securities............................... 7,754 10,892
Accounts receivable, net............................ 107,328 64,752
Inventories......................................... 94,128 55,637
Deferred income taxes............................... 4,161 5,172
Assets held for disposition, net.................... 464,524 --
Other............................................... 26,985 10,387
---------- --------
Total current assets.............................. 755,070 184,427
Property, plant and equipment, net.................... 606,260 406,527
Intangibles, loan acquisition and organization costs,
net.................................................. 229,391 96,932
Deferred income taxes................................. 9,183 10,741
Other................................................. 27,849 9,488
---------- --------
Total assets...................................... $1,627,753 $708,115
========== ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable.................................... $ 52,165 $ 36,059
Accrued liabilities................................. 52,133 33,130
Income taxes payable................................ 1,242 1,196
Deferred income taxes............................... 284 1,391
Short-term bridge financing......................... 425,945 --
Current portion of long-term debt................... 3,276 19,497
---------- --------
Total current liabilities......................... 535,045 91,273
Long-term debt, less current portion.................. 741,860 362,745
Deferred income taxes................................. 82,213 52,115
Other noncurrent liabilities.......................... 14,815 6,064
Minority interest..................................... 54,730 --
Shareholders' equity:
Series preferred stock--$.01 par value, 10,000,000
shares authorized at 1997 and 1996; 0 shares issued
and outstanding at 1997 and 1996................... -- --
Common stock--$.01 par value, 100,000,000 shares
authorized at 1997 and 1996; 32,000,000 shares
issued and outstanding at 1997 and 1996............ 320 320
Non-voting common stock--$.01 par value; 3,000,000
shares authorized at 1997 and 1996; 0 shares issued
and outstanding at 1997 and 1996................... -- --
Additional paid-in capital.......................... 243,662 243,662
(Deficit)........................................... (39,355) (54,783)
Cumulative translation adjustment................... (5,544) 6,790
Unrealized holding gain (loss) on marketable
securities......................................... 7 (71)
---------- --------
199,090 195,918
---------- --------
Total liabilities and shareholders' equity........ $1,627,753 $708,115
========== ========
</TABLE>
See accompanying notes.
38
<PAGE>
POLYMER GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED
-----------------------------------
JANUARY
3, DECEMBER 28, DECEMBER 30,
1998 1996 1995
-------- ------------ ------------
<S> <C> <C> <C>
Net sales................................. $535,267 $521,368 $437,638
Cost of goods sold........................ 402,058 389,013 333,606
-------- -------- --------
Gross profit.............................. 133,209 132,355 104,032
Selling, general and administrative
expenses................................. 74,600 70,207 61,744
-------- -------- --------
Operating income.......................... 58,609 62,148 42,288
Other (income) expense:
Interest expense, net................... 30,499 33,641 37,868
Investment income--(gain) on marketable
securities, net........................ (11,880) -- --
Foreign currency transaction (gains)
losses, net............................ (452) 2,955 22,811
-------- -------- --------
18,167 36,596 60,679
-------- -------- --------
Income (loss) before income taxes and
extraordinary item....................... 40,442 25,552 (18,391)
Income taxes.............................. 13,009 10,730 5,216
-------- -------- --------
Income (loss) before extraordinary item... 27,433 14,822 (23,607)
Extraordinary item, loss from
extinguishment of debt, net of income tax
benefit of $5,959 in 1997 ($7,492 in
1996).................................... (12,005) (13,932) --
-------- -------- --------
Net income (loss)......................... 15,428 890 (23,607)
Redeemable preferred stock dividends and
accretion................................ -- (3,020) (4,839)
-------- -------- --------
Net income (loss) applicable to common
stock.................................... $ 15,428 $ (2,130) $(28,446)
======== ======== ========
Net income (loss) per common share:
Basic:
Average common shares outstanding..... 32,000 27,688 20,500
Income (loss) before extraordinary
item................................. $ .86 $ .43 $ (1.39)
Extraordinary item, net of income tax
benefit.............................. (.38) (.51) --
-------- -------- --------
Net income (loss) per common share--
basic................................ $ .48 $ (.08) $ (1.39)
======== ======== ========
Diluted:
Average common shares outstanding..... 32,000 27,688 20,500
Income per share before extraordinary
item................................. $ .86 $ .43 $ (1.39)
Extraordinary item, net of income tax
benefit.............................. (.38) (.51) --
-------- -------- --------
Net income (loss) per common share--
diluted.............................. $ .48 $ (.08) $ (1.39)
======== ======== ========
</TABLE>
See accompanying notes.
39
<PAGE>
POLYMER GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE FISCAL YEARS ENDED JANUARY 3, 1998, DECEMBER 28, 1996 AND DECEMBER 30,
1995
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
UNREALIZED
HOLDING GAIN
ADDITIONAL CUMULATIVE (LOSS) ON
COMMON PAID-IN TRANSLATION MARKETABLE
STOCK CAPITAL (DEFICIT) ADJUSTMENT SECURITIES TOTAL
------ ---------- --------- ----------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance--December 31,
1994................... $ 17 $ 22,626 $(24,207) $ 3,784 $ -- $ 2,220
Exchange of Class A and
B stock (32,959,130
shares)................ (17) (22,626) -- -- -- (22,643)
Issuance of Class A-1
stock (5,359,615
shares)................ 3 21,155 -- -- -- 21,158
Issuance of Class A-2
stock (698,883 shares). -- 4,015 -- -- -- 4,015
Issuance of Class A-3
stock (2,296,330
shares)................ 1 4,621 -- -- -- 4,622
Issuance of Class B
stock (10,727,437
shares)................ 6 22,843 -- -- -- 22,849
Issuance of warrants.... -- 500 -- -- -- 500
Net loss................ -- -- (23,607) -- -- (23,607)
Foreign currency
translation
adjustments............ -- -- -- 9,135 -- 9,135
Cumulative dividends on
redeemable preferred
stock and discount
accretion.............. -- -- (4,839) -- -- (4,839)
Unrealized holding gain
on marketable
securities............. -- -- -- -- 342 342
---- -------- -------- -------- ----- --------
Balance--December 30,
1995................... 10 53,134 (52,653) 12,919 342 13,752
Exercise of warrants
(1,417,735 shares)..... 1 (1) -- -- -- --
Approximate 19.97 to 1
stock split............ 194 (194) -- -- -- --
Issuance of stock, net
of costs incurred
(11,500,000 shares).... 115 190,723 -- -- -- 190,838
Net income.............. -- -- 890 -- -- 890
Foreign currency
translation
adjustments............ -- -- -- (6,129) -- (6,129)
Cumulative dividends on
redeemable preferred
stock and discount
accretion.............. -- -- (3,020) -- -- (3,020)
Unrealized holding
(loss) on marketable
securities............. -- -- -- -- (413) (413)
---- -------- -------- -------- ----- --------
Balance--December 28,
1996................... 320 243,662 (54,783) 6,790 (71) 195,918
Net income.............. -- -- 15,428 -- -- 15,428
Foreign currency
translation
adjustments............ -- -- -- (12,334) -- (12,334)
Unrealized holding gain
on marketable
securities............. -- -- -- -- 78 78
---- -------- -------- -------- ----- --------
Balance--January 3,
1998................... $320 $243,662 $(39,355) $ (5,544) $ 7 $199,090
==== ======== ======== ======== ===== ========
</TABLE>
See accompanying notes.
40
<PAGE>
POLYMER GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED
------------------------------------
JANUARY 3, DECEMBER 28, DECEMBER 30,
1998 1996 1995
---------- ------------ ------------
<S> <C> <C> <C>
Operating activities
Net income (loss)....................... $ 15,428 $ 890 $ (23,607)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Extraordinary item, net of income tax
benefit................................ 12,005 13,932 --
Depreciation and amortization expense... 40,312 36,767 29,834
Foreign currency transaction (gains)
losses, net............................ (452) 2,955 22,811
Gain on marketable securities classified
as trading, net........................ (11,880) -- --
Provision for losses on accounts
receivable and price concessions....... 7,337 9,060 5,788
Provision for deferred income taxes..... 5,985 7,831 (1,375)
Changes in operating assets and
liabilities, net of effect of
acquisitions:
Accounts receivable................... (19,157) (11,966) (16,160)
Inventories........................... (6,453) (6,353) (7,799)
Accounts payable and accrued expenses. (4,304) (5,860) (2,666)
Other, net............................ (20,459) (11,159) 4,730
-------- --------- ---------
Net cash provided by operating
activities......................... 18,362 36,097 11,556
Investing activities
Purchases of property, plant and
equipment.............................. (60,144) (26,739) (47,842)
Purchases of marketable securities
classified as available for sale....... (15,251) (22,879) (22,521)
Proceeds from sales of marketable
securities classified as available for
sale................................... 17,003 16,713 19,929
Acquisition of businesses, net of cash
acquired............................... (429,559) (52,466) (281,358)
Organization and other costs............ (3,950) (1,051) (1,416)
-------- --------- ---------
Net cash (used in) investing
activities......................... (491,901) (86,422) (333,208)
Financing activities
Issuance of common stock, net of costs
incurred............................... -- 190,838 30,000
Proceeds from debt...................... 480,846 308,277 273,654
Proceeds from short-term bridge
financing.............................. 425,945 -- --
Payments of debt........................ (402,282) (375,989) (13,638)
Issuance of redeemable preferred stock
and warrants........................... -- 10,000 40,000
Redemption of preferred stock........... -- (57,359) --
Loan acquisition, debt prepayment and
other costs, net....................... (18,556) (11,376) (2,380)
-------- --------- ---------
Net cash provided by financing
activities......................... 485,953 64,391 327,636
Effect of exchange rate changes on cash... 189 5,433 (1,724)
-------- --------- ---------
Net increase in cash and
equivalents........................ 12,603 19,499 4,260
Cash and equivalents at beginning of
year............................... 37,587 18,088 13,828
-------- --------- ---------
Cash and equivalents at end of year. $ 50,190 $ 37,587 $ 18,088
======== ========= =========
Noncash investing and financing activities
Cumulative dividends on redeemable
preferred stock and accretion.......... $ -- $ 3,020 $ 4,839
Approximate 19.97 to 1 stock split...... -- 194 --
Supplemental information
Cash paid for interest.................. 40,768 38,111 43,186
Cash paid for income taxes.............. 7,419 6,602 5,027
Acquisition of businesses
Fair value of assets acquired........... 391,920 61,946 358,814
Fair value of assets acquired--held for
disposition............................ 464,524 -- --
Liabilities assumed and incurred........ (426,885) (9,480) (77,456)
Acquisition of businesses, net of cash
acquired............................... 429,559 52,466 281,358
</TABLE>
See accompanying notes.
41
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Polymer Group, Inc. (the "Company") operates in one business segment,
manufacturing and marketing woven and nonwoven polyolefin fabric. The
Company's principal lines of business include hygiene, medical, wiping and
industrial and specialty products. The Company operates manufacturing
facilities located in the United States, Canada, Mexico, The Netherlands,
France, Germany and England.
Basis of Presentation and Use of Estimates
The accompanying consolidated financial statements of the Company, a
Delaware corporation incorporated on June 16, 1994, are prepared on the basis
of generally accepted accounting principles and include the accounts of the
Company and its subsidiaries. All material intercompany accounts are
eliminated in consolidation. Certain amounts previously presented in the
consolidated financial statements for prior periods have been reclassified to
conform to current classification. The Company recorded minority interest in
the consolidated balance sheet of $54.7 million at January 3, 1998. This
minority interest represents the minority shareholders' interest in the
shareholders' equity of Dominion Textile Inc. ("Dominion"). The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
Company's investment in DNS (as defined in "Note 2. Acquisitions") is
accounted for on the equity method.
Revenue Recognition
Revenue from product sales is recognized at the time ownership of goods
transfers to the customer and the earnings process is complete.
Cash Equivalents and Interest Income
Investment securities with maturities of three months or less at the time of
acquisition are considered cash equivalents. Interest income approximated $2.4
and $1.9 million during 1997 and 1996, respectively, and consists primarily of
income from highly liquid investment sources. Interest expense in the
consolidated statements of operations is net of interest income and
capitalized interest. Interest income was not significant in 1995.
Marketable Securities
The Company accounts for its investments using Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("FAS 115"). The statement requires that certain debt and
equity securities be adjusted to market value at the end of each accounting
period. Market value gains and losses are charged to earnings if the
securities are traded for short-term profit. Otherwise, such gains and losses
are charged or credited to a separate component of shareholders' equity.
Management determines the proper classifications of investments at the time of
purchase and reevaluates such designation as of each balance sheet date. At
January 3, 1998 and December 28, 1996, all securities covered by FAS 115 were
designated as available-for-sale. Accordingly, these securities are stated at
fair value, with unrealized gains and losses reported in a separate component
of shareholders' equity. Realized gains and losses on sales of investments,
42
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
as determined on the specific identification basis, are included in the
determination of net income. Marketable securities as of January 3, 1998 and
December 28, 1996 consist of the following:
<TABLE>
<CAPTION>
1997 1996
------ -------
(IN THOUSANDS)
<S> <C> <C>
Marketable securities (common and preferred stock):
Cost.................................................... $7,747 $10,963
Unrealized gains........................................ 7 --
Unrealized (losses)..................................... -- (71)
------ -------
Gross fair value........................................ $7,754 $10,892
====== =======
</TABLE>
Accounts Receivable and Concentration of Credit Risks
Accounts receivable potentially expose the Company to concentration of
credit risk, as defined by Statement of Financial Accounting Standards No.
105, "Disclosure of Information about Financial Instruments with Off-Balance
Sheet Risk and Financial Instruments with Concentration of Credit Risk." The
Company provides credit in the normal course of business and performs ongoing
credit evaluations on certain of its customers' financial condition, but
generally does not require collateral to support such receivables. The Company
also establishes an allowance for doubtful accounts based upon factors
surrounding the credit risk of specific customers, historical trends and other
information. The allowance for doubtful accounts was $5.5 and $3.8 million at
January 3, 1998 and December 28, 1996, respectively, which management believes
is adequate to provide for credit loss in the normal course of business, as
well as losses for customers who have filed for protection under the
bankruptcy law. Johnson & Johnson ("J&J") and The Procter & Gamble Company
("P&G") accounted for approximately 26% and 16%, respectively, of the
Company's sales in 1997. In 1996, J&J and P&G accounted for approximately 29%
and 14%, respectively, of the Company's sales. In 1995, J&J and P&G accounted
for approximately 28% and 15%, respectively, of the Company's sales.
Inventories
Inventories are stated at the lower of cost or market using the first-in,
first-out method of accounting and, as of January 3, 1998 and December 28,
1996, consist of the following:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Finished goods........................................... $48,769 $26,809
Work in process and stores and maintenance parts......... 11,201 3,328
Raw materials............................................ 34,158 25,500
------- -------
Total................................................ $94,128 $55,637
======= =======
</TABLE>
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is computed for financial reporting purposes on the
straight-line method over the estimated useful lives of the related assets.
The estimated useful lives established for building and land improvements
range
from 18 to 33 years, and the estimated useful lives established for machinery,
equipment and other fixed assets range from 3 to 15 years. Costs of the
construction of certain long-term assets include capitalized interest which is
amortized over the estimated useful life of the related asset. The Company
capitalized approximately $1.6, $0.8 and $1.9 million of interest costs during
1997, 1996 and 1995, respectively.
43
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Intangibles, Loan Acquisition and Organization Costs
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Assets to be
Disposed Of" ("FAS 121"). FAS 121 requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the expected future cash flows of those assets are less than the assets'
carrying amount. FAS 121 also addresses the accounting for long-lived assets
that are expected to be sold or discarded. The Company adopted FAS 121 on
December 31, 1995. The effect of adoption was not material to the Company's
financial condition or results of operations.
The excess of cost over the fair value of net assets of companies acquired
is amortized on the straight-line method over an estimated useful life of 40
years. Identified intangible assets consist primarily of costs allocated in
the acquisitions to supply agreements, proprietary technology and other
acquisition-related arrangements. Such costs are amortized on the straight-
line method over periods not exceeding an estimated useful life of ten years.
Capitalized organization costs are amortized over five years on the straight-
line method. Loan acquisition costs relating to long-term debt are amortized
over the term of the related debt. The lives established for these assets are
a composite of many factors; accordingly, the Company evaluates the continued
appropriateness of these lives based upon the latest available economic
factors and circumstances. The carrying value of goodwill is reviewed if the
facts and circumstances suggest that it may be impaired. If this review
indicates that goodwill will not be recoverable, as determined based on the
undiscounted cash flows of the entity acquired over the remaining amortization
period, the Company's carrying value of the goodwill is reduced by the
estimated shortfall of discounted cash flows.
Derivatives
The Company does not use derivative financial instruments for trading
purposes. Such products are used only to manage well-defined interest rate and
certain foreign currency risks, as discussed below. Premiums paid for
purchased interest rate cap agreements are charged to expense over the rate
cap period. The Company entered into a London Interbank Offered Rate-based
interest rate cap agreement during 1996. The agreement provides for a notional
amount of $100.0 million which declines ratably over the rate cap term. If the
rate cap exceeds 9% on each quarterly reset date, as defined in the agreement,
the Company is entitled to receive an amount by which the rate cap exceeds 9%.
Over the term of the agreement in 1997, such amount did not exceed 9%. Charges
to expense in 1997 and 1996 related to derivative products were not
significant.
The Company may enter into financial instruments, which are limited in
duration and scope, to manage its exposure to fluctuations of foreign currency
rates. These instruments are used for hedging purposes and are employed in
connection with an underlying asset, liability, firm commitment or anticipated
transaction. Gains and losses on hedges of existing assets and liabilities are
included in the carrying amounts of those assets or liabilities and are
ultimately recognized in income as part of those carrying amounts. Gains and
losses related to qualifying hedges of firm commitments or anticipated
transactions are also deferred and recognized in income or as adjustments of
carrying amounts when the hedged transaction occurs. Gains and losses, if any,
on financial instruments that do not qualify as hedges for accounting purposes
are recognized in the determination of net income.
Fair Value of Financial Instruments
The Company has estimated the fair value amounts of financial instruments as
required by Statement of Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments", using available market information
and appropriate valuation methodologies. However,
44
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
considerable judgment is required in interpreting market data to develop the
estimates of fair value. Accordingly, such estimates are not necessarily
indicative of the amounts that the Company would realize in a current market
exchange. The carrying amount of cash and equivalents, marketable securities,
accounts receivable, other assets, accounts payable and derivative financial
instruments are reasonable estimates of their fair values. Fair value of the
Company's long-term debt was estimated using interest rates at those dates for
issuance of such financial instruments with similar terms and remaining
maturities and other independent valuation methodologies. The estimated fair
value of debt at January 3, 1998 and December 28, 1996 was $1.2 billion and
$391.2 million, respectively. During 1997, the Company utilized standby
letters of credit which collateralized the Company's debt obligations to third
parties. Outstanding standby letters of credit totaled approximately $8.7
million at January 3, 1998. The contract amounts of these letters of credit
approximate their fair value.
Income Taxes
The provision for income taxes and corresponding balance sheet accounts are
determined in accordance with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("FAS 109"). Under FAS 109, the deferred
tax liabilities and assets are determined based upon temporary differences
between the basis of certain assets and liabilities for income tax and
financial reporting purposes. A valuation allowance is recognized if it is
more likely than not that some portion or all of a deferred tax asset will not
be ultimately realized.
Research and Development
The cost of research and development is charged to expense as incurred and
is included in selling, general and administrative expense in the consolidated
statement of operations. The Company incurred approximately $9.6, $6.9 and
$6.4 million of research and development expense during 1997, 1996 and 1995,
respectively.
Foreign Currency Translation
The assets and liabilities of the Company's Canadian and European
subsidiaries are translated into U.S. dollars at the period end exchange rates
and revenues and expenses are translated at average exchange rates during the
reporting period. At the beginning of fiscal 1997, the Company changed the
functional currency of its Mexican subsidiary to the U.S. dollar. The
cumulative inflation index in Mexico approximated 100% over a three year
period ended December 28, 1996; therefore, Mexico is considered to be a
"highly inflationary" economy in accordance with Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation" ("FAS 52"). As a
result of this change, the dollar-translated amounts of nonmonetary assets at
the end of fiscal 1996 became the accounting basis for those assets at the
beginning of fiscal 1997 and for subsequent periods. Additionally, the
Mexican-related cumulative translation adjustment accumulated in shareholders'
equity prior to this change in functional currency remains a separate
component of shareholders' equity.
Net Income (Loss) Per Common Share
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings Per Share" ("FAS 128"). FAS 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per share
45
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
excludes any dilutive effects of options, warrants and convertible securities.
Diluted earnings per share is very similar to the previously reported fully
diluted earnings per share. All earnings per share amounts for all periods
have been presented, and where appropriate, restated to conform to the FAS 128
requirements. The numerator for both basic and diluted earnings per share is
net income (loss) applicable to common stock. The denominator for both basic
and diluted earnings per share is average common shares outstanding.
Comprehensive Income
In 1997, the Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income" ("FAS 130") which is effective for fiscal
years beginning after December 15, 1997. FAS 130 establishes new rules for the
reporting and display of comprehensive income and its components. FAS 130
requires unrealized gains or losses on the Company's available-for-sale
securities and the foreign currency translation adjustments, which prior to
adoption were reported separately in shareholders' equity, to be included in
other comprehensive income. The Company will adopt the new requirements
retroactively in the first quarter of 1998.
NOTE 2. ACQUISITIONS
On December 19, 1997, DT Acquisition Inc. ("DTA"), a special-purpose
subsidiary of the Company, completed the purchase of approximately 98% of the
outstanding common shares of Dominion for Cdn$14.50 per share and
approximately 96% of the outstanding first preferred shares of Dominion for
Cdn$150 per share. The acquisition, which was accounted for using the purchase
method of accounting, was financed with $215.9 million of borrowings under
DTA's $600.0 million senior secured credit facilities, and subordinated
advances of $141.0, $69.0, and $25.0 million by Galey & Lord, Inc. ("Galey"),
ZB Holdings, Inc. ("ZB Holdings") and the Company, respectively. ZB Holdings
is a wholly-owned subsidiary of The InterTech Group, Inc., an affiliate of the
Company.
On January 29, 1998, DTA acquired all remaining common and preferred shares,
at which time Dominion underwent a "winding up." All assets of Dominion were
transferred to DTA, all liabilities of Dominion were assumed by DTA and all
outstanding common shares and first preferred shares held by DTA were
redeemed. Immediately thereafter, pursuant to a purchase agreement dated
October 27, 1997, the apparel fabrics business of Dominion was sold to Galey
for approximately $464.5 million, including related fees and expenses, and the
Company acquired (the "Nonwovens Acquisition") the assets and liabilities of
Dominion that comprised the nonwovens and industrial fabrics operations (the
"Nonwovens Business") for approximately $351.6 million, including fees and
expenses. The Nonwovens Business includes a 50% interest in Argentina-based
Dominion Nonwovens Sudamerica S.A. ("DNS"). DNS manufactures and markets
nonwovens to hygiene markets in South America. Concurrently, Dominion Textile
(USA) Inc. ("DT USA"), a wholly-owned subsidiary of Dominion, purchased
approximately $145.6 million of its $150.0 million outstanding 8.875%
Guaranteed Senior Notes due 2003 and, at the same time, purchased
approximately $124.5 million of its $125.0 million outstanding 9.25%
Guaranteed Senior Notes due 2006 as more fully described in "Note 7. Debt."
Net assets of the apparel business of Dominion have been classified as assets
held for disposition on the Company's consolidated balance sheet at January 3,
1998. Results of operations of Dominion have not been included in the results
of the Company's consolidated financial statements, as their effect is not
considered to be material to the Company's consolidated results of operations.
46
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
On August 14, 1996, the Company completed the acquisition (the "FNA
Acquisition") of the business of FNA Polymer Corp. ("FNA") (formerly known as
Fitesa North America) for approximately $48.0 million in a transaction
accounted for by the purchase method of accounting. FNA produces polypropylene
fabrics for the nonwovens industry.
The following pro forma information in the table below is based on
historical financial statements of the Company, FNA and the Nonwovens Business
adjusted to give effect to the Nonwovens Acquisition, the June Refinancing (as
defined in "Note 7. Debt"), the FNA Acquisition, the IPO and the financing
thereof as if such events occurred on December 29, 1996 and December 31, 1995.
The unaudited pro forma financial information includes the results of a
business acquired by the Company in the third quarter of 1997 which is not
independently significant for disclosure purposes. In accordance with the
purchase method of accounting, the purchase price for the Nonwovens
Acquisition has been allocated to the underlying assets based on their
respective fair values at the date of the acquisition. Such allocation has
been based on preliminary estimates which may be revised at a later date. The
accompanying pro forma financial information in the table below does not
purport to represent what the Company's results of operations would have been
had the Nonwovens Acquisition, the June Refinancing, the FNA Acquisition, and
the IPO actually occurred at the beginning of the respective periods, or
project the Company's results of operations for any future periods.
<TABLE>
<CAPTION>
FISCAL YEAR
-----------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Net sales.............................................. $748,832 $741,088
Income before extraordinary item....................... 18,247 13,956
Net income............................................. 6,242 24
Per share--basic:
Income before extraordinary item..................... $ .57 $ .44
Net income........................................... .19 --
Per share--diluted:
Income before extraordinary item..................... $ .57 $ .44
Net income........................................... .19 --
</TABLE>
NOTE 3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment as of January 3, 1998 and December 28, 1996,
consist of the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Cost:
Land................................................ $ 9,288 $ 9,272
Buildings and land improvements..................... 111,031 84,089
Machinery, equipment and other...................... 527,257 365,464
Construction in progress............................ 50,228 12,915
-------- --------
697,804 471,740
Less accumulated depreciation......................... (91,544) (65,213)
-------- --------
$606,260 $406,527
======== ========
</TABLE>
Depreciation charged to expense was $31.2, $27.2 and $21.0 million during
1997, 1996 and 1995, respectively.
47
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4. INTANGIBLES, LOAN ACQUISITION AND ORGANIZATION COSTS
Intangibles, loan acquisition and organization costs as of January 3, 1998
and December 28, 1996, consist of the following:
<TABLE>
<CAPTION>
1997 1996
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Cost:
Goodwill............................................. $187,026 $61,801
Identified intangibles:
Supply agreement................................... 13,431 13,431
Proprietary technology............................. 24,100 24,100
Other.............................................. 997 902
Loan acquisition costs............................... 19,063 8,302
Organization costs................................... 8,741 6,752
-------- -------
253,358 115,288
Less accumulated amortization.......................... (23,967) (18,356)
-------- -------
$229,391 $96,932
======== =======
</TABLE>
Amortization charged to expense was $9.2, $9.6 and $8.9 million during 1997,
1996 and 1995, respectively. The approximate $125.2 million increase in
goodwill between 1997 and 1996 results primarily from the acquisition of
Dominion.
NOTE 5. ACCRUED LIABILITIES
Accrued liabilities as of January 3, 1998 and December 28, 1996, consist of
the following:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accrued liabilities:
Interest payable....................................... $ 7,377 $ 6,778
Salaries, wages and other fringe benefits.............. 13,813 7,116
Restructuring costs.................................... 5,484 10,036
Organization costs..................................... 7,422 --
Other.................................................. 18,037 9,200
------- -------
$52,133 $33,130
======= =======
</TABLE>
During 1995, management of the Company adopted a plan to relocate
manufacturing equipment, corporate offices and certain equipment used in an
acquired business' research and development activities to other sites in the
United States. Accordingly, the Company provided for accrued restructuring
costs of approximately $17.9 million at the time of the acquisition. During
1997, 1996, and 1995, the Company charged $6.5, $3.5 and $2.4 million,
respectively, against the accrued restructuring reserve. Substantially all of
the charges against the reserve during 1997 related to the relocation of the
acquiree's corporate offices and certain equipment. Management estimates that
the remainder of the accrued restructuring reserve, $5.5 million, will be
incurred during 1998; therefore, this amount has been recognized as a current
liability in the consolidated balance sheet.
48
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases certain manufacturing, warehousing and other facilities
and equipment under operating leases. The leases on most of the properties
contain renewal provisions. Rent expense (net of sub-lease income), including
incidental leases, approximated $1.7, $2.4 and $2.3 million in 1997, 1996 and
1995, respectively. Rental income approximated $0.6, $2.2 and $2.3 million in
1997, 1996 and 1995, respectively. The approximate net minimum rental payments
required under operating leases that have initial or remaining non-cancelable
lease terms in excess of one year at January 3, 1998 are:
<TABLE>
<CAPTION>
GROSS NET
MINIMUM LEASE AND MINIMUM
RENTAL SUB-LEASE RENTAL
PAYMENTS (INCOME) PAYMENTS
-------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
1998.......................................... $ 4,595 $ (1,375) $3,220
1999.......................................... 4,192 (1,275) 2,917
2000.......................................... 4,020 (1,275) 2,745
2001.......................................... 3,797 (1,275) 2,522
2002.......................................... 2,797 (1,275) 1,522
Thereafter.................................... 3,368 (12,219) (8,851)
------- -------- ------
$22,769 $(18,694) $4,075
======= ======== ======
</TABLE>
Purchase Commitments
At January 3, 1998, the Company had commitments of approximately $74.7,
$9.3, and $1.0 million related to the purchase of raw materials and converting
services, capital projects, and foreign currency, respectively.
Collective Bargaining Agreements
At January 3, 1998, the Company had a total of approximately 3,600 employees
worldwide. Of this total, approximately 1,600 employees are represented by
labor unions or trade councils that have entered into separate collective
bargaining agreements with the Company. Approximately 31% of the Company's
labor force is covered by collective bargaining agreements which will expire
within one year.
Environmental
The Company is subject to a broad range of federal, foreign, state and local
laws governing regulations relating to the pollution and protection of the
environment. Among the many environmental requirements applicable to the
Company are laws relating to air emissions, wastewater discharges and the
handling, disposal and release of solid and hazardous substances and wastes.
Based on continuing internal review and advice from independent consultants,
the Company believes that it is currently in substantial compliance with
environmental requirements. The Company is also subject to laws, such as the
Federal Comprehensive Environmental Response, Compensation, and Liability Act
of 1980 ("CERCLA"), that may impose liability retroactively and without fault
for releases of hazardous substances at on-site or off-site locations. The
Company is not aware of any releases for which it may be liable under CERCLA
or any analogous provision. As a result, the Company does not currently
anticipate any material adverse effect on its operations, financial condition
or competitive position as a
49
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
result of its efforts to comply with environmental requirements. Some risk of
environmental liability is inherent, however, in the nature of the Company's
business, and there can be no assurance that material environmental
liabilities will not arise.
NOTE 7. DEBT
Long-term debt as of January 3, 1998 and December 28, 1996, consists of the
following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Senior Subordinated Notes, due July 2007, interest rate 9%. $400,000 $ --
Senior Notes, due July 2002, interest rate 12.25%, repaid
in full in 1997........................................... -- 100,000
Revolving Credit Facility, due July 2003, interest at rates
ranging from 7.25% to 7.5%................................ 61,569 80,894
Term Loans, Facility A, B and C; interest rate 7.25%,
repaid in full in 1997.................................... -- 199,189
DT USA Guaranteed Senior Notes, due April 2006, interest
rate 9.25%, $124.5 million tendered in January 1998....... 128,052 --
DT USA Guaranteed Senior Note due November 2003, interest
rate 8.875%, $145.6 million tendered in January 1998...... 153,288 --
Other...................................................... 8,460 2,159
-------- --------
751,369 382,242
Less: Unamortized discount on Senior Subordinated Notes.... (6,233) --
-------- --------
745,136 382,242
Less: Current maturities................................... (3,276) (19,497)
-------- --------
Total...................................................... $741,860 $362,745
======== ========
</TABLE>
Long-term debt maturities consist of the following (in thousands):
<TABLE>
<S> <C>
1998.............................................................. $ 3,276
1999.............................................................. 2,181
2000.............................................................. 1,010
2001.............................................................. 735
2002.............................................................. 710
Thereafter........................................................ 737,224
</TABLE>
The June Refinancing
On June 5, 1997, the Company commenced an offer (the "Tender Offer") to
purchase for cash its 12.25% Senior Notes due 2002 (the "Original Notes") and
solicited consents to certain proposed amendments which eliminated
substantially all of the protective covenants. Proceeds from the Privately
Place Notes (as defined below) were used to purchase the Original Notes at a
price equal to $1,103.64 for each Original Note. Holders who tendered in the
Tender Offer prior to the expiration date for consents also received a consent
payment equal to 1% of the outstanding principal amount of notes tendered
(included in the total consideration described above). On July 3, 1997 the
Company received tenders of, and consents relating to, all of its Original
Notes.
On July 3, 1997, the Company issued $400.0 million of 9% Senior Subordinated
Notes due 2007 (the "Privately Placed Notes") to qualified institutional
buyers pursuant to Rule 144A under the Securities Act. The Company
subsequently registered the Privately Placed Notes with the Securities
50
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Exchange Commission pursuant to a Registration Statement on Form S-4 declared
effective September 3, 1997. The Senior Subordinated Notes are unsecured and
are guaranteed by all of the Company's direct and indirect domestic
subsidiaries. The Senior Subordinated Notes are subject to redemption at any
time on or after July 1, 2002 at the option of the Company based on certain
redemption prices plus accrued interest. As of January 3, 1998, the Company
was in compliance with covenant provisions associated with the Senior
Subordinated Notes which include restrictions on the payment of dividends. If
a change of control occurs at any time, each holder shall have the right to
require that the Company purchase the Senior Subordinated Notes in whole or in
part at an amount equal to 101% of the principal amount held plus accrued
interest.
As part of the June Refinancing, the Company amended its credit facilities.
The amended credit facility provides for secured revolving credit up to $325.0
million, and a portion of the borrowings may be denominated in Dutch guilders
and/or Canadian dollars at the request of the Company. The applicable interest
rates are as follows (plus a margin in each case depending upon certain
leverage ratios):
<TABLE>
<S> <C>
U.S. dollar-denominated loans LIBOR
Canadian dollar-denominated loans Canadian base rate
Dutch guilder-denominated loans Eurocurrency rate
</TABLE>
All indebtedness under the amended credit facility is guaranteed by each of
the direct and indirect domestic subsidiaries of the Company and by Fabrene
Group, Inc., a wholly-owned Canadian subsidiary of the Company. The amended
credit facility is secured by substantially all of the assets of the Company
and pledges of stock and intercompany notes and certain of its subsidiaries.
The amended credit facility contains covenants customary for financings of
this type which the Company is in compliance with as of January 3, 1998.
Commitment fees on the amended credit facility are generally equal to a
percentage of the daily unused average amount of such commitment. At January
28, 1998, unused commitments under the amended credit facility approximated
$254.8 million. Loan acquisition costs, including commitment fees,
approximated $18.6 and 5.3 million in 1997 and 1996, respectively.
DT USA Guaranteed Senior Notes
During 1993, DT USA issued $150.0 million of 8.875% Guaranteed Senior Notes
due 2003 (the "2003 Notes") and during 1996, issued an additional $125.0
million of 9.25% Guaranteed Senior Notes due 2006 (the "2006 Notes"). Both the
2003 Notes and the 2006 Notes are senior indebtedness of DT USA and are
guaranteed by DT USA and Dominion.
On December 23, 1997, following the initial purchase of Dominion shares by
DTA, DT USA made tender offers to purchase the outstanding 2003 Notes and 2006
Notes (the "2003 Tender Offer" and "2006 Tender Offer," respectively), and
solicited consents to certain proposed amendments to facilities which
eliminated substantially all of the protective covenants. The total
consideration paid was $1,065.32 and $1,138.50 for each 2003 Note and 2006
Note, respectively. Holders who tendered in the 2003 Tender Offer and the 2006
Tender Offer prior to each respective expiration date for consents also
received a consent payment equal to 1% of the outstanding principal amount of
notes tendered (included in the total consideration described above).
On January 16, 1998, DT USA made a separate, unconditional offer to purchase
all outstanding 2003 Notes at a price equal to 101% of their aggregate
principal amount (the "Change of Control Offer"). The Change of Control Offer
was made solely for the purpose of satisfying certain provisions,
51
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
which require such an offer to be made within 30 days of a change in control
of DT USA or Dominion. The Change of Control Offer expired on March 17, 1998.
On January 28, 1998, the expiration date for the 2003 Tender Offer and the
2006 Tender Offer, DT USA accepted for repurchase $145.6 million of 2003 Notes
and $124.5 million of 2006 Notes. DT USA intends to exercise its rights to
satisfy and discharge the 2003 Notes and the 2006 Notes at the permitted
times.
Short-term Bridge Financing
The Company received short-term bridge financing to consummate the
acquisition of Dominion as discussed in "Note 2. Acquisitions." Such
indebtedness was either repaid or canceled in January 1998 pursuant to the
disposition of the apparel business of Dominion to Galey. Short-term bridge
financing consisted of the following at January 3,1998 (in thousands):
<TABLE>
<S> <C>
DTA Credit Facility, original maturity of June 1998, interest rate
9.5%, repaid in full in January 1998................................. $215,945
Subordinated advance--ZB Holdings, interest rate 9.5%, repaid in full
in January 1998...................................................... 69,000
Subordinated advance--Galey, interest rate imputed at 9.5%, canceled
in January 1998...................................................... 141,000
--------
$425,945
========
</TABLE>
NOTE 8. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Payment of the Company's Senior Subordinated Notes is unconditionally
guaranteed, jointly and severally, on a senior subordinated basis by certain
of the Company's wholly-owned subsidiaries. Management has determined that
separate complete financial statements of the guarantor entities would not be
material to users of the financial statements; therefore, the following sets
forth condensed consolidating financial statements (in thousands):
52
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JANUARY 3, 1998
<TABLE>
<CAPTION>
COMBINED
COMBINED NON-
GUARANTOR GUARANTOR THE RECLASSIFICATIONS
ASSETS SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------ ------------ ------------ -------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Cash and cash
equivalents............ $ 8,721 $ 37,752 $ 3,717 $ -- $ 50,190
Marketable securities... -- -- 7,754 -- 7,754
Accounts receivable,
net.................... 42,281 65,047 -- -- 107,328
Inventories............. 40,324 54,164 -- (360) 94,128
Due from affiliates..... 66 2,223 -- (2,289) --
Assets held for
disposition, net....... -- 464,524 -- -- 464,524
Other................... 22,367 6,004 1,482 1,293 31,146
---------- ---------- -------- ----------- ----------
Total current
assets............. 113,759 629,714 12,953 (1,356) 755,070
Due from affiliates..... 436,795 1,884 508,249 (946,928) --
Investment in
subsidiaries........... 273,967 11,553 410,893 (684,860) 11,553
Property, plant and
equipment, net......... 302,905 303,010 -- 345 606,260
Intangibles, loan
acquisition and
organization costs, net 29,773 180,319 14,767 4,532 229,391
Other................... 7,443 15,066 12,084 (9,114) 25,479
---------- ---------- -------- ----------- ----------
Total assets........ $1,164,642 $1,141,546 $958,946 $(1,637,381) $1,627,753
========== ========== ======== =========== ==========
<CAPTION>
LIABILITIES AND
SHAREHOLDERS' EQUITY
--------------------
<S> <C> <C> <C> <C> <C>
Accounts payable,
accrued liabilities and
other.................. $ 44,000 $ 65,226 $ 8,853 $ (12,255) $ 105,824
Short-term bridge
financing.............. -- 425,945 -- -- 425,945
Current portion of long-
term debt.............. 900 1,376 1,000 -- 3,276
---------- ---------- -------- ----------- ----------
Total current
liabilities........ 44,900 492,547 9,853 (12,255) 535,045
Due to affiliates....... 515,331 99,935 307,398 (922,664) --
Long-term debt, less
current portion........ 1,150 340,944 424,767 (25,001) 741,860
Deferred income taxes
and other.............. 17,182 125,400 9,152 24 151,758
Shareholders' equity.... 586,079 82,720 207,776 (677,485) 199,090
---------- ---------- -------- ----------- ----------
Total liabilities
and shareholders'
equity............. $1,164,642 $1,141,546 $958,946 $(1,637,381) $1,627,753
========== ========== ======== =========== ==========
</TABLE>
53
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 28, 1996
<TABLE>
<CAPTION>
COMBINED
COMBINED NON-
GUARANTOR GUARANTOR THE RECLASSIFICATIONS
ASSETS SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------ ------------ ------------ -------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Cash and cash
equivalents............ $ 16,329 $ 18,254 $ 3,004 $ -- $ 37,587
Marketable securities... -- -- 10,892 -- 10,892
Accounts receivable,
net.................... 29,848 34,904 -- -- 64,752
Inventories............. 34,088 21,595 -- (46) 55,637
Other................... 12,447 1,902 1,395 (185) 15,559
---------- -------- -------- ----------- --------
Total current
assets............. 92,712 76,655 15,291 (231) 184,427
Due from affiliates..... 377,780 671 57,236 (435,687) --
Investment in
subsidiaries........... 250,589 -- 389,769 (640,358) --
Property, plant and
equipment, net......... 266,446 137,942 2,139 -- 406,527
Intangibles, loan
acquisition and
organization costs,
net.................... 36,743 57,027 1,218 1,944 96,932
Other................... 7,963 6,381 6,143 (258) 20,229
---------- -------- -------- ----------- --------
Total assets........ $1,032,233 $278,676 $471,796 $(1,074,590) $708,115
========== ======== ======== =========== ========
<CAPTION>
LIABILITIES AND
SHAREHOLDERS' EQUITY
--------------------
<S> <C> <C> <C> <C> <C>
Accounts payable,
accrued liabilities and
other.................. $ 43,546 $ 22,636 $ 5,944 $ (350) $ 71,776
Current portion of long-
term debt.............. 11,069 6,985 1,443 -- 19,497
---------- -------- -------- ----------- --------
Total current
liabilities........ 54,615 29,621 7,387 (350) 91,273
Due to affiliates....... 301,447 38,450 95,790 (435,687) --
Long-term debt, less
current portion........ 129,931 69,257 163,557 -- 362,745
Deferred income taxes
and other.............. 18,765 31,110 9,144 (840) 58,179
Shareholders' equity.... 527,475 110,238 195,918 (637,713) 195,918
---------- -------- -------- ----------- --------
Total liabilities
and shareholders'
equity............. $1,032,233 $278,676 $471,796 $(1,074,590) $708,115
========== ======== ======== =========== ========
</TABLE>
54
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED JANUARY 3, 1998
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- RECLASSIFICA-
GUARANTOR GUARANTOR THE TIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------ ------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $354,206 $195,465 $ -- $(14,404) $535,267
Cost of goods sold...... 280,112 136,315 35 (14,404) 402,058
-------- -------- ------- -------- --------
Gross profit........ 74,094 59,150 (35) -- 133,209
Selling, general and
administrative
expenses............... 47,700 32,967 (6,067) -- 74,600
-------- -------- ------- -------- --------
Operating income.... 26,394 26,183 6,032 -- 58,609
Other (income) expense,
net.................... 13,941 7,212 (2,986) -- 18,167
-------- -------- ------- -------- --------
Income before income
taxes and
extraordinary item. 12,453 18,971 9,018 -- 40,442
Income taxes............ (785) 3,101 10,693 -- 13,009
-------- -------- ------- -------- --------
Income before
extraordinary item. 13,238 15,870 (1,675) -- 27,433
Extraordinary item...... (4,587) (839) (6,579) -- (12,005)
Equity in earnings of
subsidiaries........... -- -- 15,031 (15,031) --
-------- -------- ------- -------- --------
Net income (loss)....... $ 8,651 $ 15,031 $ 6,777 $(15,031) $ 15,428
======== ======== ======= ======== ========
</TABLE>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- RECLASSIFICA-
GUARANTOR GUARANTOR THE TIONS AND
SUBSIDIARIES SUBSIDIARIES COMPANY ELIMINATIONS CONSOLIDATED
------------ ------------ -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $335,477 $187,754 $ -- $ (1,863) $521,368
Cost of goods sold...... 264,027 126,836 1 (1,851) 389,013
-------- -------- -------- -------- --------
Gross profit........ 71,450 60,918 (1) (12) 132,355
Selling, general and
administrative
expenses............... 38,281 32,710 (453) (331) 70,207
-------- -------- -------- -------- --------
Operating income.... 33,169 28,208 452 319 62,148
Other expense, net...... 11,772 13,806 11,018 -- 36,596
-------- -------- -------- -------- --------
Income (loss) before
income taxes and
extraordinary item. 21,397 14,402 (10,566) 319 25,552
Income taxes............ 4,698 1,659 4,373 -- 10,730
-------- -------- -------- -------- --------
Income (loss) before
extraordinary item. 16,699 12,743 (14,939) 319 14,822
Extraordinary item...... (10,745) 793 (3,980) -- (13,932)
Equity in earnings of
subsidiaries........... -- -- 19,809 (19,809) --
-------- -------- -------- -------- --------
Net income.............. 5,954 13,536 890 (19,490) 890
Redeemable preferred
stock dividends and
accretion.............. (2,551) -- (3,020) 2,551 (3,020)
-------- -------- -------- -------- --------
Income (loss) applicable
to common stock........ $ 3,403 $ 13,536 $ (2,130) $(16,939) $ (2,130)
======== ======== ======== ======== ========
</TABLE>
55
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NON-GUARANTOR THE RECLASSIFICATIONS
SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------------ ------------- -------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $287,418 $154,025 -- $(3,805) $437,638
Cost of goods sold...... 230,740 106,670 -- (3,804) 333,606
-------- -------- -------- ------- --------
Gross profit........ 56,678 47,355 -- (1) 104,032
Selling, general and
administrative
expenses............... 38,502 23,242 -- -- 61,744
-------- -------- -------- ------- --------
Operating income.... 18,176 24,113 -- (1) 42,288
Other expense, net...... 15,733 44,671 275 -- 60,679
-------- -------- -------- ------- --------
Income (loss) before
income taxes....... 2,443 (20,558) (275) (1) (18,391)
Income taxes............ 742 1,709 2,765 -- 5,216
Equity in earnings
(loss) of subsidiaries. -- -- (20,567) 20,567 --
-------- -------- -------- ------- --------
Net income (loss)....... 1,701 (22,267) (23,607) 20,566 (23,607)
Redeemable preferred
stock dividends and
accretion.............. (4,839) -- (4,839) 4,839 (4,839)
-------- -------- -------- ------- --------
(Loss) applicable to
common stock........... $ (3,138) $(22,267) $(28,446) $25,405 $(28,446)
======== ======== ======== ======= ========
</TABLE>
56
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED JANUARY 3, 1998
<TABLE>
<CAPTION>
COMBINED COMBINED THE RECLASSIFICATIONS
GUARANTOR NON-GUARANTOR COMPANY AND ELIMINATIONS CONSOLIDATED
--------- ------------- -------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by
operating activities... $ 52,917 $ 29,290 $ 18,763 $ (82,608) $ 18,362
Investing activities
Purchases of property,
plant and equipment.. (50,933) (9,208) (3) -- (60,144)
Purchases of
marketable securities
classified as
available for sale... -- -- (15,251) -- (15,251)
Proceeds from sales of
marketable securities
classified as
available for sale... -- -- 17,003 -- 17,003
Business acquisitions,
net.................. -- (424,645) (4,914) -- (429,559)
Organization and other
costs................ -- (3,554) (396) -- (3,950)
-------- -------- -------- --------- --------
Net cash (used in)
investing activities... (50,933) (437,407) (3,561) -- (491,901)
Financing activities
Proceeds from debt.... 19,675 28,478 432,693 -- 480,846
Proceeds from short-
term bridge
financing............ -- 425,945 -- -- 425,945
Payments of debt...... (160,675) (69,682) (171,925) -- (402,282)
Intercompany
transactions, net.... 131,425 46,496 (260,529) 82,608 --
Loan acquisition
costs, net........... (17) (3,622) (14,917) -- (18,556)
-------- -------- -------- --------- --------
Net cash provided by
(used in) financing
activities............. (9,592) 427,615 (14,678) 82,608 485,953
Effect of exchange rate
changes on cash........ -- -- 189 -- 189
-------- -------- -------- --------- --------
Net increase (decrease)
in cash and
equivalents............ (7,608) 19,498 713 -- 12,603
Cash and equivalents at
beginning of year...... 16,329 18,254 3,004 -- 37,587
-------- -------- -------- --------- --------
Cash and equivalents at
end of year............ $ 8,721 $ 37,752 $ 3,717 $ -- $ 50,190
======== ======== ======== ========= ========
</TABLE>
57
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NON-GUARANTOR THE RECLASSIFICATIONS
SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------------ ------------- -------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by
operating activities... $ 31,224 $ 17,997 $ 3,580 $(16,704) $ 36,097
Investing activities
Purchases of property,
plant and equipment.. (13,029) (11,569) (2,141) -- (26,739)
Purchases of
marketable
securities........... -- -- (22,879) -- (22,879)
Proceeds from sales of
marketable
securities........... -- -- 16,713 -- 16,713
Acquisition of
businesses, net of
cash acquired........ -- -- (52,466) -- (52,466)
Other costs........... (520) -- (531) -- (1,051)
--------- -------- -------- --------- ---------
Net cash (used in)
investing activities... (13,549) (11,569) (61,304) -- (86,422)
Financing activities
Issuance of common
stock, net of costs
incurred............. -- -- 190,838 -- 190,838
Proceeds from debt.... 165,900 75,377 67,000 -- 308,277
Payments of debt...... (323,863) (126) (52,000) -- (375,989)
Issuance of redeemable
preferred stock...... -- -- 10,000 -- 10,000
Redemption of
preferred stock...... -- -- (57,359) -- (57,359)
Intercompany
transactions, net.... 151,691 (71,487) (96,908) 16,704 --
Loan acquisition and
other costs.......... (3,669) (1,145) (6,562) -- (11,376)
--------- -------- -------- --------- ---------
Net cash (used in)
provided by financing
activities............. (9,941) 2,619 55,009 16,704 64,391
Effect of exchange rate
changes on cash........ -- -- 5,433 -- 5,433
--------- -------- -------- --------- ---------
Net increase in cash and
equivalents............ 7,734 9,047 2,718 -- 19,499
Cash and equivalents at
beginning of year...... 8,595 9,207 286 -- 18,088
--------- -------- -------- --------- ---------
Cash and equivalents at
end of year............ $ 16,329 $ 18,254 $ 3,004 $ -- $ 37,587
========= ======== ======== ========= =========
</TABLE>
58
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995
<TABLE>
<CAPTION>
COMBINED
COMBINED NON-
GUARANTOR GUARANTOR THE RECLASSIFICATIONS
SUBSIDIARIES SUBSIDIARIES COMPANY AND ELIMINATIONS CONSOLIDATED
------------ ------------ -------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Net cash provided by
(used by) operating
activities............. $ 33,304 $(8,663) $(34,302) $21,217 $ 11,556
Investing activities
Purchases of property,
plant and equipment.. (17,951) (29,891) -- -- (47,842)
Purchases of
marketable
securities........... -- -- (22,521) -- (22,521)
Proceeds from sales of
marketable
securities........... -- -- 19,929 -- 19,929
Acquisition of
businesses, net of
cash acquired........ -- -- (281,358) -- (281,358)
Other costs........... (1,416) -- (399) 399 (1,416)
-------- ------- -------- ------- --------
Net cash (used in)
investing activities... (19,367) (29,891) (284,349) 399 (333,208)
Financing activities
Issuance of common
stock, net of costs
incurred............. 30,000 -- -- -- 30,000
Proceeds from debt.... 273,654 -- -- -- 273,654
Payments of debt...... (13,638) -- -- -- (13,638)
Issuance of redeemable
preferred stock...... 40,000 -- -- -- 40,000
Intercompany
transactions, net.... (344,207) 44,046 321,777 (21,616) --
Loan acquisition and
other costs.......... (1,263) -- (1,117) -- (2,380)
-------- ------- -------- ------- --------
Net cash (used in)
provided by financing
activities............. (15,454) 44,046 320,660 (21,616) 327,636
Effect of exchange rate
changes on cash........ -- -- (1,724) -- (1,724)
-------- ------- -------- ------- --------
Net (decrease) increase
in cash and
equivalents............ (1,517) 5,492 285 -- 4,260
Cash and equivalents at
beginning of year...... 10,112 3,715 1 -- 13,828
-------- ------- -------- ------- --------
Cash and equivalents at
end of year............ $ 8,595 $ 9,207 $ 286 $ -- $ 18,088
======== ======= ======== ======= ========
</TABLE>
59
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9. INCOME TAXES
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
------------------------
1997 1996 1995
------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal and state.................................. $ 315 $ -- $1,461
Foreign............................................ 6,709 2,899 5,130
Deferred:
Federal and state.................................. 7,108 8,324 (826)
Foreign............................................ (1,123) (493) (549)
------- ------- ------
Income tax before extraordinary item................. 13,009 10,730 5,216
Income tax benefit from:
Extraordinary item, loss from early extinguishment
of debt........................................... (5,959) (7,492) --
------- ------- ------
Total income tax expense............................. $ 7,050 $ 3,238 $5,216
======= ======= ======
</TABLE>
60
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company's provision for income taxes in 1997 includes the benefit of
utilizing net operating loss carryforwards of approximately $5.8 million. At
January 3, 1998, the Company had: (i) operating loss carryforwards of
approximately $16.8 million for federal income tax purposes expiring in the
years 2007-2012; (ii) Canadian capital loss carryforwards of approximately
$3.7 million and Canadian operating loss carryforwards of approximately $1.7
million which expire in 2005; and (iii) operating loss carryforwards of
approximately $8.0 million which begin to expire in 2002 related to its
Mexican operation. No accounting recognition has been given to the potential
income tax benefit related to the Canadian and Mexican operating loss
carryforwards. The Company has not provided U.S. income taxes for
undistributed earnings of foreign subsidiaries which are considered to be
retained indefinitely for reinvestment. The distribution of these earnings
would result in additional foreign withholding taxes and additional U.S.
federal income taxes to the extent they are not offset by foreign tax credits,
but it is not practicable to estimate the total liability that would be
incurred upon such a distribution. However, in 1996, the Company provided
approximately $3.5 million for income taxes related to the distribution of
earnings from certain of its foreign operations which are not considered to be
retained indefinitely for reinvestment. Significant components of the
Company's deferred tax assets and liabilities as of January 3, 1998 and
December 28, 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Provision for restructuring.............................. $ 869 $ 2,566
U.S. net operating loss carryforward..................... 5,883 10,057
Foreign net operating and capital loss carryforward...... 3,603 6,821
Foreign tax credits...................................... 3,359 1,356
Other.................................................... 5,557 9,262
-------- --------
Total deferred tax assets.............................. 19,271 30,062
Valuation allowance for deferred tax assets................ (5,927) (14,149)
-------- --------
Net deferred tax assets.................................... 13,344 15,913
Deferred tax liabilities:
Depreciation and amortization............................ (26,548) (22,159)
Basis difference on fixed assets......................... (52,207) (23,561)
Provision for undistributed foreign earnings not
considered to be retained indefinitely for reinvestment. -- (3,301)
Other, net............................................... (3,742) (4,485)
-------- --------
Total deferred tax liabilities......................... (82,497) (53,506)
-------- --------
Net deferred taxes..................................... $(69,153) $(37,593)
======== ========
</TABLE>
Taxes on income are based on earnings (loss) before taxes as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
------------------------
1997 1996 1995
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic........................................ $18,688 $11,018 $ 1,611
Foreign......................................... 21,754 14,534 (20,002)
------- ------- --------
$40,442 $25,552 $(18,391)
======= ======= ========
</TABLE>
61
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The provision for income taxes at the Company's effective tax rate differed
from the provision for income taxes at the statutory rate as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
------------------------
1997 1996 1995
------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed tax (benefit) expense at the
statutory rate............................... $14,155 $8,943 $(6,437)
Valuation allowance........................... (2,387) 418 7,521
Withholding taxes............................. 471 964 1,244
Effect of foreign operations, net............. 314 347 2,375
Other, net.................................... 456 58 513
------- ------ -------
Provision for income taxes before
extraordinary item........................... 13,009 10,730 5,216
Income tax benefit related to extraordinary
item......................................... (5,959) (7,492) --
------- ------ -------
Provision for income taxes.................... $ 7,050 $3,238 $ 5,216
======= ====== =======
</TABLE>
62
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10. STOCK OPTION AND EMPLOYEE STOCK PURCHASE PLANS
Stock Option Plan
In connection with the IPO, the Company adopted the 1996 Key Employee Stock
Option Plan ("1996 Plan"). The 1996 Plan is administered by the Stock Option
Committee, which is composed of non-management members of the Company's Board
who are appointed by the Board. Any person who is a full-time, salaried
employee of the Company (excluding non-management directors) is eligible to
participate in the 1996 Plan. The Stock Option Committee selects the
participants and determines the terms and conditions of the options. The 1996
Plan provides for the issuance of options covering 1,500,000 shares of common
stock, subject to certain adjustments reflecting changes in the Company's
capitalization. Options granted under the 1996 Plan may be either incentive
stock options ("ISOs") or such other forms of non-qualified stock options
("NQOs") as the Stock Option Committee may determine. The 1996 Plan provides
that the option price shall not be less than the fair value of the shares at
the date of grant and that such options vest in equal 20% increments over five
years. The options expire three years after the date that such portion became
vested and exercisable. The options were not considered in the calculation of
diluted earnings per share as their effect was antidilutive; however, these
options could have a dilutive effect in future years. The following table
summarizes the transactions of the 1996 Plan for the two year period ended
January 3, 1998:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE
SHARES PRICE
--------- --------
<S> <C> <C>
Unexercised options outstanding--December 30, 1995 -- $ --
Granted.............................................. 130,330 18.00
Exercised............................................ -- --
Forfeited............................................ -- --
Expired/canceled..................................... -- --
------- ------
Unexercised options outstanding--December 28, 1996..... 130,330 18.00
Granted.............................................. 595,000 14.25
Exercised............................................ -- --
Forfeited............................................ (5,555) 18.00
Expired/canceled..................................... -- --
------- ------
Unexercised options outstanding--January 3, 1998....... 719,775 $14.90
======= ======
Exercisable options:
December 30, 1995.................................... -- --
December 28, 1996.................................... -- --
January 3, 1998...................................... 143,955 $14.90
Shares available for future grant...................... 780,225 --
</TABLE>
In connection with the IPO, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"). FAS 123 establishes financial accounting and
reporting standards for stock-based compensation plans. As permitted by FAS
123, the Company elected to account for stock-based compensation awards in
accordance with Accounting Principles Board Opinion No. 25. Accordingly, no
compensation cost has been recognized in the Company's financial statements
for the 1996 Plan. In accordance with FAS 123, the fair value of each option
grant was determined by using the Black-Scholes option-pricing model with the
following weighted average assumptions used for 1997 and 1996, respectively;
dividend yield of 0.0% both years; expected volatility of 0.56 and 0.55; risk-
free interest rate of 6.1% for both years and weighted average expected lives
of 5 years for both years. Had compensation cost
63
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
for the Company's 1996 Plan been determined based on the fair value at the
grant date for such awards in 1997 and 1996 consistent with the provisions of
FAS 123, the Company's net income available to common shareholders and net
income per common share would have been reduced to the pro forma amounts
indicated below.
<TABLE>
<CAPTION>
FISCAL YEAR
---------------
1997 1996
------- -------
(IN THOUSANDS,
EXCEPT PER
SHARE DATA)
<S> <C> <C>
Net income (loss) available to common shareholders--basic:
As reported................................................. $15,428 $(2,130)
Pro forma................................................... 15,075 (2,228)
Net income (loss) per common share--basic:
As reported................................................. $ .48 $ (.08)
Pro forma................................................... .47 (.08)
Net income (loss) available to common shareholders--diluted:
As reported................................................. $15,428 $(2,130)
Pro forma................................................... 15,075 (2,228)
Net income (loss) per common share--diluted:
As reported................................................. $ .48 $ (.08)
Pro forma................................................... .47 (.08)
Weighted average fair value of options granted under the 1996
Plan......................................................... $ 7.79 $ 9.72
</TABLE>
The pro forma impact of these options is not likely to be representative of
the effects on reported net income for future years.
Employee Stock Purchase Plan
At the beginning of fiscal 1997, the Company adopted the Stock Purchase Plan
for Employees of Polymer Group, Inc. ("Purchase Plan") which allows employee
participants to purchase common stock of the Company through payroll
deductions. The Purchase Plan is administered by a third party and all
administrative costs of the Purchase Plan are covered by the Company. In
accordance with the Purchase Plan, share purchases by the administrator are
made at the fair value of the Company's common stock on the date of purchase.
The cost of the Purchase Plan was not material during 1997.
NOTE 11. SHAREHOLDERS' EQUITY
On May 15, 1996, the Company completed the initial public offering ("IPO"),
in which it offered and sold 11.5 million shares of its common stock at a
price of $18.00 per share. Pursuant to a recapitalization agreement, all of
the warrants to acquire shares of Class C common stock were exercised, and the
outstanding shares of Class A common stock, Class B common stock, and Class C
common stock were converted into shares of a single class of common stock. In
addition, the Company's Board of Directors ("Board") approved an approximate
19.97 to 1 stock split; therefore, all common shares and warrant data in the
consolidated financial statements have been restated to reflect such stock
split.
As a result of the IPO, the Company's authorized capital stock consists of
100,000,000 shares of common stock, par value $0.01 per share, 3,000,000
shares of non-voting common stock, par value $0.01 per share, and 10,000,000
shares of preferred stock, par value $0.01 per share. Subject to certain
regulatory limitations, the non-voting common stock is convertible on a one-
for-one basis into common stock at the option of the holder. The Company's
Board may, without further action by Polymer Group's shareholders, direct the
issuance of shares of preferred stock and may determine the
64
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
rights, preferences, conversion features, dividend rate (including whether
such dividend shall be cumulative or noncumulative) and limitations of each
issue. Satisfaction of any dividend preferences of outstanding shares of
preferred stock would reduce the amount of funds available for common
dividends. Holders of shares of preferred stock may be entitled to receive a
preference before any payment is made to common shareholders.
In connection with the IPO, the Company adopted a rights plan ("Rights
Plan"). On April 15, 1996, the Company's Board declared a dividend of one
right for each share of common stock outstanding at the close of business on
June 3, 1996. The holders of additional common stock issued subsequent to such
date and before the occurrence of certain events are entitled to one right for
each such additional share. Each right entitles the registered holder under
certain circumstances to purchase from the Company one-thousandth of a share
of junior preferred stock (series A) at a price of $80 per one-thousandth
share of junior preferred stock, subject to adjustment. The Company may redeem
the rights at $.01 per right prior to the earlier of the stock acquisition
date and the expiration date as defined in the Rights Plan. Prior to exercise
of a right, the holder will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
distributions. In addition, the rights have certain anti-takeover effects. The
rights are not issued in separate form and may not be traded other than with
the shares to which they attach. If unexercised, the rights expire on June 3,
2006. Following the IPO, 100,000 shares of junior preferred stock were
reserved for issuance in connection with the Rights Plan.
NOTE 12. RETIREMENT PLANS
The Company sponsors several defined contribution plans through its domestic
subsidiaries covering employees who meet certain service requirements. The
Company makes contributions to the plans based upon a percentage of the
employees' contribution in the case of its 401(k) plans or upon a percentage
of the employees' salary or hourly wages in the case of its noncontributory
money purchase plans. The cost of the plans was $1.7, $1.7, and $1.6 million
for 1997, 1996 and 1995, respectively. In addition, the Company sponsors
defined benefit retirement plans covering employees at certain of its
subsidiaries. The annual service costs are determined on the basis of an
actuarial valuation by using the projected benefit method. Any realizable
surpluses are amortized on a straight-line basis over the expected average
remaining service lives of the employees in the plan. It is the Company's
policy to fund such plans in accordance with applicable laws and regulations.
At January 3, 1998, the pension plan assets were primarily invested in
separate funds whose values are subject to fluctuation in interest rates and
equity/bond securities markets.
The Company also sponsors, through its Nonwovens Business, a Supplemental
Executive Retirement Plan ("SERP") which provides certain personnel with
supplemental benefits in addition to those available under the Company's
retirement plans. These supplemental retirement benefits are provided by a
nonqualified, noncontributory plan and are based on years of service and
compensation. Contributions are made based upon the estimated requirements of
the plan.
The data presented in the following tables illustrate the funded status for
such plans as of the respective periods, components of pension expense and
assumptions used in accounting for the defined benefit retirement plans.
Information regarding the Company's defined benefit retirement plan for its
Mexican subsidiary is excluded from the following disclosures as such amounts
were not material during 1997, 1996 and 1995.
65
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table sets forth the funded status and amounts recognized in
the consolidated balance sheet as of January 3, 1998 and December 28, 1996:
<TABLE>
<CAPTION>
1997 1996
----------------------- -----------------------
PLAN PLAN
PLAN ASSETS LIABILITIES PLAN ASSETS LIABILITIES
EXCEED PLAN EXCEED PLAN EXCEED PLAN EXCEED PLAN
LIABILITIES ASSETS LIABILITIES ASSETS
----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Accumulated benefit obligation:
Vested....................... $36,601 $ -- $21,368 $ 231
Non-vested................... 1,122 -- 1,172 181
------- ------ ------- -----
37,723 -- 22,540 412
Benefits attributable to future
salaries...................... 5,205 -- 3,942 --
------- ------ ------- -----
Projected benefit obligation... 42,928 -- 26,482 412
Plan assets at fair value...... 57,683 -- 34,036 175
------- ------ ------- -----
Excess (deficit) of plan assets
over projected benefit
obligation.................... 14,755 -- 7,554 (237)
Unrecognized transition net
asset......................... (169) -- (360) --
Unrecognized net (gain) loss... (2,412) -- (1,635) --
------- ------ ------- -----
Prepaid pension cost (pension
liability).................... $12,174 $ -- $ 5,559 $(237)
======= ====== ======= =====
</TABLE>
Pension expense included in the determination of net income for 1997, 1996
and 1995 is as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------
1997 1996 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current service costs............................. $ 1,566 $ 1,523 $ 1,286
Interest costs on projected benefit obligation.... 1,813 1,673 1,160
Return on plan assets............................. (2,659) (2,158) (1,400)
Net amortization of transition obligation......... (26) (52) 5
------- ------- -------
Pension expense, net.............................. $ 694 $ 986 $ 1,051
======= ======= =======
</TABLE>
Significant assumptions used in accounting for the defined benefit
retirement plans are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------
1997 1996 1995
---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Return on plan assets:
U.S. Plan................................ 8.0%-9.0% 9.0% 9.0%
Non U.S. Plans........................... 6.5%-8.5% 6.5%-13.0% 6.5%-8.0%
Discount rate on projected benefit
obligations:
U.S. Plan................................ 7.5%-7.75% 7.5% 7.5%
Non U.S. Plans........................... 6.0%-8.5% 6.0%-8.5% 6.0%-8.0%
Salary and wage escalation rate:
U.S. Plan................................ 0.0%-5.0% -- --
Non U.S. Plans........................... 3.0%-6.5% 3.0%-4.0% 3.0%-4.0%
</TABLE>
66
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 13. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company sponsors several defined benefit postretirement plans covering
certain employees. Accordingly, the Company follows provisions of Statement of
Financial Accounting Standards No. 106, "Employers Accounting for
Postretirement Benefits Other Than Pensions" ("FAS 106"). FAS 106 requires
that the accrual method of accounting for postretirement benefits other than
pensions be used and that the accrual period be based on the period that
employees render the services necessary to earn their postretirement benefits.
The Company currently anticipates funding the plans on a "pay-as-you-go"
basis. The weighted average discount rate used in the calculation of the
accumulated postretirement benefit obligation and the net postretirement
benefit cost for the plans was 6.5% and 7.5%, respectively. The assumed annual
composite rate of increase in the per capita cost of Company provided health
care benefits begins at 9.0% for 1996, gradually decreases to 6.0% by 1999 and
remains at that level thereafter. A 1% increase in these health care cost
trend rates would cause the accumulated obligation to increase by $0.5
million. The effect of such increase on the aggregate of the service and
interest components of the 1997 net postretirement benefit cost is not
significant. During 1997, the Company terminated a defined benefit plan which
was not replaced. The Company recorded approximately $1.7 million in net pre-
tax curtailment gains related to the termination of this plan. Net
postretirement benefit cost included in the determination of net income for
1997, 1996 and 1995 is included in the following table:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost--benefits earned during the period........... $107 $169 $109
Interest costs on accumulated postretirement benefit
obligation............................................... 203 238 174
---- ---- ----
Net postretirement benefit cost........................... $310 $407 $283
==== ==== ====
</TABLE>
The following table sets forth the funded status of the Company's obligation
under FAS 106 as of January 3, 1998 and December 28, 1996:
<TABLE>
<CAPTION>
1997 1996
------ ------
(IN
THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees................................................. $2,676 $ --
Fully eligible active plan participants.................. 1,054 885
Other active plan participants........................... 1,831 3,016
------ ------
Accrued postretirement benefit obligation.................. $5,561 $3,901
====== ======
</TABLE>
67
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 14. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
FISCAL YEAR ENDED JANUARY 3, 1998
Net sales............................... $128,947 $131,508 $129,711 $145,101
Gross Profit............................ 32,585 34,716 31,196 34,712
Income (loss) before extraordinary item. 4,962 6,012 8,948 7,511
Extraordinary item...................... -- -- (12,005) --
Net income (loss) attributable to common
stock.................................. 4,962 6,012 (3,057) 7,511
Net income (loss) per common share:
Basic:
Income before extraordinary item.... $ .16 $ .19 $ .28 $ .23
Extraordinary item.................. -- -- (.38) --
-------- -------- -------- --------
Net income (loss) per common share--
basic.............................. $ .16 $ .19 $ (.10) $ .23
======== ======== ======== ========
Diluted:
Income before extraordinary item.... $ .16 $ .19 $ .28 $ .23
Extraordinary item.................. -- -- (.38) --
-------- -------- -------- --------
Net income (loss) per common share--
diluted............................ $ .16 $ .19 $ (.10) $ .23
======== ======== ======== ========
FISCAL YEAR ENDED DECEMBER 28, 1996
Net sales............................... $122,715 $128,593 $135,042 $135,018
Gross profit............................ 29,395 32,265 33,834 36,861
Income before extraordinary item........ (483) 2,598 5,531 7,176
Extraordinary item...................... -- (13,932) -- --
Net income (loss)....................... (483) (11,334) 5,531 7,176
Redeemable preferred stock dividends and
accretion.............................. (2,104) (916) -- --
Net income (loss) attributable to common
stock.................................. (2,587) (12,250) 5,531 7,176
Net income (loss) per common share:
Basic:
Income (loss) before extraordinary
item............................... $ (.13) $ .06 $ .17 $ .22
Extraordinary item.................. -- (.53) -- --
-------- -------- -------- --------
Net income (loss) per common share--
basic.............................. $ (.13) $ (.47) $ .17 $ .22
======== ======== ======== ========
Diluted:
Income (loss) before extraordinary
item............................... $ (.13) $ .06 $ .17 $ .22
Extraordinary item.................. -- (.53) -- --
-------- -------- -------- --------
Net income (loss) per common share--
diluted............................ $ (.13) $ (.47) $ .17 $ .22
======== ======== ======== ========
</TABLE>
During the third quarter of 1997 and second quarter of 1996 the Company
recorded an extraordinary item of $12.0 million (net of tax) and $13.9 million
(net of tax), respectively, for the write-off of previously capitalized debt
issue costs and prepayment premiums related to the refinancing of
indebtedness.
68
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 15. GEOGRAPHICAL INFORMATION
Geographic data for the Company's operations are presented in the following
table. Intercompany sales and expenses are eliminated in determining results
for each operation. Export sales from the Company's United States operations
to unaffiliated customers approximated $83.0, $43.8, and 16.1 million during
1997, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
FISCAL YEAR
-----------------------------
1997 1996 1995
---------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales to unaffiliated customers:
United States................................. $ 311,923 $312,000 $255,296
Canada........................................ 61,747 57,371 59,417
Europe........................................ 109,714 108,563 99,180
Mexico........................................ 51,883 43,434 23,745
---------- -------- --------
Total....................................... $ 535,267 $521,368 $437,638
========== ======== ========
Income from operations:
United States................................. $ 34,399 $ 35,625 $ 16,918
Canada........................................ 7,105 9,045 13,485
Europe........................................ 3,327 7,350 4,994
Mexico........................................ 13,778 10,128 6,891
---------- -------- --------
Total....................................... 58,609 62,148 42,288
Other (income) expense, net:
Interest expense, net......................... 30,499 33,641 37,868
Investment income--(gain) on marketable
securities, net.............................. (11,880) -- --
Foreign currency transaction (gains) losses,
net.......................................... (452) 2,955 22,811
---------- -------- --------
Income (loss) before income taxes and
extraordinary item............................. $ 40,442 $ 25,552 $(18,391)
========== ======== ========
Identifiable assets:
United States................................. $ 695,042 $388,240 $324,088
Canada........................................ 642,523 92,670 88,100
Europe........................................ 226,117 171,676 180,978
Mexico........................................ 64,071 55,529 44,815
---------- -------- --------
Total....................................... $1,627,753 $708,115 $637,981
========== ======== ========
</TABLE>
In 1997, the Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("FAS
131"), which is effective for years beginning after December 15, 1997. FAS 131
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. It also establishes standards for
related disclosures about products and services, geographic areas, and major
customers. The Company will adopt the new requirements retroactively in the
first quarter of 1998.
69
<PAGE>
POLYMER GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 16. CERTAIN MATTERS
The Company's corporate headquarters are housed in space leased by a
shareholder of the Company from an affiliate of the shareholder. A portion of
the payments and other expenses, primarily insurance and allocated costs, are
charged to the Company. Such amounts approximated $1.8, $2.1, and $2.3 million
in 1997, 1996, and 1995, respectively. On September 1, 1993, an affiliated
entity of the Company acquired a manufacturing facility in Vineland, New
Jersey for the benefit of a wholly-owned subsidiary of the Company and entered
into a lease of the facility to the subsidiary at a rate which the Company
believes is comparable to similar properties in the area. The lease terminates
on August 31, 2003 and is subject to a fair market value purchase option at
termination. Annual rental expense relating to this lease approximated $0.2
million in 1997, 1996 and 1995, respectively. On January 11, 1996, the Company
issued 10,000 shares of 13% Cumulative Redeemable Preferred Stock, $.01 par
value, to an entity affiliated with the Company for $10.0 million. Such shares
were redeemed in connection with the IPO.
NOTE 17. SUBSEQUENT EVENTS
On January 29, 1998, the Company (i) acquired all remaining outstanding
shares of Dominion (as described in "Note 2. Acquisitions") and (ii) amended
its credit facility in connection with the acquisition of Dominion. This
amendment provides for a $125.0 million secured term loan and modification of
certain terms of the revolving portion of the credit facility. The Company
borrowed approximately $326.6 million under the amendment to finance the
Nonwovens Acquisition, for which it paid a gross price of approximately $351.6
million, including related fees and expenses. The Company also refinanced its
outstanding indebtedness under the DTA Credit Facility, repaid its
subordinated advance from ZB Holdings and repaid a substantial portion of the
DT USA Guaranteed Senior Notes with borrowings under this facility. Related to
the refinancing of this debt, the Company expects to incur an extraordinary
item for the write-off of loan acquisition costs associated with the DTA
Credit Facility during the first quarter of 1998.
On March 5, 1998, the Company issued $200.0 million of 8.75% Senior
Subordinated Notes due 2008 (the "2008 Notes") to qualified buyers pursuant to
Rule 144A under the Securities Act. Proceeds from the sale of the 2008 Notes
were used to finance the Oriented Polymer Acquisition (as defined) and to
repay existing revolving obligations.
On March 16, 1998, the Company completed the acquisition (the "Oriented
Polymer Acquisition") of a leading North American manufacturer of
polypropylene-based commercial twine and polyethylene-based specialty knitted
products for approximately $47.0 million.
70
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
In connection with the Nonwovens Acquisition on January 29, 1998, the
Company appointed Ernst & Young LLP, independent auditors, as independent
accountants for the subsidiaries comprising the Nonwovens Business to replace
Deloitte & Touche LLP ("Deloitte & Touche"), chartered accountants, whom the
Company dismissed as of January 29, 1998.
During the two fiscal years prior to the Nonwovens Acquisition, there were
no disagreements with Deloitte & Touche on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure
nor did Deloitte & Touche's reports on the financial statements for such
period contain an adverse opinion or disclaimer of opinion, nor were such
reports qualified or modified as to uncertainty, audit scope or accounting.
Deloitte & Touche has been provided with a copy of this disclosure and
requested by the Company to furnish a letter addressed to the Commission
stating whether they agree with the above statements. A copy of Deloitte &
Touche's letter to the Commission is filed as an exhibit to this Annual Report
on Form 10-K.
71
<PAGE>
PART III
ITEM 10. MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Information regarding directors of the Company required by this Item is
incorporated by reference from the Notice of 1998 Annual Meeting of
Stockholders and Proxy Statement, to be filed with the Commission no later
than 120 days after the fiscal year end (the "Proxy Statement"), under the
caption "Election of Directors". The Company appointed a new officer of the
Company and restructured the responsibilities of certain other officers in
February 1998, following the fiscal year end. The information set forth below
regarding officers of the Company is as of March 1, 1998 and reflects the
current management structure of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Jerry Zucker............ 48 Chairman, President, Chief Executive Officer
and Director
James G. Boyd........... 53 Executive Vice President, Chief Financial
Officer, Treasurer, Secretary and Director
S. Grant Reeves......... 42 Vice President--Operational Analysis and Chief
Operating Officer--Oriented Polymer Division
Thomas E. Phillips...... 48 Group Vice President--Sales (Americas),
Finance, Information Technology and Human
Resources, Nonwovens
James L. Schaeffer...... 47 Group Vice President--Operations and General
Manager (Americas), Nonwovens
Gregg Wilkinson......... 45 Group Vice President--Marketing and
International Business Development, Nonwovens
Richard L. Ferencz...... 53 Group Vice President--Advanced Technology and
Engineering, Nonwovens
Peter C. Bourgeois...... 54 Group Vice President and General Manager,
Fabrene
Bruce V. Rauner......... 42 Director
David A. Donnini........ 32 Director
Michael J. McGovern..... 35 Director
L. Glenn Orr, Jr. ...... 57 Director
John F. ("Jack") Ruffle. 61 Director
</TABLE>
JERRY ZUCKER has served as Chairman, President, Chief Executive Officer and
a Director of the Company since its inception. In addition to his duties with
the Company, Mr. Zucker presently serves as Chairman and Chief Executive
Officer of InterTech, one of the Company's principal stockholders, and has
served in this capacity since 1983.
JAMES G. BOYD has served as Executive Vice President, Chief Financial
Officer, Treasurer, Secretary and a Director of the Company since its
inception. In addition to his duties with the Company, Mr. Boyd serves as
Executive Vice President and Treasurer of InterTech, one of the Company's
principal shareholders, and has served in this capacity since 1986.
S. GRANT REEVES has served as Vice President--Operational Analysis and Chief
Operating Officer--Oriented Polymers Division since February 1998. From June
1994 through February 1998, Mr. Reeves served as a Vice President of the
Company. Mr. Reeves joined lnterTech in 1986, where he served as controller of
Reemay, Inc., a former InterTech affiliate ("Reemay"), and served as General
Manager at Fabrene from 1991 through June 1994.
72
<PAGE>
THOMAS E. PHILLIPS has served as Group Vice President--Sales (Americas),
Finance, Information Technology and Human Resources, Nonwovens since February
1998. Mr. Phillips served as Group Vice President--Finance, Systems and
Administration, Nonwovens from March 1995 through February 1998. From 1993
until March 1995, Mr. Phillips served as General Manager and Vice President of
FiberTech. Prior to joining FiberTech, Mr. Phillips served as a Vice President
(1986-1992) and a Senior Vice President (1992-1993) of Reemay, where his
responsibilities included financial, systems, human resources and
administrative functions.
JAMES L. SCHAEFFER has served as Group Vice President--Operations and
General Manager (Americas), Nonwovens since February 1998. Mr. Schaeffer
served as Group Vice President--Operations/Engineering, Nonwovens from March
1995 through February 1998. From 1992 until March 1995, Mr. Schaeffer served
as Vice President--Operations/Engineering of FiberTech. Prior to joining
FiberTech, Mr. Schaeffer served as General Manager for Scott Nonwovens at the
Landisville facility from 1990 to 1992.
GREGG WILKINSON has served as Group Vice President--Marketing and
International Business Development, Nonwovens since February 1998. Mr.
Wilkinson served as Group Vice President--Marketing and Sales, Nonwovens from
March 1995 through February 1998. From July 1994 until March 1995, Mr.
Wilkinson served as Vice President--Marketing, Sales and Technology of
FiberTech and from August 1993 until July 1994, Mr. Wilkinson served as
Director--New Business Development. For the period 1987 to August 1993, Mr.
Wilkinson served in sales and marketing management capacities with Reemay.
RICHARD L. FERENCZ has served as Group Vice President--Advanced Technology
and Engineering, Nonwovens since February 1998. From March 1996 to February
1998, Mr. Ferencz served as Vice President--Advanced Technology and
Engineering of the Company. From 1992 to 1996 Mr. Ferencz served as Vice
President of Engineering of the Company. Prior to joining the Company, Mr.
Ferencz served as Director of Systems of Reemay (1986-1992).
PETER C. BOURGEOIS has served as Group Vice President and General Manager,
Fabrene since February 1998. Mr. Bourgeois served as Vice President, Wovens
from 1993 through February 1998. Mr. Bourgeois served as Vice President--
Marketing and Sales for Fabrene from June 1989 until 1993.
The Board currently consists of seven directors, who are divided into three
classes as nearly equal number as possible, with Messrs. Boyd's and McGovern's
terms expiring in 1998, Messrs. Zucker's and Rauner's terms expiring in 1999,
and Messrs. Donnini's, Orr's and Ruffles's terms expiring in 2000. At each
annual meeting of stockholders, successors to the class of directors whose
term expires at such meeting will be elected to serve for three-year terms or
until their successors are duly elected and qualified. The Board has the power
to appoint the officers of the Company. Each officer will hold office for such
term as may be prescribed by the Board and until such person's successor is
chosen and qualified or until such person's death, resignation or removal.
There are three Committees of the Board: the Compensation Committee, the
1996 Key Employee Stock Option Plan Committee (the "Stock Option Committee")
and the Audit Committee. The Compensation Committee, which is composed of
Messrs. Donnini and Rauner, reviews and makes recommendations to the Board
regarding salaries, compensation and benefits of executive officers and key
employees of the Company. The Stock Option Committee, which is composed of
Messrs. Donnini and Rauner, is empowered to grant options to purchase Common
Stock of the Company to any key employee in accordance with the 1996 Key
Employee Stock Option Plan. The Audit Committee is composed of Messrs.
McGovern, Donnini and Rauner. Among other duties, the Audit Committee reviews
the internal and external financial reporting of the Company, reviews the
scope of the independent audit, considers comments by the auditors regarding
internal controls and accounting procedures and provides the management's
response to the auditors' comments. The Company does not have a nominating
committee.
73
<PAGE>
EMPLOYMENT AND MANAGEMENT AGREEMENTS
Pursuant to management agreements originally entered into in October, 1992
(the "PGI Management Agreements"), Messrs. Zucker and Boyd (collectively, the
"Executives") have agreed to serve as President and Chief Executive Officer,
and Executive Vice President and Treasurer, respectively, of PGI Polymer.
Pursuant to management agreements entered into in March, 1995 (the "Chicopee
Management Agreements" and, together with the PGI Polymer Management
Agreements, the "Management Agreements"), the Executives have agreed to serve
in the same capacities for Chicopee. The Management Agreements provide that
the Executives' employment thereunder will continue until the Executive's
resignation, permanent disability, death or termination by PGI's or Chicopee's
Board of Directors, as the case may be.
The PGI Management Agreements provide for an annual base salary of $250,000
to be paid to Mr. Zucker and an annual base salary of $150,000 to be paid to
Mr. Boyd, while the Chicopee Management Agreements provide for an annual base
salary of $400,000 to be paid to Mr. Zucker and an annual base salary of
$200,000 to be paid to Mr. Boyd, all of which amounts may be increased as
determined in good faith by the Board of Directors of PGI Polymer and
Chicopee, respectively. The Management Agreements also provide for a bonus to
be paid at the end of each fiscal year to each of the Executives in an amount
determined by PGI Polymer or Chicopee's Board of Directors, as the case may
be, but not to exceed such Executive's base salary.
The Management Agreements provide that upon the termination of either
Executive's employment, such Executive is entitled to receive severance
payments equal to either one-half (in the case of death, disability,
resignation without good reason or termination for cause) or three times (in
all other cases) his annual salary.
ITEM 11. EXECUTIVE COMPENSATION
Information required under this Item is incorporated by reference from the
Proxy Statement under the caption "Executive Compensation."
ITEM 12. SECURITY OWNERSHIP
Information required under this Item is incorporated by reference from the
Proxy Statement under the caption "Security Ownership."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required under this Item is incorporated by reference from the
Proxy Statement under the caption "Certain Relationships and Related
Transactions."
74
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS AND SCHEDULES
(a) The following financial statements and independent auditors report
required by this Item are filed herewith under Item 8.
(i) Consolidated Balance Sheets.
(ii) Consolidated Statements of Operations.
(iii) Consolidated Statements of Shareholders' Equity.
(iv) Consolidated Statements of Cash Flows.
(v) Notes to Consolidated Financial Statements.
(vi) Report of Ernst & Young LLP, Independent Auditors.
(b) Schedule II--Valuation and Qualifying Accounts ("Schedule II").
Supplemental schedules other than Schedule II are omitted because of the
absence of conditions under which they are required or because the required
information is included in the consolidated financial statements or in the
notes thereto.
EXHIBITS
Exhibits required to be filed with this Form 10-K are listed in the
following Exhibit Index.
FORM 8-K
On November 12, 1997, the Company filed a Form 8-K relative to DT
Acquisition's offer to purchase any and all outstanding shares of Dominion
Textile Inc.
On February 13, 1998, the Company filed a Form 8-K relative to its
consummation of the acquisition of the Nonwovens Business of Dominion Textile
Inc.
75
<PAGE>
POLYMER GROUP, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- --------- ----------------- ---------- ----------
ADDITIONS
-----------------
BALANCE
AT CHARGED TO BALANCE AT
BEGINNING COSTS AND DEDUCTIONS END OF
DESCRIPTION OF PERIOD EXPENSES OTHER (DESCRIBE) PERIOD
----------- --------- ---------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JANUARY 3, 1998
Allowance for doubtful
accounts................. $ 3,848 7,337 503(2) 6,185(1) $ 5,503
Valuation allowance for
deferred tax assets...... $14,149 -- -- 8,222(3) $ 5,927
Restructuring costs....... $12,009 -- -- 6,525(3) $ 5,484
YEAR ENDED DECEMBER 28,
1996
Allowance for doubtful
accounts................. $ 1,885 9,060 114(2) 7,211(1) $ 3,848
Valuation allowance for
deferred tax assets...... $11,792 2,357 -- -- $14,149
Restructuring costs....... $15,453 -- -- 3,444(3) $12,009
YEAR ENDED DECEMBER 30,
1995
Allowance for doubtful
accounts................. $ 496 5,788 674(2) 5,073(1) $ 1,885
Valuation allowance for
deferred tax assets...... $10,198 1,594 -- -- $11,792
Restructuring costs....... $ -- -- 17,859(2) 2,406(3) $15,453
</TABLE>
- --------
(1) Uncollectible accounts written off and price concessions.
(2) Reserve established as part of business acquisition.
(3) Charges to reserve.
76
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Polymer Group, Inc.
/s/ Jerry Zucker
By: _________________________________
Jerry Zucker
Chairman, President andChief
Executive Officer
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPABILITIES AND ON APRIL 3,
1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Jerry Zucker Chairman, Chief Executive Officer,
___________________________________________ President and Director (principal
Jerry Zucker executive officer)
/s/ James G. Boyd Executive Vice President, Chief Financial
___________________________________________ Officer, Treasurer and Director
James G. Boyd (principal financial officer and
principal accounting officer)
/s/ Bruce V. Rauner Director
___________________________________________
Bruce V. Rauner
/s/ Michael J. McGovern Director
___________________________________________
Michael J. McGovern
/s/ David A. Donnini Director
___________________________________________
David A. Donnini
/s/ L. Glenn Orr, Jr. Director
___________________________________________
L. Glenn Orr, Jr.
/s/ John F. Ruffle Director
___________________________________________
John F. Ruffle
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
------- -------------------- ----------
<C> <S> <C>
2.1 Agreement dated October 27, 1997, among Polymer Group,
Inc., Galey & Lord, Inc. and DT Acquisition Inc.(1)
2.2 Letter Agreement, dated October 27, 1997, among Polymer
Group, Inc., Galey & Lord, Inc. and DT Acquisition Inc.
2.3 Operating Agreement, dated December 19, 1997, among
Polymer Group, Inc., Galey & Lord, Inc. and DT Acquisi-
tion Inc.(1)
2.4 DT Acquisition Inc. Offers to Purchase Statement for
all outstanding Common Shares and all outstanding First
Preferred Shares of Dominion Textile Inc., dated Octo-
ber 29, 1997.
2.5 Notice of Extension and Variation by DT Acquisition
Inc. in respect of its Offers to Purchase, dated Novem-
ber 18, 1997.
2.6 Notice of Extension by DT Acquisition Inc. in respect
of its Offers to Purchase, dated December 2, 1997.
2.7 Notice of Extension and Variation by DT Acquisition
Inc. in respect of its Offers to Purchase, dated Decem-
ber 8, 1997.
2.8 Notice of Extension by DT Acquisition Inc. in respect
of its Offers to Purchase, dated December 17, 1997.
2.9 Letter Agreement between DTA, PGI and DTI dated Novem-
ber 16, 1997.
2.10 Notice of Redemption pursuant to the provisions of Sec-
tion 206 of the Canada Business Corporations Act in re-
gard to holders of Common Shares of Dominion Textile
Inc., dated December 30, 1997.
2.11 Notice of Redemption pursuant to the provisions of Sec-
tion 206 of the Canada Business Corporations Act in re-
gard to holders of First Preferred Shares of Dominion
Textile Inc., dated December 30, 1997.
2.12 Notice of Redemption in regard to holders of Second
Preferred Shares, Series D of Dominion Textile Inc.,
dated December 23, 1997.
2.13 Notice of Redemption in regard to holders of Second
Preferred Shares, Series E of Dominion Textile Inc.,
dated December 23, 1997.
2.14 Indenture, winding up Dominion Textile Inc. pursuant to
the Canada Business Corporations Act, dated January 29,
1998.
2.15 Master Separation Agreement, among Polymer Group, Inc.,
Galey & Lord, Inc. and DT Acquisition Inc., dated Janu-
ary 29, 1998.(1)*
3.1(i) Form of Amended and Restated Certificate of Incorpora-
tion of the Company.(2)
3.1(ii) Certificate of Designation of the Company.(3)
3.2 Amended and Restated By-laws of the Company.(2)
4.1 Indenture, dated as of July 1, 1997, among Polymer
Group, Inc., the Guarantors named therein and Harris
Trust and Savings Bank, as trustee.(3)
4.2 Forms of Series A and Series B 9% Senior Subordinated
Notes due 2007 (contained in Exhibit 4.1 as Exhibit A
and B thereto, respectively).(3)
4.3 Form of Guarantee (contained in Exhibit 4.2).(3)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DOCUMENT DESCRIPTION NUMBER
------- -------------------- ----------
<C> <S> <C>
4.4 Registration Rights Agreement dated as of July 3, 1997
among Polymer Group, Inc., the Guarantors named therein
and Chase Securities Inc.(3)
4.5 First Supplemental Indenture, dated October 27, 1997,
between Polymer Group Inc., Harris Trust and Savings
Bank and Loretex Corporation.
4.6 Second Supplemental Indenture, dated January 29, 1998,
between Polymer Group Inc., Harris Trust and Savings
Bank, DomTex Industries Inc. and Poly-Bond Inc.
4.7 Amended and Restated Credit Agreement dated July 3,
1997 by and among Polymer Group, Inc., the Guarantors
named therein, the lenders named therein and The Chase
Manhattan Bank, as agent.(3)
The Registrant will furnish to the Commission, upon re-
quest, each instrument defining the rights of holders
of long-term debt of the Registrant and its subsidiar-
ies where the amount of such debt does not exceed 10
percent of the total assets of the Registrant and its
subsidiaries on a consolidated basis.
9 Voting Agreement, dated May 15, 1996, among the Compa-
ny, GTC Fund III, Zucker, Boyd, InterTech, FTG, CMIHI
and Leeway.(4)
11 Statement of Computation of Per Share Earnings.
16 Letter of Deloitte & Touche regarding a change in cer-
tified accountants.
21 Subsidiaries of the Company.
23 Consent of Ernst & Young LLP.
27 Financial Data Schedule.
99.1 Offer to Purchase and Consent Solicitation Statement
dated June 5, 1997 to any and all holders of the 12
1/4% Senior Notes due 2002, relating to the Senior
Notes Tender Offer and Consent Solicitation.(3)
99.2 Form of Letter of Transmittal relating to the Senior
Notes Tender Offer and Consent Solicitation.(3)
99.3 Form of Notice of Guaranteed Delivery relating to the
Senior Notes Tender Offer and Consent Solicitation.(3)
99.4 Form of Letter of Transmittal relating to the Exchange
Offer.(3)
99.5 Form of Notice of Guaranteed Delivery relating to the
Exchange Offer.(3)
99.6 Form of Tender Instructions relating to the Exchange
Offer.(3)
99.7 Offer to Purchase and Consent Solicitation Statement,
dated December 23, 1997, to any and all holders of Do-
minion Textile Inc. 8 7/8% Senior Notes due 2003, re-
lating to the 2003 Tender Offer.
99.8 Form of Consent and Letter of Transmittal relating to
the 2003 Tender Offer.
99.9 Form of Notice of Guaranteed Delivery relating to the
2003 Tender Offer.
99.10 Offer to Purchase and Consent Solicitation Statement,
dated December 23, 1997, to any and all holders of Do-
minion Textile Inc. 9 1/4% Senior Notes due 2006, re-
lating to the 2006 Tender Offer.
99.11 Form of Consent and Letter of Transmittal relating to
the 2006 Tender Offer.
99.12 Form of Notice of Guaranteed Delivery relating to the
2006 Tender Offer.
</TABLE>
<PAGE>
- --------
*Certain portions of the Agreement have been omitted and filed separately
with the Commission pursuant to an Application for Confidential
Treatment.
(1) Incorporated by reference to the respective exhibit to the Company's
Form 8-K, dated February 13, 1998.
(2) Incorporated by reference to the respective exhibit to the Company's
Registration Statement on Form S-1 (Reg. No. 333-2424).
(3) Incorporated by reference to the respective exhibit to the Company's
Registration Statement on Form S-4 (Reg. No. 333-32605).
(4) Incorporated by reference to the respective exhibit to the Company's
Form 10-Q, dated August 13, 1996, for the fiscal quarter ended June 29,
1996, as amended.
<PAGE>
[CONFORMED COPY]
Privileged and Confidential
Polymer Group, Inc.
4838 Jenkins Avenue
North Charleston, South Carolina 29405
October 27, 1997
Galey & Lord Incorporated
980 Avenue of the Americas
New York, New York 10018
Attn: Arthur C. Wiener
Chairman, President and Chief Executive Officer
Re: Dominion Textile, Inc.
Dear Sirs:
In connection with the agreement ("Agreement") of even date herewith
between Polymer Group, Inc., a Delaware corporation ("PGI"), DT Acquisition,
Inc., a corporation organized under the laws of Canada ("DTA"), and Galey & Lord
Incorporated, a Delaware corporation ("GL") relating to the acquisition of all
of the outstanding common shares ("Common Shares") or all or substantially all
of the assets of Dominion Textile, Inc., a corporation organized under the laws
of Canada ("Target"), DTA intends to commence, directly or indirectly, a public
take-over bid to acquire all of the outstanding Common Shares of Target.
Pursuant to Section 14(c) of the Agreement ("Section 14(c)"), the Parties intend
to set forth in this letter agreement certain rights of the Parties to terminate
the Agreement upon certain events ("Termination Events," individually referred
to as a "Termination Event"). Terms not defined in this letter have the meanings
given such terms in the Agreement.
1. Increased Offer Price.
(a) In the event that DTA determines that it intends to offer more
than Can. $14.00 per Common Share pursuant to a public take-over bid to acquire
the outstanding Common Shares of Target, then PGI shall provide notice of such
determination, including the new price, to GL. By 5:00 p.m. E.S.T. on the later
of the (i) third day, or (ii) second business day following PGI's notice to GL
(the later of which constitutes the "GL Response Period"), GL shall notify PGI
whether GL will (i) continue with the Agreement at the increased price, or (ii)
terminate the Agreement pursuant to Section 14(c) if DTA
<PAGE>
Galey & Lord, Incorporated
October 27, 1997
Page 2
proceeds at the increased price. If GL does not provide PGI with
notice within the GL Response Period, then the Agreement will
continue in full force and effect and GL, PGI and DTA shall be
bound at the increased price. In the event that, within the GL
Response Period, GL notifies PGI that GL will terminate the
Agreement at the increased price pursuant to Section 14(c), then
by 5:00 p.m. E.S.T. on the later of the (i) second day or (ii)
first business day following receipt of GL's notification (the
later of which constitutes the "PGI Response Period"), PGI will
notify GL whether PGI will (i) continue with the Agreement and
not increase the price, or (ii) increase the price and terminate
the Agreement pursuant to Section 14(c). If PGI elects clause
(ii) in the immediately preceding sentence within the PGI
Response Period, this shall constitute a Termination Event
pursuant to Section 14(c). If PGI does not respond within the PGI
Response Period, the PGI shall not increase the price of the
public take-over bid above Can. $14.00 per Common Share and the
Agreement will continue, in which case PGI will continue to have
the right to propose an increase in the price at a later time or
times, subject to the terms of this provision.
(b) In the event that PGI or GL determines that DTA should offer more
than Can. $14.00 per Common Share pursuant to a public take-over
bid to acquire the outstanding Common Shares of Target, then the
Parties shall negotiate in good faith during the applicable
Response Periods to seek an agreement as to (i) the offer price
per Common Share, and (ii) the allocation to the purchase price
of each Business of the aggregate cash consideration paid by DTA
to the holders of Common Shares ("Common Shareholders") in excess
of Can. $14.00 per Common Share (the "Excess Amount").
2. Public Auction of Target. In the event that Target publicly announces
its intention to auction its Apparel Fabric Business and its Nonwoven
Business separately and not as a whole and has taken any bona fide
action to effectuate such auction, and the Parties agree in good faith
that the combined sale price of the Businesses is expected to exceed
the implied equivalent of completing the Target Acquisition at Can.
$14.00 per Common Share of Target, then GL or PGI can terminate the
Agreement pursuant to Section 14(c) by providing notice to the other
Party by 5:00 p.m. E.S.T. on the fifth business day following such an
agreement by the Parties. Delivery of such notice shall be a
Termination Event pursuant to Section 14(c).
3. Waiver, Modification or Amendment of Conditions to Take-Over Bid. In
the event that DTA determines that it intends to (i) waive, modify or
amend its public take-over bid to acquire the outstanding Common
Shares of Target in a manner that would waive, modify or amend the
conditions set forth in Sections 4(a), 4(b), 4(c)
<PAGE>
Galey & Lord, Incorporated
October 27, 1997
Page 3
and 4(k) of the attached draft take-over bid circular, or (ii) change
or alter the form of consideration to be paid to the Common
Shareholders as set forth in the attached draft take-over bid circular
(the items described in clauses (i) and (ii) are referred to herein as
"Material Tender Conditions"), then PGI shall provide notice of such
determination, including the nature of the proposed waiver,
modification or amendment, to GL. Within the GL Response Period, GL
shall notify PGI whether GL will (i) continue with the Agreement with
the waiver, modification or amendment, or (ii) terminate the Agreement
pursuant to Section 14(c) if DTA proceeds with the waiver,
modification or amendment. If GL does not provide PGI with notice
within the GL Response Period, then the Agreement will continue in
full force and effect and GL, PGI and DTA shall be bound by the
conditions as waived, modified or amended. In the event that, within
the GL Response Period, GL notifies PGI that GL will terminate the
Agreement if the waiver, modification or amendment is made, then
within the PGI Response Period, PGI will notify GL whether PGI will
(i) continue with the Agreement and not make the waiver, modification
or amendment, or (ii) proceed with the waiver, modification or
amendment and terminate the Agreement pursuant to Section 14(c). If
PGI elects clause (ii) in the immediately preceding sentence within
the PGI Response Period, this shall constitute a Termination Event
pursuant to Section 14(c). If PGI does not respond within the PGI
Response Period, then PGI shall not make the waiver, modification or
amendment and the Agreement will continue, in which case PGI will
continue to have the right to waive, modify or amend the Material
Tender Conditions at a later time or times, subject to the terms of
this provision.
If any extraordinary change occurs in the capital structure of Target after
the date of this letter, including a stock split, reverse stock split,
reclassification, recapitalization or similar event, then all per Common Share
figures herein shall be adjusted to reflect the changes.
All notices required by this letter shall be in writing and shall be sent
by facsimile (with confirming copy sent by overnight courier), with oral
confirmation of receipt. All notices to GL shall be made to Arthur Wiener,
Chairman, President and Chief Executive Officer of GL, and all notices to PGI
and DTA shall be made to Jerry Zucker, Chairman, President and Chief Executive
Officer of PGI, at the addresses of their respective principal executive
offices.
This agreement is for the benefit of the Parties, and will be governed by
and construed in accordance with the internal laws of the State of New York. The
obligations of each Party under this agreement will expire upon termination of
the Agreement.
<PAGE>
Galey & Lord, Incorporated
October 27, 1997
Page 4
If you agree with the foregoing, please sign and return two copies of
this letter, which will constitute our agreement with respect to the subject
matter of this letter.
Very truly yours,
POLYMER GROUP, INC.
By: /s/ Jerry Zucker
------------------------------------
Name: Jerry Zucker
Title: Chairman, President and
Chief Executive Officer
DT ACQUISITION INC.
By: /s/ Jerry Zucker
------------------------------------
Name: Jerry Zucker
Title: Chairman, President and
Chief Executive Officer
CONFIRMED AND AGREED
as of the date written above:
GALEY & LORD INCORPORATED
By: /s/ Arthur C. Wiener
------------------------------
Name: Arthur C. Wiener
Title: Chairman, President and
Chief Executive Officer
<PAGE>
This document is important and requires your immediate attention. If you are in
doubt as to how to deal with it, you should consult your investment dealer,
lawyer or other advisor.
DT ACQUISITION INC.
OFFERS TO PURCHASE
all of the outstanding Common Shares
and all of the outstanding First Preferred Shares of
DOMINION TEXTILE INC.
for Cdn. $11.75 cash per Common Share
and Cdn. $109.50 cash per First Preferred Share
The offer to purchase (the "Common Share Offer") common shares, together
with associated "Rights" (as defined below), (collectively, the "Common Shares")
of Dominion Textile Inc. ("Dominion Textile") and the offer to purchase (the
"Preferred Share Offer") first preferred shares (the "First Preferred Shares")
of Dominion Textile made by DT Acquisition Inc. (the "Offeror") is open for
acceptance until 4:00 pm (Toronto time) on November 20, 1997 (the "Expiry
Time"), unless withdrawn or extended. The Common Share Offer and the Preferred
Share Offer are collectively referred to as the "Offers".
The Offeror is owned as to 60% by Polymer Group, Inc. ("Polymer") and as to
40% by The InterTech Group, Inc. ("ITG"). The Offeror, together with persons
acting jointly or in concert with the Offeror, owns 5,955,000 Common Shares or
approximately 14.5% of the outstanding Common Shares. The Offers are conditional
upon, among other conditions, (i) at least that number of Common Shares (on
fully diluted basis) and First Preferred Shares (collectively, the "Shares")
being validly deposited under each Offer and not withdrawn which represents 90%
of each such class but excluding Shares of the particular class held as of the
date hereof by or on behalf of the Offeror, its affiliates and associates (as
those terms are defined in the CBCA) and (ii) the redemption of all Rights or
waiver of the application of the "Rights Plan" (as defined below) to the Common
Share Offer, a Compulsory Acquisition or any Subsequent Acquisition Transaction.
These and the other conditions to the Offers are described in Section 4 of the
Offers, "Conditions of the Offers".
Holders of Common Shares who wish to accept the Common Share Offer must
properly complete and execute the accompanying Letter of Transmittal (printed
on blue paper) and holders of First Preferred Shares who wish to accept the
Preferred Share Offer must properly complete and execute the accompanying Letter
of Transmittal (printed on green paper) or, in each case, a manually signed
facsimile thereof and deposit the relevant Letter of Transmittal, together with
certificates representing their Shares, in accordance with the instructions in
the relevant Letter of Transmittal at any of the offices of the Depositary
specified in such Letter of Transmittal, so as to arrive there not later than
the Expiry Time. Alternatively, Shareholders tendering Common Shares may follow
the procedure for guaranteed delivery set forth under Section 3 of the Offers,
"Manner of Acceptance - Procedure for Guaranteed Delivery", using the
accompanying Notice of Guaranteed Delivery (printed on yellow paper).
Questions and requests for assistance may be directed to CIBC Wood Gundy
Securities Inc. (the "Canadian Dealer Manager"), Chase Securities Inc. (the
"U.S. Dealer Manager") or Montreal Trust Company of Canada (the "Depositary")
and additional copies of this document, the Letters of Transmittal and the
Notice of Guaranteed Delivery may be obtained without charge on request from
those persons at their respective offices shown on the last page of this
document.
If your Shares are registered in the name of a nominee, you should contact
your broker, investment dealer, bank, trust company or other nominee for
assistance.
Members of the Soliciting Dealer Group will be paid the fees described in
Section 20 of the Circular, "Dealer Managers and Soliciting Dealer Group".
------------------------------
The Dealer Managers for the Offers:
CIBC WOOD GUNDY SECURITIES INC. CHASE SECURITIES, INC.
in Canada in the United States
October 29, 1997
<PAGE>
The Offers are made for the securities of a Canadian issuer and while the
Offers are subject to Canadian disclosure requirements, investors should be
aware that those requirements are different from those of the United States.
Financial statements included herein regarding Dominion Textile, if any, have
been prepared in accordance with Canadian generally accepted accounting
principles and thus may not be comparable to financial statements of United
States companies.
The enforcement by investors of civil liabilities under the United States
federal securities laws may be affected adversely by the fact that the Offeror
is incorporated and located in Canada, that some or all of its officers and
directors are residents of Canada, that the Canadian Dealer Manager is a
resident of Canada, and that all or a substantial portion of the assets of the
Offeror and said persons are located outside the United States.
You should be aware that the Offeror or its affiliates, directly or
indirectly, may bid for or make purchases of Dominion Textile's securities
subject to the Offers, or of Dominion Textile's related securities, during the
period of the Offers, as permitted by applicable Canadian laws, provincial laws
or regulations.
This document does not constitute an offer or a solicitation to any person in
any jurisdiction in which such offer or solicitation is unlawful. The Offers are
not being made to, nor will deposits be accepted from or on behalf of,
Shareholders in any jurisdiction in which the making or acceptance of the Offers
would not be in compliance with the laws of such jurisdiction. However, the
Offeror may, in its sole judgment, take such action as it may deem necessary to
extend either of the Offers to Shareholders in such jurisdiction.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
DEFINITIONS................................................................ 4
SUMMARY.................................................................... 7
OFFERS..................................................................... 10
1. The Offers........................................................... 10
2. Time For Acceptance.................................................. 10
3. Manner of Acceptance................................................. 10
4. Conditions of the Offers............................................. 13
5. Extension and Variation of the Offers................................ 16
6. Payment for Deposited Shares......................................... 16
7. Return of Shares..................................................... 17
8. Withdrawal of Deposited Shares....................................... 17
9. Changes in Capitalization, Distributions and Liens................... 18
10. Notices and Delivery................................................. 19
11. Acquisition of Shares Not Deposited.................................. 19
12. Mail Service Interruption............................................ 20
13. Market Purchases..................................................... 20
14. Other Terms of the Offers............................................ 21
CIRCULAR................................................................... 22
1. The Offeror, Polymer, ITG and GLI.................................... 22
2. Dominion Textile..................................................... 23
3. Background to the Offers............................................. 23
4. Purpose of the Offers and the Offeror's Plans for Dominion Textile... 25
5. Purchase Agreement................................................... 26
6. Effect of the Offers on Outstanding Indebtedness of Dominion Textile. 26
7. Holdings of Securities of Dominion Textile........................... 27
8. Trading in Securities of Dominion Textile............................ 28
9. Commitments to Acquire Securities.................................... 28
10. Source of Funds...................................................... 28
11. Price Range and Trading Volume of Shares............................. 30
12. Effect of the Offers on Market and Listings.......................... 30
13. Acquisition of Shares Not Deposited Under the Offers................. 31
14. Regulatory Matters................................................... 33
15. Material Changes and Other Information............................... 35
16. Agreements, Arrangements or Understandings........................... 35
17. Previous Distributions............................................... 35
18. Dividend Record of Dominion Textile.................................. 36
19. Depositary........................................................... 36
20. Dealer Managers and Soliciting Dealer Group.......................... 36
21. Rights Plan.......................................................... 37
22. Canadian Federal Income Tax Considerations........................... 38
23. Acceptance of the Offers............................................. 40
24. Statutory Rights..................................................... 41
25. Consents............................................................. 41
</TABLE>
3
<PAGE>
DEFINITIONS
In the Offers and the Circular, unless the subject matter or context is
inconsistent therewith, the following terms shall have the meanings set forth
below.
"affiliate has the meaning ascribed thereto in the Securities Act (Ontario), as
amended.
"Antitrust Division" means the Antitrust Division of the United States
Department of Justice.
"Apparel Fabric Business" means the apparel fabrics textile group businesses of
Dominion Textile conducted primarily through the Swift Textiles Canada division
of Dominion Textile, six direct or indirect wholly-owned subsidiaries of
Dominion Textile (being Dominion Textile (U.S.A.) Inc., a Delaware corporation,
Swift Textiles, Inc., a Delaware corporation, Dominion Textile (Asia) Pte.
Ltd., a company organized under the laws of Singapore, Swift Textiles (Far East)
Ltd., a company organized under the laws of Hong Kong, Dominion Textile
International B.V., a company organized under the laws of the Netherlands, and
Klopman International S.r.L., a company organized under the laws of Italy) and
Swift Textiles Europe Ltd., a company organized under the laws of the Republic
of Ireland.
"associate" has the meaning ascribed thereto in the Securities Act (Ontario),
as amended.
"Canadian Dealer Manager" means CIBC Wood Gundy Securities Inc.
"CBCA" means the Canada Business Corporations Act, as amended.
"Circular" means the take-over bid circular accompanying and forming part of the
Offers.
"Common Shares" means collectively all of the issued and outstanding common
shares in the capital of Dominion Textile, as currently constituted, and all
common shares issued prior to the Expiry Time upon the exercise of currently
outstanding options and rights (other than the Rights) to purchase Common Shares
and includes, as part of each Common Share, the Right attached thereto pursuant
to the Rights Plan.
"Common Share Offer" means the offer made hereby to Shareholders to purchase all
of the issued and outstanding Common Shares.
"Compulsory Acquisition" has the meaning ascribed thereto in Section 13 of the
Circular, "Acquisition of Shares Not Deposited Under the Offers - Compulsory
Acquisition".
"Dealer Managers" means the Canadian Dealer Manager and the U.S. Dealer Manager.
"Depositary" means Montreal Trust Company of Canada.
"Dominion Textile" means Dominion Textile Inc., a company continued under the
laws of Canada.
"Eligible Institution" means a Schedule I Canadian chartered bank, a major trust
company in Canada, a member firm of a recognized stock exchange in Canada, or a
member firm of the Securities Transfer Agent Medallion Program.
"Expiry Date" means, in respect of each Offer, November 20, 1997, or such later
date or dates as may be fixed by the Offeror from time to time in respect of
either such Offer pursuant to Section 5 of the Offers, "Extension and Variation
of the Offers".
"Expiry Time" means, in respect of each Offer, 4:00 p.m. (Toronto time) on the
Expiry Date, or such later time or times as may be fixed by the Offeror from
time to time in respect of either such Offer pursuant to Section 5 of the
Offers, "Extension and Variation of the Offers".
"First Preferred Shares" means collectively all of the issued and outstanding
first preferred shares in the capital of Dominion Textile, as currently
constituted.
"FTC" means the United States Federal Trade Commission.
"fully diluted basis" means, with respect to the number of outstanding Common
Shares at any time, the number of Common Shares that would be outstanding
assuming that all outstanding options and rights to purchase Common Shares
(other than the Rights) are exercised.
4
<PAGE>
"GLI" means Galey & Lord, Inc., a corporation incorporated under the laws of
Delaware.
"going private transaction" has the meaning ascribed thereto in Policy 9.1 and
Policy Q-27.
"HSR Act" has the meaning ascribed thereto in Section 14 of the Circular,
"Regulatory Matters".
"ITG" means The InterTech Group, Inc., a corporation incorporated under the laws
of South Carolina.
"Letter or Transmittal" means, in the case of the Common Share Offer, the letter
of transmittal printed on blue paper and, in the case of the Preferred Share
Offer, the letter of transmittal printed on green paper, in each case in the
form accompanying the Offers and the Circular and "Letters of Transmittal"
means, collectively, the Letter of Transmittal for the Common Share Offer and
the Letter of Transmittal for the Preferred Share Offer.
"ME" means the Montreal Exchange.
"Nonwovens Business" means the nonwoven textile group businesses of Dominion
Textile conducted primarily through the Dominion Industrial Fabrics Company
division ("DIFCO") of Dominion Textile, two indirect, wholly-owned subsidiaries
of Dominion Textile (being Poly-Bond Inc., a Delaware corporation, and Nordlys
S.A., a company organized under the laws of the Republic of France) and the
Dominion Nonwoven (South America) Argentinean joint venture.
"Notes" means, collectively, the 2003 Notes and the 2006 Notes (as each are
defined in Section 6 of the Circular, "Effect of the Offers on Outstanding
Indebtedness of Dominion Textile").
"Notice of Guaranteed Delivery" means the notice of guaranteed delivery (printed
on yellow paper) in the form accompanying the Common Share Offer and the
Circular.
"Offers" means the Common Share Offer and the Preferred Share Offer and "Offer"
means either the Common Share Offer or the Preferred Share Offer, as the case
may be.
"Offer Period" means, in respect of each Offer, the period commencing on the
date hereof and ending at the Expiry Time of such Offer.
"Offeror" means DT Acquisition Inc., a corporation incorporated under the CBCA.
"OSC" means the Ontario Securities Commission.
"Permitted Bid" has the meaning ascribed thereto in Section 21 of the Circular,
"Rights Plan".
"Policy 9.1" means OSC Policy Statement No. 9.1, as amended.
"Policy Q-27" means Policy Q-27 of the QSC, as amended.
"Polymer" means Polymer Group, Inc., a corporation incorporated under the laws
of Delaware.
"Preferred Share Offer" means the offer made hereby to Shareholders to purchase
all of the issued and outstanding First Preferred Shares.
"Purchase Agreement" means the purchase agreement dated October 27, 1997 entered
into among Polymer, the Offeror and GLI with respect to the Purchase Agreement
Transaction.
"Purchase Agreement Transaction" means the acquisition by GLI of the Apparel
Fabric Business (including its proportionate liabilities) and the acquisition by
Polymer of the Nonwovens Business (including its proportionate liabilities),
such transaction or transactions to be carried out following the acquisition by
the Offeror of all of the outstanding Common Shares as contemplated by the
Purchase Agreement.
"QSC" means the Commission des valeurs mobilieres du Quebec.
"Rights" means the rights issued pursuant to the Rights Plan.
"Rights Plan" means the rights agreement adopted by the board of directors of
Dominion Textile on August 9, 1989 and confirmed by Shareholders on October 25,
1989.
"Shareholders" means, collectively, the holders of Common Shares and the holders
of First Preferred Shares, from time to time.
5
<PAGE>
"Shares" means, in respect of the Common Share Offer, the Common Shares, in
respect of the Preferred Share Offer, the First Preferred Shares, and,
collectively, in respect of the Offers, the Common Shares and the First
Preferred Shares and "Share" means a Common Share or a First Preferred Share, as
the case may be.
"Soliciting Dealer" has the meaning ascribed thereto in Section 20 of the
Circular, "Dealer Managers and Soliciting Dealer Group".
"Subsequent Acquisition Transaction" has the meaning ascribed thereto in Section
13 of the Circular, "Acquisition of Shares Not Deposited Under the Offers -
Subsequent Acquisition Transaction".
"subsidiary" has the meaning ascribed thereto in the Securities Act (Ontario),
as amended.
"Tax Act" means the Income Tax Act (Canada), as amended.
"TSE" means The Toronto Stock Exchange.
"U.S. Dealer Manager" means Chase Securities Inc.
6
<PAGE>
The following is a summary only and is qualified in its entirety by the detailed
provisions contained in the Offers and the Circular. Shareholders are urged to
read the Offers and the Circular in their entirety.
The information concerning Dominion Textile contained in the Offers and
Circular has been taken from or is based upon publicly available documents or
records on file with Canadian securities regulatory authorities and other public
sources at the time of the Offers, unless otherwise indicated. All currency
amounts expressed herein unless otherwise indicated. All currency amounts
expressed herein unless otherwise indicated are expressed in Canadian dollars.
SUMMARY
The Offers
The Common Share Offer is made by the Offeror for all of the issued and
outstanding Common Shares, together with associated Rights, at a price of $11.75
cash per Common Share and the Preferred Share Offer is made by the Offeror for
all of the issued and outstanding First Preferred Shares at a price of $109.50
cash per First Preferred Share.
Time for Acceptance
The Offers are open for acceptance until 4:00 p.m. (Toronto time) on
November 20, 1997 or such later time and date to which either Offer may be
extended, unless withdrawn by the Offeror.
Conditions of the Offers
The Offeror reserves the right to withdraw or terminate the Offers and not
take up and pay for any Shares deposited under either Offer unless the
conditions described in Section 4 of the Offers, "Conditions of the Offers", are
satisfied or waived by the Offeror prior to the Expiry Time. Those conditions
include, without limitation, (i) the valid deposit of not less than 90% of the
Common Shares, calculated on a fully diluted basis, excluding Common Shares held
as of the date hereof by or on behalf of the Offeror, its affiliates and
associates (as those terms are defined in the CBCA), which shares shall not have
been withdrawn at the Expiry Time, (ii) the valid deposit of not less than 90%
of the First Preferred Shares, which shares shall not have been withdrawn at the
Expiry Time; and (iii) the Board of Directors of Dominion Textile having
redeemed all outstanding Rights or having waived the application of the Rights
Plan to the purchase of Common Shares by the Offeror under the Common Share
Offer, a Compulsory Acquisition and any Subsequent Acquisition Transaction or
the Offeror otherwise being satisfied that the Rights Plan does not affect the
Common Share Offer, a Compulsory Acquisition and any Subsequent Acquisition
Transaction. See Section 4 of the Offers, "Conditions of the Offers".
The Offeror, Polymer, ITG and GLI
The Offeror has been incorporated and organized solely for the purpose of
making the Offers and has not otherwise carried on any material business or
activity. The outstanding common shares of the Offeror are owned as to 60% by
Polymer and as to 40% by ITG. The Offeror, together with persons acting jointly
or in concert with it, owns 5,955,000 Common Shares or approximately 14.5% of
the outstanding Common Shares. See Section 1 of the Circular, "The Offeror,
Polymer, ITG and GLI".
Polymer is a leading world-wide manufacturer and marketer of a broad range
of nonwoven and woven polyolefin products. Polymer's principal lines of business
include medical, reusable wiping, hygiene, and industrial and speciality
products. Polymer believes that it is the fourth largest producer of nonwovens
in the world and that it employs the most extensive range of nonwoven
technologies of any nonwovens producer, which allows it to supply products
tailored to customers' needs at a competitive cost. Polymer had net sales of
approximately U.S. $521 million, and consolidated assets of U.S. $708 million,
as at December 28, 1996. The common stock of Polymer is listed on the New York
Stock Exchange under the trading symbol "PGH".
ITG is a private holding company specializing in polymer, fiber and
elastomeric composites and fabrications. ITG owns approximately 12.0% of the
common stock of Polymer.
7
<PAGE>
The Offeror, Polymer and GLI have entered into the Purchase Agreement
pursuant to which GLI has agreed with the Offeror and Polymer to purchase the
Apparel Fabric Business following the acquisition by the Offeror of all of the
outstanding Common Shares. See Section 4 of the Circular, "Purpose of the Offers
and the Offeror's Plans for Dominion Textile" and Section 5 of the Circular,
"Purchase Agreement".
GLI is a leading developer, manufacturer and marketer of high quality woven
cotton and cotton blended apparel fabrics. GLI supplies fabrics to manufacturers
of sportswear for use in the production of men's, women's and children's pants
and shorts and to manufacturers of commercial uniforms. GLI had net sales of
approximately U.S. $493 million and consolidated assets of U.S. $197 million as
at September 27, 1997. The common stock of GLI is listed on the New York Stock
Exchange under the trading symbol "GNL".
Dominion Textile
Dominion Textile is a manufacturer and supplier of textile and textile
related products with leading positions in selected markets and global
manufacturing capabilities. Dominion Textile is the world's largest manufacturer
of high-end denim fabrics. It is also a supplier to the U.S. disposable diaper
market and has significant non-woven, spunbond multidenier production capacity.
Dominion Textile operates manufacturing plants in five countries, including the
United States, Canada and three European countries.
Purpose of the Offers
The purpose of the Offers is to enable the Offeror to acquire, directly or
indirectly, (i) all of the Common Shares that are not currently owned by the
Offeror, (ii) all of the First Preferred Shares, and (iii) to complete the
transactions described in Section 4 of the Circular, "Purpose of the Offers and
the Offeror's Plans for Dominion Textile" and in Section 5 of the Circular,
"Purchase Agreement".
Manner of Acceptance
A Shareholder wishing to accept an Offer must deposit his or her Share
certificate(s) together with a properly completed Letter of Transmittal
(printed on blue paper in respect of the Common Share Offer and green paper in
respect of the Preferred Share Offer), or a manually signed facsimile thereof,
at any one of the offices of the Depositary specified in the Letters of
Transmittal at or prior to the Expiry Time. Instructions are contained in the
Letters of Transmittal which accompany the Offers.
If a Shareholder wishes to deposit Common Shares pursuant to the Common
Share Offer and the certificates representing the Common Shares are not
immediately available, or if such Shareholder is not able to deliver the
certificates and all other required documents to the Depositary at or prior to
the Expiry Time, such Common Shares nevertheless may be deposited under the
Common Share Offer in compliance with the procedure for guaranteed delivery
using the accompanying Notice of Guaranteed Delivery (printed on yellow paper).
See Section 3 of the Offers, "Manner of Acceptance - Procedure for Guaranteed
Delivery".
Payment
If all of the conditions referred to in Section 4 of the Offers,
"Conditions of the Offers" are satisfied or waived by the Offeror, the Offeror
will be obligated to (i) take up and pay for Shares validly deposited and not
withdrawn under the Offers promptly but in any event not more than 10 days after
the Expiry Time, and (ii) pay for the Shares taken up as soon as possible and in
any event not later than the earlier of three days after taking up the Shares
and ten days after the Expiry Time. Any Shares deposited under the Offers after
the first date on which Shares have been taken up and paid for by the Offeror
will be taken up and paid for within 10 days of such deposit. See Section 6 of
the Offers, "Payment for Deposited Shares".
Withdrawal of Deposited Shares
All deposits of Shares pursuant to the Offers are irrevocable, except as
provided in Section 8 of the Offers, "Withdrawal of Deposited Shares".
8
<PAGE>
Acquisition of Shares Not Deposited
If the Offeror takes up and pays for Common Shares validly deposited under
the Common Share Offer and acquires not less than 90% of the issued and
outstanding Common Shares, other than Common Shares held on the date of the
Common Share Offer by or on behalf of the Offeror or its affiliates or
associates (as defined in the CBCA), the Offeror intends to acquire the
remainder of the Common Shares pursuant to the compulsory acquisition provisions
of the CBCA. If the statutory right of acquisition referred to above is not
available, then the Offeror intends to propose an amalgamation, statutory
arrangement or other transaction pursuant to which the Offeror will acquire all
of the Common Shares not deposited under the Common Share Offer without the
consent of the holders of such Shares. See Section 13 of the Circular,
"Acquisition of Shares Not Deposited Under the Offers".
If the Offeror takes up and pays for First Preferred Shares validly
deposited under the Preferred Share Offer and acquires not less than 90% of the
issued and outstanding First Preferred Shares, other than First Preferred Shares
held on the date of the Preferred Share Offer by or on behalf of the Offeror or
its affiliates or associates (as defined in the CBCA), the Offeror intends to
acquire the remainder of the First Preferred Shares pursuant to the compulsory
acquisition provisions of the CBCA. If the statutory right of acquisition
referred to above is not available, then the Offeror intends to propose an
amalgamation, statutory arrangement or other transaction pursuant to which the
Offeror will acquire all of the First Preferred Shares not deposited under the
Preferred Share Offer without the consent of the holders of such Shares. See
Section 13 of the Circular, "Acquisition of Shares Not Deposited Under the
Offers".
Regulatory Matters
The acquisition of the Shares by the Offeror is subject to the requirements
of the Competition Act (Canada), the Investment Canada Act (Canada) and the
notice and waiting period requirements of the United States Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended. See Section 14 of the Circular,
"Regulatory Matters".
Canadian Federal Income Tax Considerations
The sale of Shares under the Offers will be a taxable disposition for
Canadian federal income tax purposes. In general, Canadian residents will
realize a capital gain (or capital loss) to the extent that the proceeds of
disposition received for the Shares, net of any costs of disposition, exceed (or
are less than) the adjusted cost base thereof. See Section 22 of the Circular,
"Canadian Federal Income Tax Considerations".
The tax treatment of a Subsequent Acquisition Transaction will depend upon
the exact nature of the transaction to be carried out.
Depositary
Montreal Trust Company of Canada is acting as Depositary under the Offers.
The Depositary will receive deposits of certificates representing the Shares and
accompanying Letters of Transmittal at the offices specified in the Letters of
Transmittal.
Dealer Managers and Soliciting Dealer Group
CIBC Wood Gundy Securities Inc. has been retained as dealer manager in
Canada for the Offers and to form a soliciting dealer group comprised of members
of the Investment Dealers Association of Canada and members of Canadian stock
exchanges to solicit acceptances of the Offers in Canada. Chase Securities Inc.
has been retained as dealer manager in the United States for the Offers. See
Section 20 of the Circular, "Dealer Managers and Soliciting Dealer Group".
9
<PAGE>
OFFERS
October 29, 1997
TO: THE HOLDERS OF COMMON SHARES AND THE HOLDERS OF
FIRST PREFERRED SHARES OF DOMINION TEXTILE INC.
1. The Offers
The Offeror hereby offers to purchase, on and subject to the terms and
conditions hereinafter specified, (i) all of the issued and outstanding Common
Shares, together with associated Rights, for $11.75 in cash per Common Share
and (ii) all of the issued and outstanding First Preferred Shares for $109.50 in
cash per First Preferred Share.
The Offers are made only for the Shares and are not made for any
outstanding options or rights to purchase Shares or for any securities
convertible into Shares (other than the Rights). Any holder of such securities
(other than the Rights) who wishes to accept either of the Offers should
exercise the options or conversion rights in order to obtain certificates
representing Shares and deposit them under the relevant Offer in accordance with
the terms hereof.
Depositing Shareholders will not be obliged to pay brokerage fees or
commissions if they accept the relevant Offer by depositing their Shares
directly with the Depositary or if they use the services of the Dealer Managers
or a member of the Soliciting Dealer Group to accept the relevant Offer. See
Section 20 of the Circular, "Dealer Managers and Soliciting Dealer Group".
The accompanying Circular, Letters of Transmittal and Notice of Guaranteed
Delivery are incorporated into and form part of the Offers and contain important
information which should be read carefully before making a decision with respect
to the Offers.
Shareholders will be deemed to have deposited the Rights associated with
their Common Shares upon depositing their Common Shares under the Common Share
Offer. No additional payment will be made for the Rights.
2. Time For Acceptance
Each Offer is open for acceptance until the Expiry Time, being 4:00 p.m.
(Toronto time) on November 20, 1997, or until such later time and date to which
either such Offer may be extended by the Offeror, at its sole discretion, unless
withdrawn by the Offeror.
3. Manner of Acceptance
Letters of Transmittal
The Offers may be accepted by delivering to the Depositary at any of its
offices shown on the Letters of Transmittal, so as to arrive there not later
than the Expiry Time, the following documents:
(a) in the case of the Common Share Offer, a Letter of Transmittal
(printed on blue paper) and, in the case of the First Preferred Share
Offer, a Letter of Transmittal (printed on green paper), in each case
in the form accompanying the Offers, duly completed and executed, or a
manually signed facsimile thereof, as required by the rules and
instructions set out in the relevant Letter of Transmittal;
(b) the certificate or certificates representing the Shares in respect of
which the relevant Offer is being accepted; and
(c) any other relevant documents required by the instructions set out in
the relevant Letter of Transmittal.
The Offeror reserves the right to permit the Offers to be accepted in a
manner other than as set forth herein.
Except as otherwise provided in the instructions and rules set out in the
Letters of Transmittal, the signature on a Letter of Transmittal must be
guaranteed by an Eligible Institution. If a Letter of Transmittal is executed by
a person other than the registered holder of the certificate(s) deposited
therewith, the certificate(s) must be endorsed, or be accompanied by an
appropriate share transfer power of attorney duly and properly completed
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by the registered holder, with the signature on the endorsement panel or share
transfer power guaranteed by an Eligible Institution.
Procedure for Guaranteed Delivery
If a Shareholder wishes to deposit Common Shares pursuant to the Common
Share Offer and (i) the certificates representing the Common Shares are not
immediately available, or (ii) the Shareholder is not able to deliver the
certificates and all other required documents to the Depositary at or prior to
the Expiry Time, such Common Shares may nevertheless be validly deposited under
the Common Share Offer provided that all of the following conditions are met:
(a) the deposit is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery
(printed on yellow paper) in the form accompanying the Common Share
Offer, or a manually signed facsimile thereof, is received by the
Depositary at its office in Toronto as set forth on the Notice of
Guaranteed Delivery, prior to the Expiry Time; and
(c) the certificate(s) representing deposited Common Shares, in proper
form for transfer, together with a properly completed and duly
executed Letter of Transmittal (printed on blue paper) in the form
accompanying the Common Share Offer, or a manually signed facsimile
thereof, and all other documents required by the Letter of Transmittal
(printed on blue paper), are received at the office of the Depositary
in Toronto on or before 4:30 p.m. (Toronto time) on the third trading
day on the TSE after the Expiry Time of the Common Share Offer.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mail to the Office of the Depositary in Toronto and
must include a signature guaranteed by an Eligible Institution in the form set
forth in the Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery
can not be used in respect of tenders of First Preferred Shares.
General
In all cases, payment for Shares deposited and taken up by the Offeror will
be made only after timely receipt by the Depositary of the certificates
representing the Shares, a properly completed and duly executed Letter of
Transmittal, or a manually signed facsimile thereof, covering those Shares with
the signatures guaranteed in accordance with the instructions set out in the
Letters of Transmittal and any other required documents.
The method of delivery of certificates representing Shares, the relevant
Letter of Transmittal and all other required documents is at the option and risk
of the person depositing the same. The Offeror recommends that such documents be
delivered by hand to the Depositary and a receipt obtained or, if mailed, that
registered mail, with return receipt requested, be used and the proper insurance
be obtained.
Shareholders whose Shares are registered in the name of a nominee should
contact their broker, investment dealer, bank, trust company of other nominee
for assistance in depositing their Shares. Shareholders whose Common Shares are
held in Dominion Textile's dividend reinvestment plan should contact the CIBC
Mellon Trust Company for assistance in depositing their Common Shares.
The acceptance of either of the Offers pursuant to the procedures set forth
above will constitute an agreement between the depositing Shareholder and the
Offeror in accordance with the terms and conditions of the relevant Offer.
All questions as to the validity, form, eligibility (including timely
receipt) and acceptance of any Shares deposited pursuant to the Offers will be
determined by the Offeror in its sole discretion. Depositing Shareholders agree
that such determination shall be final and binding. The Offeror reserves the
absolute right to reject any and all deposits which it determines not to be in
proper form or which may be unlawful to accept under the laws of any
jurisdiction. The Offeror reserves the absolute right to waive any defects or
irregularities in the deposit of any Shares. There shall be no obligation on the
Offeror, the Dealer Managers, a Soliciting Dealer, the Depositary or any other
person to give notice of any defects or irregularities in any deposit and no
liability shall be incurred by any of them for failure to give any such notice.
The Offeror's interpretation of the
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terms and conditions of the Offers (including the Circular and the Letters of
Transmittal) will be final and binding.
The Offeror reserves the right to permit the Offers to be accepted in a
manner other than that set out above.
Power of Attorney
The execution of a Letter of Transmittal irrevocably constitutes and
appoints the Depositary, and any officer of the Offeror, and each of them, and
any other person designated by the Offeror in writing, as the true and lawful
agent, attorney and attorney-in-fact and proxy of the holder of the Shares
covered by the Letter of Transmittal with respect to the Shares deposited under
the Letter of Transmittal which are taken up and paid for under the Offers (the
"Purchased Securities") and with respect to any and all: (i) dividends,
distributions, payments, securities, rights, assets or other interests declared,
paid, issued, distributed, made or transferred on or in respect of the Purchased
Securities on or after the date hereof; and (ii) Rights, whether or not
separated from the Common Shares (collectively, the "Other Securities").
The power of attorney granted irrevocably upon execution of a Letter of
Transmittal shall be effective on and after the date that the Offeror takes up
and pays for the Purchased Securities (the "Effective Date") with full power of
substitution, in the name and on behalf of such holder (such power of attorney
being deemed to be an irrevocable power coupled with an interest): (i) to
register or record, transfer and enter the transfer of Purchased Securities and
any Other Securities on the appropriate register of holders maintained by
Dominion Textile; and (ii) to exercise any and all of the rights of the holder
of the Purchased Securities and Other Securities, including, without limitation,
to vote, execute and deliver any and all instruments of proxy, authorizations or
consents in respect of all or any of the Purchased Securities and Other
Securities, revoke any such instrument, authorization or consent given prior to,
on, or after the Effective Date, designate in any such instruments of proxy any
person or persons as the proxy holder or the proxy nominee or nominees of such
holder of Shares in respect of such Purchased Securities and such Other
Securities for all purposes including, without limitation, in connection with
any meeting (whether annual, special or otherwise and any adjournment thereof)
of holders of securities of Dominion Textile, and execute, endorse and
negotiate, for and in the name of and on behalf of the registered holder of
Purchased Securities and Other Securities, any and all cheques or other
instruments respecting any distribution payable to or to the order of such
holder in respect of such Purchased Securities or Other Securities. Furthermore,
a holder of Purchased Securities or Other Securities who executes a Letter of
Transmittal agrees, effective on and after the Effective Date, not to vote any
of the Purchased Securities or Other Securities at any meeting (whether annual,
special or otherwise or any adjournment thereof) of Shareholders; and not to
exercise any or all of the other rights or privileges attached to the Purchased
Securities or Other Securities and agrees to execute and deliver to the Offeror
any and all instruments of proxy, authorizations or consents in respect of the
Purchased Securities and Other Securities and to designate in any such
instruments of proxy the person or persons specified by the Offeror as the proxy
holder or the proxy nominee or nominees of the holder of the Purchased
Securities and Other Securities. Upon such appointment, all prior proxies given
by the holder of such Purchased Securities or Other Securities with respect
thereto shall be revoked and no subsequent proxies may be given by such person
with respect thereto. A holder of Purchased Securities or Other Securities who
executes a Letter of Transmittal covenants to execute, upon request, any
additional documents necessary or desirable to complete the sale, assignment and
transfer of the Purchased Securities and the Other Securities to the Offeror and
acknowledges that all authority therein conferred or agreed to be conferred
shall, to the extent permitted by law, survive the death or incapacity,
bankruptcy or insolvency of the holder and all obligations of the holder therein
shall be binding upon the heirs, personal representatives, successors and
assigns of the holder.
Depositing Shareholders' Representations and Warranties
The deposit of Shares pursuant to the procedures described above will
constitute a binding agreement between the depositing Shareholder and the
Offeror upon the terms and subject to the conditions of the relevant Offer,
including the depositing Shareholder's representation and warranty that: (i)
such person has full power and authority to deposit, sell, assign and transfer
the Shares (and any Other Securities) being deposited; (ii) such Shareholder
depositing the Shares, or on whose behalf such Shares are being deposited, has
good title to and is the beneficial owner of the Shares (and any Other
Securities) being deposited within the meaning of applicable
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securities laws; (iii) the deposit of such Shares (and any Other Securities)
complies with applicable securities laws; and (iv) when such Shares (and any
Other Securities) are taken up and paid for by the Offeror, the Offeror will
acquire good title thereto, free and clear of all liens, restrictions, charges,
encumbrances, claims, adverse interests, equities and rights of others.
4. Conditions of the Offers
The Offeror shall have the right to withdraw either Offer and not take up
and pay for, or extend the period of time during which either Offer is open, and
postpone taking up and paying for, any Shares deposited hereunder unless all of
the following conditions are satisfied or waived by the Offeror at or prior to
the Expiry Time of such Offer:
(a) there shall have been validly deposited under the Common Share Offer
and not withdrawn that number of Common Shares which represents at
least 90% of the Common Shares on a fully diluted basis, excluding
Common Shares held as of the date hereof by or on behalf of the
Offeror, its affiliates and associates (as those terms are defined in
the CBCA);
(b) there shall have been validly deposited under the Preferred Share
Offer and not withdrawn that number of First Preferred Shares which
represents at least 90% of the First Preferred Shares, excluding First
Preferred Shares held as of the date hereof by or on behalf of the
Offeror, its affiliates and associates (as those terms are defined in
the CBCA);
(c) the Offeror shall have determined in its sole judgment that, on terms
satisfactory to the Offeror, (i) the Board of Directors of Dominion
Textile shall have redeemed all outstanding Rights or waived the
application of the Rights Plan to the purchase of Common Shares by the
Offeror under the Common Share Offer, a Compulsory Acquisition and any
Subsequent Acquisition Transaction, (ii) a cease trading order or
orders or an injunction or injunctions shall have been issued that has
the effect of prohibiting or preventing the exercise of the Rights or
the issue of Common Shares or other securities or property upon the
exercise of the Rights in relation to the Common Share Offer, a
Compulsory Acquisition and any Subsequent Acquisition Transaction,
which cease trading order or orders or injunction or injunctions shall
be in full force and effect, (iii) a court of competent jurisdiction
shall have made a final and binding order to the effect that the
Rights are illegal, of no force or effect or may not be exercised in
relation to the Common Share Offer, a Compulsory Acquisition and any
Subsequent Acquisition Transaction, (iv) the Rights and the Rights
Plan shall otherwise have been held unexercisable or unenforceable in
relation to the Common Share Offer, a Compulsory Acquisition and any
Subsequent Acquisition Transaction, or (v) the Rights Plan does not
make it inadvisable for the Offeror to proceed with the Common Share
Offer and/or with taking up and paying for all of the Common Shares
under the Common Share Offer;
(d) the Offeror shall have determined in its sole judgment that Dominion
Textile and its subsidiaries, associates and entities in which it has
a direct or indirect interest (all such entities being hereinafter
referred to as "entities") have not taken any action, or disclosed any
previously undisclosed action taken by them, that might make it
inadvisable for the Offeror to proceed with the Offers, or with
taking-up and paying for Shares deposited under the Offers;
(e) all government or regulatory consents or approvals (including in
Canada, the United States or elsewhere) which the Offeror, in its
sole judgment, views as being necessary or desirable to enable the
Offeror to acquire Dominion Textile and complete the Purchase
Agreement Transaction shall have been received by the Offeror on terms
and conditions satisfactory to the Offeror including the expiration or
early termination of any applicable waiting periods under the
Competition Act (Canada), the Investment Canada Act (Canada) and the
United States Han-Scott-Rodino Antitrust Improvement Act of 1976;
(f) the Offeror shall have determined in its sole judgment that (i) no
act, action, suit or proceeding shall have been threatened or taken
before or by any domestic or foreign court or tribunal or governmental
agency or other regulatory authority or administrative agency or
commission or by any elected or appointed public official or private
person (including, without limitation, any individual, corporation,
firm, group or other entity) in Canada or elsewhere, whether or not
having the force of law, and (ii) no
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law, regulation or policy shall have been proposed, enacted,
promulgated or applied, in the case of either (i) or (ii):
(A) to cease trade, enjoin, prohibit or impose limitations or
conditions on the purchase by or the sale to the Offeror of the
Shares, the right of the Offeror to own Dominion Textile or
exercise full rights of ownership of the Shares or the right of
the Offeror to complete the Purchase Agreement Transaction;
(B) which, if the Offers were consummated, could, in the Offeror's
sole judgment, adversely affect Dominion Textile and its
subsidiaries, associates and entities considered on a
consolidated basis; or
(C) which challenges or would prevent or make uncertain completion of
the acquisition by the Offeror of Shares pursuant to a Compulsory
Acquisition or any Subsequent Acquisition Transaction or
completion of the Purchase Agreement Transaction;
(g) there shall not exist any prohibition at law against the Offeror
making the Offers or taking up and paying for any Shares deposited
under the Offers or completing a Compulsory Acquisition, any
Subsequent Acquisition Transaction or the Purchase Agreement
Transaction;
(h) there shall not have occurred any actual or threatened change
(including any announcement, governmental or regulatory initiative,
condition, event or development involving a change or a prospective
change) that, in the Offeror's sole judgment, directly or indirectly
increases the effective tax cost of, or reduces the proceeds from, the
sale or other disposition of any assets or securities owned by
Dominion Textile or any of its subsidiaries, associates or entities,
including pursuant to the Purchase Agreement Transaction, or that has
or may have adverse significance with respect to the business and
operations of Dominion Textile or any of its subsidiaries, associates
or entities or with respect to the regulatory regime applicable to
their respective businesses and operations;
(i) there shall not exist or have occurred (or, if there does exist or
shall have previously occurred, there shall not have been disclosed,
generally or to the Offeror) any change (or any condition, event or
development involving a prospective change) in the business,
operations, assets, capitalization, condition (financial or
otherwise), results of operations, cash flows, prospects, properties,
licenses, permits, rights, privileges or liabilities, whether
contractual or otherwise, of or relating to: (i) Dominion Textile or
any of its subsidiaries, associates or entities, on a consolidated
basis; (ii) the Apparel Fabric Business; or (iii) the Nonwoven
Business, which, in any such case, in the Offeror's sole judgment, is
adverse or may be considered to be significant to a purchaser of
Shares;
(j) the Offeror shall have determined in its sole judgment that no
property, right, franchise or license of Dominion Textile or of any of
its subsidiaries, associates or entities has been or would be impaired
(or threatened to be impaired) or otherwise adversely affected (or
threatened to be adversely affected), whether as a result of the
making of the Offers, the taking up and paying for Shares deposited
under the Offers, the completion of a Compulsory Acquisition, any
Subsequent Acquisition Transaction or the Purchase Agreement
Transaction, or otherwise, which might make it inadvisable for the
Offeror to proceed with the Offers or with taking up and paying for
Shares deposited under the Offers;
(k) Dominion Textile shall not, other than in the ordinary course of
business and consistent with past practices, have guaranteed, or
permitted its subsidiaries, associates or entities to guarantee, the
payment of any indebtedness or have incurred any liability or
indebtedness for money borrowed or have issued or sold any securities
(other than pursuant to the exercise of currently outstanding options)
or otherwise changed the capitalization of Dominion Textile, its
subsidiaries, associates or entities;
(l) the Offeror shall have determined in its sole judgment that there does
not exist any covenant, term or condition in any of the instruments or
agreements to which any of Dominion Textile, its subsidiaries,
associates or entities is a party or to which they or any of their
properties or assets are subject that might make it inadvisable for
the Offeror to proceed with the Offers and/or with taking up and
paying for Shares deposited under the Offers (including, but not
limited to, any covenant, term or condition that may be breached or
cause a default or permit third parties to exercise rights against any
of Dominion Textile or its subsidiaries, associates or entities which
would have an adverse effect on Dominion Textile or any of its
subsidiaries, associates or entities as a result of the Offeror making
the
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Offers or acquiring Shares deposited under the Offers or completing a
Compulsory Acquisition, any Subsequent Acquisition Transaction or the
Purchase Agreement Transaction);
(m) the Offeror shall not have become aware of any untrue statement of
material fact, or an omission to state a material fact that is
required to be stated or that is necessary to make a statement not
misleading in the light of the circumstances in which it was made and
at the date it was made (after giving effect to all subsequent filings
in relation to all matters covered in earlier filings) in any document
filed by or on behalf of Dominion Textile with any securities
commission or similar securities regulatory authority in any of the
provinces of Canada or in the United States, including without
limitation any annual information form, financial statement, material
change report or management proxy circular or in any document so filed
or released by Dominion Textile to the public;
(n) there shall not have occurred, developed or come into effect or
existence any event, action, state, condition or financial occurrence
of national or international consequence, or any law, regulation,
action, government regulation, inquiry or other occurrence of any
nature whatsoever, which adversely affects, or may adversely affect,
the financial markets in Canada or the United States, generally;
(o) the Offeror shall have been provided with, or shall have been given
access to, in a timely manner, all non-public information relating to
Dominion Textile or any of its subsidiaries, associates or entities,
including full access to management of Dominion Textile, as has been
or may be given, provided or made available by Dominion Textile or any
of its subsidiaries, associates or entities at any time within 120
days prior to the announcement of the Offers, or at any time after the
announcement of the Offers:
(i) to any other potential acquiror of any Shares or of a significant
portion of the assets of Dominion Textile or any of its
subsidiaries, associates or entities, or to any other potential
acquiror considering (or seeking such information in order to
consider) any merger, amalgamation, statutory arrangement or
similar business combination with Dominion Textile; or
(ii) to any other potential acquiror who, after the announcement of
the Offers, makes a take-over bid for any of the Shares or enters
into an agreement with Dominion Textile relating to the
acquisition of a significant portion of the properties or assets
of Dominion Textile or any of its subsidiaries, associates or
entities or a merger, amalgamation, statutory arrangement or
similar business combination with Dominion Textile or any of its
subsidiaries, associates or entities;
on substantially the same terms and conditions as may be imposed on
such other potential acquiror, provided that no such term or condition
shall be imposed on the Offeror that would be inconsistent with or
would render the Offeror unable to complete the acquisition of the
Shares pursuant to the Offers, a Compulsory Acquisition or any
Subsequent Acquisition Transaction;
(p) all outstanding options and warrants, if any, to acquire Common Shares
shall have been exercised or cancelled on terms satisfactory to the
Offeror; and
(q) the Offeror shall have determined in its sole judgment that the Notes
may be repaid, repurchased or otherwise acquired by Dominion Textile
or its subsidiaries, associates or entities, or otherwise, upon terms
and conditions satisfactory to the Offeror.
The foregoing conditions are for the exclusive benefit of the Offeror. The
Offeror may assert any of the foregoing conditions at any time, regardless of
the circumstances giving rise to such assertion (including any action or
inaction by the Offeror). The Offeror may waive any of the foregoing conditions
with respect to one or both of the Offers in whole or in part at any time and
from time to time without prejudice to any other rights which the Offeror may
have. The failure by the Offeror at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Offeror concerning the events described in this
Section 4 will be final and binding upon all parties.
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Any waiver of a condition or the withdrawal of either Offer shall be
effective upon written notice or other communication to that effect (to be
confirmed in writing) to the Depositary at its principal office in Toronto. The
Offeror, forthwith after giving any such notice, shall make a public
announcement of such waiver or withdrawal, shall cause the Depositary, if
required by law, as soon as practicable thereafter to notify the relevant
Shareholders in the manner set forth in Section 10 of the Offers, "Notices and
Delivery" and shall provide a copy of the aforementioned notice to the TSE and
the ME. If either Offer is withdrawn, the Offeror shall not be obligated to take
up or pay for any Shares deposited under such Offer and the Depositary will
promptly return all certificates for deposited Shares, Letters of Transmittal,
Notices of Guaranteed Delivery and related documents to the parties by whom they
were deposited.
5. Extension and Variation of the Offers
Each Offer is open for acceptance until, but not after, the Expiry Time of
such Offer, unless withdrawn.
The Offeror reserves the right, in its sole discretion, at any time and
from time to time while an Offer is open for acceptance, to extend the Offer
Period for that Offer by fixing a new Expiry Time or to vary that Offer by
giving oral notice (to be confirmed in writing) or written notice of such
extension or variation to the Depositary at its principal office in Toronto, and
by causing the Depositary to provide as soon as practicable thereafter a copy of
such notice in the manner set forth in Section 10 of the Offers, "Notices and
Delivery", to all holders of Shares whose Shares have not been taken up under
that Offer prior to the extension or variation. The Offeror shall, as soon as
possible after giving notice of an extension or variation to the Depositary,
make a public announcement of the extension or variation and provide a copy of
the notice thereof to the TSE and the ME. Any notice of extension or variation
will be deemed to have been given and to be effective on the day on which and at
the time at which it is delivered or otherwise communicated to the Depositary at
its principal office in Toronto.
Notwithstanding the foregoing, neither Offer may be extended by the Offeror
if all of the terms and conditions of such Offer, except those waived by the
Offeror, have been fulfilled or complied with unless the Offeror first takes up
and pays for all Shares deposited under such Offer and not withdrawn.
Except for a variation in the terms of an Offer consisting solely of the
waiver of a condition, where the terms of an Offer are varied, such Offer shall
not expire before 10 days after the notice of variation has been given to the
relevant Shareholders. During any extension or in the event of any variation,
all Shares previously deposited and not taken up or withdrawn will remain
subject to the relevant Offer. An extension of the Expiry Time of an Offer or a
variation of an Offer does not constitute a waiver by the Offeror of its rights
under Section 4 of the Offers, "Conditions of the Offers" except, in the case of
a variation, as specifically provided therein.
If the consideration being offered for the Shares under an Offer is
increased, the increased consideration will be paid to all depositing
Shareholders whose Shares are taken up under such Offer, without regard to when
such Shares are taken up by the Offeror.
6. Payment for Deposited Shares
If, in respect of an Offer, all the conditions referred to under Section 4
of the Offers, "Conditions of the Offers", have been satisfied or waived at the
Expiry Time, the Offeror will become obligated to take up the Shares validly
deposited under that Offer and not withdrawn not later than 10 days from the
Expiry Time of such Offer and to pay for Shares taken up as soon as possible,
but in any event not later than the earlier of three days after taking up the
Shares and 10 days after the Expiry Time.
Subject to applicable law, the Offeror expressly reserves the right in its
sole discretion to delay taking up and paying for any Shares or to terminate
either Offer and not take up or pay for any Shares pursuant to that Offer if any
condition specified in Section 4 of the Offers, "Conditions of the Offers", is
not satisfied or waived, by giving written notice thereof or other communication
confirmed in writing to the Depositary at its principal office in Toronto. The
Offeror also expressly reserves the right, in its sole discretion and
notwithstanding any other condition of the Offers, to delay taking up and paying
for Shares in order to comply, in whole or in part, with any applicable law. Any
Shares deposited pursuant to an Offer after the first date on which Shares have
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been taken up and paid for by the Offeror under that Offer will be taken up and
paid for within 10 days of such deposit.
The Offeror will be deemed to have taken up and accepted for payment Shares
validly deposited and not withdrawn pursuant to an Offer if, as and when the
Offeror gives oral notice (to be confirmed in writing) or written notice to the
Depositary to that effect.
The Offeror will pay for Shares validly deposited pursuant to an Offer and
not withdrawn by providing the Depositary with sufficient funds (by bank
transfer or other means satisfactory to the Depositary) for transmittal to
depositing Shareholders. Under no circumstances will interest accrue or be paid
by the Offeror or the Depositary to persons depositing Shares on the purchase
price of Shares purchased by the Offeror, regardless of any delay in making such
payment.
The Depositary will act as the agent of persons who have deposited Shares
in acceptance of an Offer for the purposes of receiving payment from the Offeror
and transmitting such payment to such persons, and receipt thereof by the
Depositary will be deemed to constitute receipt thereof by persons depositing
Shares.
Settlement will be made by the Depositary issuing or causing to be issued a
cheque payable in Canadian funds in the amount to which a person depositing
Shares is entitled. Unless the person depositing Shares instructs the Depositary
to hold the cheque for pick up by checking the appropriate box in the Letter of
Transmittal, cheques issued in the name of the registered holder of the Shares
deposited will be forwarded by first class mail to such person at the address
specified in the Letter of Transmittal. If no address is specified, cheques
will be forwarded to the address of the holder as shown on the share register
maintained by Dominion Textile.
Depositing Shareholders will not be obligated to pay any brokerage fee or
commission if they accept an Offer by depositing their Shares directly with the
Depositary or avail themselves of the facilities of any member of the Soliciting
Dealer Group. See Section 20, of the Circular, "Dealer Managers and Soliciting
Dealer Group".
7. Return of Shares
If any deposited Shares are not taken up pursuant to the terms and
conditions of the Offers for any reason, certificates for unpurchased Shares
will be returned, at the expense of the Offeror, to the depositing Shareholder
by first class mail to the address of the depositing Shareholder specified in
the Letter of Transmittal or, if such name and address is not so specified, in
such name and to such address as shown on the share register of Dominion
Textile.
8. Withdrawal of Deposited Shares
Except as otherwise stated in this Section 8, all deposits of Shares
pursuant to an Offer are irrevocable. Unless otherwise required or permitted by
applicable law, the securities laws allow any Shares deposited in acceptance of
an Offer to be withdrawn by or on behalf of the depositing Shareholder:
(a) at any time before 12:00 midnight (Toronto time) on November 19, 1997;
(b) at any time before the expiration of the tenth day after the date upon
which either (i) a notice of change is delivered in accordance with
Section 10 of the Offers, "Notices and Delivery", relating to a change
which has occurred in the information contained in an Offer or
Circular or in any notice of change or notice of variation delivered
in connection herewith (except any change that is not within the
control of the Offeror or an affiliate of the Offeror) that would
reasonably be expected to affect the decision of a Shareholder to
accept or reject the Offer, which change occurred prior to the Expiry
Time of the Offer or after the Expiry Time but before the expiry of
all rights of withdrawal in respect of the Offer; or (ii) a notice of
variation concerning a variation in the terms of an Offer is delivered
in accordance with Section 10 of the Offers, "Notices and Delivery";
unless such deposited Shares have been taken up by the Offeror at the
date of such notice of change or variation, or in the case of a notice
of variation, unless the variation in the terms of the Offer consists
solely of an increase in the consideration offered for Shares pursuant
to that Offer and the time for deposit is not extended for a
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<PAGE>
period greater than 10 days or unless the variation in the terms of
the Offer consists solely of the waiver of a condition of the Offer;
and
(c) at any time after December 13, 1997 provided that the Shares have not
been taken up and paid for by the Offeror prior to the receipt by the
Depositary of the notice of withdrawal in respect of such Shares.
In order for any withdrawal of Shares to be made, notice of the withdrawal
must be in writing (which includes a telegraphic communication or notice by
electronic means that produces a printed copy), and must be actually received by
the Depositary at the place of deposit of the applicable Shares or by facsimile
transmission to the Toronto office of the Depositary within the period permitted
for withdrawal, Any such notice of withdrawal must be (i) signed by or on behalf
of the person who signed the Letter of Transmittal that accompanied the Shares
to be withdrawn, and (ii) specify the number of Shares to be withdrawn, the name
of the registered holder and the certificate number shown on each certificate
representing the Shares to be withdrawn. Any signature in a notice of withdrawal
must be guaranteed by an Eligible Institution in the same manner as in the
Letter of Transmittal (as described in the instructions set out in such Letter
of Transmittal), except in the case of Shares deposited for the account of an
Eligible Institution. The withdrawal will take effect upon receipt by the
Depositary of the properly completed notice of withdrawal.
All questions as to the validity (including, without limitation, timely
receipt) and form of notices of withdrawal shall be determined by the Offeror in
its sole discretion and such determination shall be final and binding. None of
the Offeror, the Dealer Managers, a Soliciting Dealer, the Depositary or any
other person will be under any duty to give notification of any defect or
irregularity in any notice of withdrawal or will incur any liability for
failure to give such notification.
If the Offeror is delayed in the taking up or paying for the Shares or is
unable to take up or pay for Shares for any reason, then, without prejudice to
the Offeror's other rights, Shares may not be withdrawn except to the extent
that depositing Shareholders are entitled to withdrawal rights as set forth in
this Section 8 or pursuant to applicable law.
Any Shares withdrawn will be deemed not validly deposited for the purposes
of an Offer, but may be re-deposited at any subsequent time prior to the Expiry
Time of such Offer by following any of the procedures described in Section 3 of
the Offers, "Manner of Acceptance".
In addition to the foregoing rights of withdrawal, Shareholders in certain
provinces of Canada are entitled to statutory rights of rescission or to
damages, or both, in certain circumstances. See Section 24 in the Circular,
"Statutory Rights".
9. Changes in Capitalization, Distributions and Liens
If, on or after the date of the Offers, Dominion Textile should split,
combine or otherwise change any of the Shares or its capitalization, or shall
disclose that it has taken any such action, then the Offeror may, in its sole
discretion, make such adjustments as it considers appropriate to the purchase
price and other terms of either Offer (including, without limitation, the type
of securities offered to be purchased and the amounts payable therefor) to
reflect such split, combination or other change.
Shares acquired pursuant to the Offers shall be transferred to the Offeror
free and clear of all liens, charges, encumbrances, claims and equities and
together with all rights and benefits arising therefrom including the right to
all: (i) dividends, distributions, payments, securities, rights, assets or other
interests which may be declared, paid, issued, distributed, made or transferred
on or in respect of the Shares on or after October 27, 1997 (other than
quarterly dividends paid in respect of the Common Shares not exceeding $0.05 per
Common Share in respect of any fiscal quarter and other than any periodic
dividends payable in respect of the First Preferred Shares not exceeding the
amount provided for in the share conditions attaching to that class of Shares,
such quarterly or periodic dividends are hereinafter referred to as "Ordinary
Course Dividends"); and (ii) Rights, whether or not separated from the Common
Shares.
If, on or after October 27, 1997, Dominion Textile should declare or pay
any dividend (other than an Ordinary Course Dividend) or declare, make or pay
any other distribution or payment on or declare, allot, reserve or issue any
securities, rights or other interests with respect to the Shares, payable or
distributable to
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<PAGE>
shareholders of record on a date prior to the transfer into the name of the
Offeror or its nominee or transferee or in Dominion Textile's transfer register
of Shares accepted for payment pursuant to the Offers, then (i) in the case of
cash dividends, distributions or payments (other than Ordinary Course
Dividends), the amount of the dividends, distributions or payments shall be
received and held by the depositing Shareholder for the account of the Offeror
until the Offeror pays for such Shares, and to the extent that such dividends,
distributions or payments do not exceed the purchase price per Share payable by
the Offeror pursuant to an Offer, the purchase price per Share payable by the
Offeror pursuant to such Offer will be reduced by the amount of any such
dividend, distribution or payment, and (ii) in the case of non-cash dividends,
distributions, payments, rights or other interests, the whole of any such non-
cash dividend, distribution, payment, security, right, asset or other interest,
and in the case of any cash dividends, distributions or payments in an amount
that exceeds the purchase price per Share, the whole of any such cash dividend,
distribution or payment, will be received and held by the depositing Shareholder
for the account of the Offeror and shall be required to be promptly remitted and
transferred by the depositing Shareholder to the Depositary for the account of
the Offeror, accompanied by appropriate documentation of transfer. Pending such
remittance, the Offeror will be entitled to all rights and privileges as owner
of any such dividend, distribution, payment, security, right, asset or other
interest and may withhold the entire purchase price payable by the Offeror
pursuant to an Offer or deduct from the purchase price payable by the Offeror
pursuant to an Offer, the amount or value thereof, as determined by the Offeror
in its sole discretion.
10. Notices and Deliver
Except as otherwise provided in the Offers, any notice to be given by the
Offeror or the Depositary pursuant to the Offers will be deemed to have been
properly given if it is mailed by first class mail, postage prepaid, to the
registered Shareholders at their addresses as shown on the share registers of
Dominion Textile and will be deemed to have been received on the first business
day following the date of mailing. For this purpose, "business day" means any
day other than a Saturday, Sunday or statutory holiday in the jurisdiction to
which the notice is mailed. These provisions apply notwithstanding any
accidental omission to give notice to any one or more Shareholders and
notwithstanding any interruption of mail services in Canada following mailing.
In the event of any interruption of mail service following mailing, the Offeror
intends to make reasonable efforts to disseminate the notice by other means,
such as publication. Except as otherwise required or permitted by law, if post
offices in Canada are not open for the deposit of mail, any notice which the
Offeror or the Depositary may give or cause to be given under the Offers will be
deemed to have been properly given and to have been received by Shareholders if
it is given to the TSE and the ME for dissemination through their respective
facilities and if a summary of the material facts thereof is published (i) once
in the National Edition of The Globe and Mail, provided that if the National
Edition of The Globe and Mail is not being generally circulated, publication
thereof shall be made in The Financial Post, and (ii) once in a French language
daily newspaper of general circulation in the City of Montreal.
The Offers will be mailed to registered Shareholders or made in such other
manner as is permitted by applicable regulatory authorities and will be
furnished by the Offeror to brokers, investment dealers, banks and similar
persons whose names, or the names of whose nominees, appear in the registers
maintained by Dominion Textile in respect of the Shares or, if security position
listings are available, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares where such listings are received.
Wherever an Offer calls for documents to be delivered to the Depositary,
such documents will not be considered delivered unless and until they have been
physically received at one of the addresses listed for the Depositary in the
Letter of Transmittal, as applicable. Wherever an Offer calls for documents to
be delivered to a particular office of the Depositary, such documents will not
be considered delivered unless and until they have been physically received at
the particular office at the address indicated in the Letter of Transmittal, as
applicable.
11. Acquisition of Shares Not Deposited
Section 206 of the CBCA permits an Offeror to acquire the shares not
tendered to an offer for all of the shares of a particular class of shares of a
corporation if, within 120 days after the date of the offer, the offer is
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<PAGE>
accepted by the holders of not less than 90% of the shares to which the offer
relates, other than shares held at the date of the offer by or on behalf of the
Offeror or its affiliates or associates (as such terms are defined in the CBCA).
If the Offeror takes up and pays for Shares validly tendered to the Offers and
as a result acquires a sufficient number of the Common Shares or the First
Preferred Shares to avail itself of this right of acquisition, the Offeror
currently intends to exercise this right.
If, pursuant to the Common Share Offer, the Offeror acquires less than such
number of Common Shares or elects not to pursue the compulsory acquisition of
Common Shares under the CBCA or such provisions are otherwise unavailable, the
Offeror intends to consider other means of acquiring, directly or indirectly,
all of the Common Shares on a fully diluted basis, including a Subsequent
Acquisition Transaction. The Offeror reserves the right not to proceed with a
Subsequent Acquisition Transaction. See Section 4 of the Circular, "Purpose of
the Offers and the Offeror's Plans for Dominion Textile" and Section 13 of the
Circular, "Acquisition of Shares Not Deposited Under the Offers".
If, pursuant to the Preferred Share Offer, the Offeror acquires less than
such number of First Preferred Shares or elects not to pursue the compulsory
acquisition of First Preferred Shares under the CBCA or such provisions are
otherwise unavailable, the Offeror intends to consider other means of acquiring,
directly or indirectly, all of the First Preferred Shares, including a
Subsequent Acquisition Transaction. The Offeror reserves the right not to
proceed with a Subsequent Acquisition Transaction. See Section 4 of the
Circular, "Purpose of the Offers and the Offeror's Plans for Dominion Textile"
and Section 13 of the Circular, "Acquisition of Shares Not Deposited Under the
Offers".
12. Mail Service Interruption
Notwithstanding the provisions of the Offers, the Circular and the Letters
of Transmittal, cheques in payment for Shares purchased pursuant to the Offers
and certificates for any Shares to be returned will not be mailed if the Offeror
determines that delivery thereof by mail may be delayed. Persons entitled to
cheques or certificates which are not mailed for the foregoing reason may take
delivery thereof at the office of the Depositary to which the deposited
certificates for Shares were delivered until such time as the Offeror has
determined that delivery by mail will no longer be delayed. The Offeror shall
provide notice of any such determination not to mail made under this Section 12
as soon as reasonably practicable after the making of such determination and in
accordance with Section 10 of the Offers, "Notices and Delivery".
Notwithstanding Section 6 of the Offers, "Payment for Deposited Shares", cheques
or certificates not mailed for the foregoing reason will be conclusively deemed
to have been delivered on the first day upon which they are available for
delivery to the depositing Shareholder at the appropriate office of the
Depositary.
13. Market Purchases
The Offeror has no current intention of acquiring any Common Shares while
the Common Share Offer is outstanding other than as described in the Circular
and the Common Share Offer. However, the Offeror reserves the right to, and may
acquire or cause an affiliate to acquire, beneficial ownership of Common Shares
by making purchases through the facilities of the TSE or the ME, subject to
applicable law, at any time and from time to time prior to the Expiry Time of
the Common Share Offer. In no event will the Offeror make any such purchases of
Common Shares through the facilities of the TSE or the ME until the third
Business Day following the date of the Common Share Offer. The aggregate number
of Common Shares acquired by the Offeror through the facilities of the TSE or
the ME during the Offer Period shall not exceed 5% of the outstanding Common
Shares as of the date of the Common Share Offer and the Offeror will issue and
file a press release containing the information prescribed by law forthwith
after the close of business of the TSE and the ME on each day on which Common
Shares have been purchased. For the purposes of this Section 13 "Offeror"
includes the Offeror and any person or company acting jointly or in concert with
the Offeror.
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<PAGE>
14. Other Terms of the Offers
(a) Each Offer and all contracts resulting from acceptance hereof shall be
governed by and construed in accordance with the laws of the Province
of Ontario and the laws of Canada applicable therein. Each party to
any agreement resulting from the acceptance of an Offer
unconditionally and irrevocably attorns to the exclusive jurisdiction
of the courts of the Province of Ontario.
(b) No broker, dealer or other person has been authorized to give any
information or make any representation on behalf of the Offeror not
contained herein or in the accompanying Circular, and, if given or
made, such information or representation must not be relied upon as
having been authorized.
(c) The Definitions, the Summary, the Circular, the Letters of Transmittal
and the Notice of Guaranteed Delivery, including the instructions and
rules contained therein, form part of the terms and conditions of the
Offers.
(d) The Offeror, in its sole discretion, shall be entitled to make a final
and binding determination of all questions relating to the
interpretation of the Offers, the Circular, the Letters of Transmittal
and the Notice of Guaranteed Delivery, and the validity of any
acceptance of the Offers and the validity of any withdrawals of
deposited Shares.
(e) The Common Share Offer and the Preferred Share Offer are separate and
independent offers made by the Offeror and the Offeror may exercise
all of its rights, and will fulfill all of its obligations, in respect
of each Offer, separately.
The accompanying Circular together with the Offers constitutes the take-
over bid circular required under the CBCA and Canadian provincial securities
legislation with respect to the Offers.
Dated: October 29, 1997
DT ACQUISITION INC.
(Signed) Jerry Zucker
Chairman, President & Chief Executive Officer
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<PAGE>
CIRCULAR
The following information is supplied with respect to the accompanying
Offers dated October 29, 1997 by the Offeror to purchase (i) all of the issued
and outstanding Common Shares and associated Rights, and (ii) all of the issued
and outstanding First Preferred Shares.
The information concerning Dominion Textile contained in the Offers and
this Circular has been taken from or based upon publicly available documents and
records on file with Canadian securities regulatory authorities and other public
sources. Except as described in the Offers or in the Circular, the Offeror has
no information that indicates that any material change has occurred in the
affairs of Dominion Textile that has not been publicly disclosed by Dominion
Textile. Although the Offeror has no knowledge that would indicate that any
statements contained herein taken from or based on such documents and records
are untrue or incomplete, the Offeror does not assume any responsibility for the
accuracy or completeness of the information taken from or based upon such
documents and records, or for any failure by Dominion Textile to disclose events
which may have occurred or may affect the significance or accuracy of any such
information but which are unknown to the Offeror.
The terms and conditions of the Offers are incorporated into and form part
of this Circular and holders of Shares should refer to the Offers for details of
the terms and conditions of each Offer, including details as to payment and
withdrawal rights. Terms defined in the Offers but not defined in this Circular
have the same meaning herein as in the Offers unless the context otherwise
requires. All sums expressed in dollars herein are in Canadian dollars unless
otherwise expressly noted.
1. The Offeror, Polymer, ITG and GLI
The Offeror has been incorporated and organized solely for the purpose of
making the Offers and has not otherwise carried on any material business or
activity. The Offeror is owned as to 60% by Polymer and as to 40% by ITG. The
Offeror, together with persons acting jointly or in concert with it, owns
5,955,000 Common Shares or approximately 14.5% of the outstanding Common Shares.
Such ownership includes Common Shares owned by Mr. Jerry Zucker who is treated
as acting jointly and in concert with the Offeror. Mr. Zucker is Chairman,
President and Chief Executive Officer of the Offeror, Polymer and ITG.
Polymer, incorporated under the laws of Delaware, is a leading world-wide
manufacturer and marketer of a broad range of nonwoven and woven polyolefin
products. Polymer's principal lines of business include medical, reusable
wiping, hygiene, and industrial and speciality products. Polymer believes that
it is the fourth largest producer of nonwovens in the world and that it employs
the most extensive range of nonwoven technologies of any nonwovens producer,
which allows it to supply products tailored to customers' needs at a competitive
cost. Polymer had net sales of approximately U.S. $521 million, and consolidated
assets of U.S. $708 million, as at December 28, 1996. The common stock of
Polymer is listed on the New York Stock Exchange under the trading symbol "PGH".
ITG is a private holding company specializing in polymer fiber and
elastomeric composites and fabrications. ITG owns approximately 12.0% of the
common stock of Polymer.
The Offeror, Polymer and GLI have entered into the Purchase Agreement
pursuant to which GLI has agreed with the Offeror and Polymer to purchase the
Apparel Fabric Business (including its proportionate liabilities) following the
acquisition by the Offeror of all of the outstanding Common Shares. See Section
4 of the Circular, "Purpose of the Offers and the Offeror's Plans for Dominion
Textile" and Section 5 of the Circular, "Purchase Agreement".
GLI, incorporated under the laws of Delaware, is a leading developer,
manufacturer and marketer of high quality woven cotton and cotton blended
apparel fabrics. GLI supplies fabrics to manufacturers of sportswear for use in
the production of men's, women's and children's pants and shorts and to
manufacturers of commercial uniforms. GLI had net sales of approximately U.S.
$493 million and consolidated assets of U.S. $197 million as at September 27,
1997. The common stock of GLI is listed on the New York Stock Exchange under the
trading symbol "GNL".
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<PAGE>
2. Dominion Textile
Dominion Textile is a manufacturer and supplier of textile and textile
related products with leading positions in selected markets and global
manufacturing capabilities. Dominion Textile is the world's largest manufacturer
of high-end denim fabrics. It is also a supplier to the U.S. disposable diaper
market and has significant non-woven, spunbond multidenier production capacity.
Dominion Textile operates manufacturing plants in five countries, including the
United States, Canada and three European countries.
The authorized capital of Dominion Textile consists of an unlimited number
of Common Shares of which 41,129,867 Common Shares are issued and outstanding
(approximately 42,635,000 Common Shares on a fully diluted basis), 4,306 First
Preferred Shares of which 370 First Preferred Shares are issued and outstanding,
and an unlimited number of second preferred shares issuable in series of which
1,914,600 second preferred shares, series D and 600,000 second preferred shares,
series E are issued and outstanding. All information with respect to issued and
outstanding share capital is based upon the shareholder list dated September 30,
1997 provided by Dominion Textile. According to the audited financial statements
of Dominion Textile for the year ended June 30, 1997, there were 1,504,800 stock
options outstanding to purchase Common Shares under Dominion Textile's executive
stock option plan as of the fiscal year end.
Dominion Textile is subject to the information and reporting requirements
of the securities laws of all the provinces of Canada and the rules of the TSE
and the ME. In accordance therewith, Dominion Textile is required to file
reports, financial statements and other information with certain securities
regulatory authorities in Canada, with the TSE and the ME relating to its
business, financial condition and other matters. Information as of particular
dates concerning Dominion Textile's directors and officers, their remuneration,
their indebtedness, if any, to Dominion Textile, stock options granted to them,
the principal holders of securities and any material interests of such persons
in transactions with Dominion Textile and other matters is required to be
disclosed in proxy statements distributed to Shareholders and filed with certain
of such securities regulatory authorities in Canada, with the TSE and the ME and
may be inspected at Dominion Textile's offices or through the facilitates of
such Canadian securities regulatory authorities, the TSE and the ME.
3. Background to the Offers
Over nine months ago, Mr. Jerry Zucker, the Chairman, President and Chief
Executive Officer of the Offeror, Polymer and ITG, met with Mr. John Boland,
President and Chief Executive Officer of Dominion Textile, to discuss ways in
which Polymer and Dominion Textile could work together to create value for their
respective shareholders. Over the months following this meeting, some
preliminary discussions were held between the parties and it appeared to Polymer
that a transaction on a friendly basis was achievable. However, on May 14, 1997,
Dominion Textile indicated that it was not interested in participating in any
further discussions. Following this date, Polymer made repeated attempts to
continue discussions, including sending a letter to Mr. Charles H. Hantho, the
Chairman of Dominion Textile, dated August 26, 1997, in which Polymer indicated
that, based on Polymer's preliminary views on value, it had a strong interest in
entering into a transaction with Dominion Textile. During the period from May
14, 1997 through to September 10, 1997, Polymer and ITG acquired a significant
number of Common Shares in Dominion Textile. See Section 8 of the Circular,
"Trading in Securities of Dominion Textile". In accordance with applicable
securities laws, on September 4, 1997 Polymer made public disclosure of the fact
that a group, consisting of itself and others with whom it acted jointly or in
concert, had acquired beneficial ownership of Common Shares in an amount which
exceeded 10% of the outstanding Common Shares. Following public disclosure of
Polymer's ownership position in Dominion Textile, representatives of Polymer and
Dominion Textile met on September 15, 1997. This meeting concluded without there
having been a meaningful discussion regarding the possibility of a transaction
involving Dominion Textile and Polymer. Finally, on October 27, 1997 Polymer
sent the following letter to Mr. Hantho:
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<PAGE>
October 27, 1997
Mr. Charles H. Hantho
Chairman
Dominion Textile Inc.
1950 Sherbrooke Street West
Montreal, Quebec H3H IE7
Dear Chuck:
As you know from our prior communications, Polymer Group is highly interested in
a business combination with Dominion Textile Inc. ("Dominion"). We have, over a
period of several months, attempted to have serious discussions with you, the
Board, and Dominion senior management regarding a possible transaction that
would provide your shareholders with significant value.
During this time period, we and certain other affiliated investors, were a
significant acquirer of Dominion shares and currently hold approximately 14.5%
of the outstanding Dominion shares. Such purchases constituted a substantial
portion of the trading volume in Dominion Textile's shares during the period May
1 to September 4, 1997, and contributed to the price increases of the shares
during this period.
Although I hoped that our meeting of September 15 would lead to substantive
dialogue, you again declined to pursue meaningful discussions that could lead to
increased value for your shareholders. Your continued refusal to discuss the
merits and valuation of a transaction has left us with no choice but to present
our offer directly to Dominion Textile shareholders.
Therefore, DT Acquisition Inc. is publicly announcing today a cash tender offer
for all of the outstanding common shares of Dominion at a price of C$11.75 per
share. As the following table shows, our offer represents a significant premium
to Dominion's shareholders.
<TABLE>
<CAPTION>
Date DTX Price Offer Premium
- ---- --------- ------------
<S> <C> <C>
January 3, 1997...................................... C$6.92 69.8%
August 26, 1997...................................... C$7.75 51.6%
12 Month Average/1/.................................. C$7.08 66.0%
24 Month Average/2/.................................. C$7.20 63.2%
</TABLE>
You will note that our offer is below Friday's closing price of C$12.25. In our
opinion, Dominion's current price has been driven by significant speculative
trading by short-term investors and exceeds the fair value we perceive based on
our analysis of publicly available information.
Our offer is not subject to financing. The conditions to our proposal will
include the valid tendering and non-withdrawal of 90% of both of the outstanding
common shares and first preferred shares held by the public, the removal of your
take-over defenses, specifically the existing poison pill, and necessary
regulatory clearances.
Polymer and DT Acquisition Inc. have entered into an agreement with a third
party for the purchase of Dominion's apparel fabric business, comprising its
denim and career wear operations following successful completion of the offer.
Chuck, we have on many occasions expressed our desire to complete a friendly
transaction. Most importantly, we strongly believe that a friendly transaction
can provide a higher per share value to your shareholders. Despite our great
frustration with your unwillingness to move forward, we remain prepared to
discuss ways to generate more value for Dominion's shareholders.
As a significant Dominion Textile shareholder, we believe our offer represents a
unique opportunity for Dominion's Board of Directors to maximize value for all
of its shareholders on a near term basis and strongly suggest that you
reconsider your position of ignoring our requests for serious negotiation. We
urge you to recognize the substantial benefits our proposal brings to your
shareholders.
We look forward to hearing from you promptly.
Respectfully,
"Jerry Zucker"
- --------------
1 12-month period prior to September 3, 1997 public disclosure of Polymer's
interest.
2 24-month period prior to September 3, 1997 public disclosure of Polymer's
interest.
24
<PAGE>
Since management of Dominion Textile does not appear willing to discuss a
friendly transaction with Polymer, Polymer has determined that it is appropriate
to make the Offers directly to the Shareholders.
4. Purpose of the Offers and the Offeror's Plans for Dominion Textile
Purpose of the Offers
The purpose of the Offers is to enable the Offeror to acquire all of the
outstanding Shares of Dominion Textile. If the Offeror takes up and pays for
Shares under the Offers, the Offeror's current intention is to acquire all
Shares not deposited under the Offers. See Section 13 of the Circular,
"Acquisition of Shares Not Deposited Under the Offers". The exact timing and
terms of a Compulsory Acquisition or Subsequent Acquisition Transaction
involving Dominion Textile will necessarily depend upon a variety of factors,
including the number of Shares acquired pursuant to each Offer.
Although the Offeror currently intends to propose a Compulsory Acquisition
or a Subsequent Acquisition Transaction generally on the terms described herein,
it is possible that, as a result of information hereafter obtained by the
Offeror, changes in general economic, industry or market conditions or in the
business of Dominion Textile, or other currently unforeseen circumstances, such
a transaction may not be so proposed, may be delayed or abandoned or may be
proposed on different terms. The Offeror expressly reserves the right not to
propose a Compulsory Acquisition or Subsequent Acquisition Transaction involving
Dominion Textile, or to propose a Subsequent Acquisition Transaction on terms
other than those described herein. Specifically, the Offeror reserves the right
to propose that the consideration in a Subsequent Acquisition Transaction
consist of cash or securities or a combination of cash and securities and that
the consideration in such a transaction have a value more or less than the
amount offered under the Offers.
If the Offeror decides not to propose a Compulsory Acquisition or a
Subsequent Acquisition Transaction, or proposes a Subsequent Acquisition
Transaction but cannot promptly obtain any required approvals, the Offeror will
evaluate its other alternatives. Such alternatives could include, to the extent
permitted by applicable law, (i) purchasing additional Shares in the open
market, in privately negotiated transactions, in another takeover bid or
exchange offer or (ii) otherwise, or taking no further action to acquire
additional Shares. Any additional purchases of Shares could be at a price
greater than, equal to or less than the price to be paid for Shares under the
Offers and could be for cash and/or other consideration. Alternatively, the
Offeror may sell or otherwise dispose of any or all Shares acquired pursuant to
the Offers or otherwise. Such transactions may be effected on terms and at
prices then determined by the Offeror, which may vary from the price paid for
Shares under the Offers.
Plans for Dominion Textile
If the Offeror takes up and pays for Shares under the Offers and the
Offeror acquires control of Dominion Textile as a result thereof, the Offeror
intends to take steps to cause (i) the existing board of directors to be
replaced with nominees of the Offeror, and (ii) Dominion Textile to redeem all
of its issued and outstanding second preferred shares. In addition, as
contemplated in the Purchase Agreement, it is proposed that following the
acquisition by the Offeror of all of the Common Shares, and subject to receipt
of all necessary shareholder and other approvals, the Offeror will propose and
implement the Purchase Agreement Transaction the effect of which would be to
transfer the Apparel Fabric Business (including its proportionate liabilities)
to GLI and to transfer the Nonwovens Business (including its proportionate
liabilities) to Polymer. The precise nature and terms of the Purchase Agreement
Transaction will not likely be settled until after the Offeror has acquired all
of the outstanding Common Shares of Dominion Textile. While the Offeror and
Polymer have agreed with GLI to carry out the Purchase Agreement Transaction,
there can be no assurance that the Purchase Agreement Transaction will occur or
that it will be carried out on the terms proposed. In connection with the
Purchase Agreement Transaction, Dominion Textile may be liquidated into or
merged with the Offeror. Except for the foregoing, the Offeror has developed no
specific plans or proposals in respect of Dominion Textile, its assets or
operations or for any changes in its assets, business strategies or personnel
following the acquisition of Shares pursuant to the Offers. Following the
acquisition of Shares pursuant to the Offers and the Offeror gaining access to
more detailed information with respect Dominion Textile, the Offeror will review
the assets and operations of Dominion Textile and consider what changes, if any,
are necessary or appropriate. See Section 5 of the Circular, "Purchase
Agreement". As discussed in Section 6 of the Circular, "Effect of the Offers on
Outstanding
25
<PAGE>
Indebtedness of Dominion Textile", the effect of the Offers and the foregoing
plans may be to require Dominion Textile to make a tender for the outstanding
Notes, to retire the Notes or to obtain certain waivers by the holders thereof.
If permitted by applicable law, subsequent to the completion of the Offers
and any Compulsory Acquisition or Subsequent Acquisition Transaction, if any,
the Offeror intends to delist the Common Shares from the TSE and the ME, and,
subject to applicable securities laws in provinces where Dominion Textile is a
reporting issuer, to cause Dominion Textile to cease to be a reporting issuer in
such provinces.
Except as described in the Offers and in this Circular, the Offeror has no
current plans or proposals which would relate to or result in any material
changes in the affairs of Dominion Textile.
5. Purchase Agreement
On October 27, 1997, the Offeror, Polymer and GLI entered into the Purchase
Agreement. The Purchase Agreement provides for the manner in which the parties
intend to deal with Dominion Textile following the acquisition by the Offeror of
all of the Common Shares. Generally, the Purchase Agreement contemplates the
acquisition of the Apparel Fabric Business (including its proportionate
liabilities) by GLI and the acquisition by Polymer of the Nonwovens Business
(including its proportionate liabilities).
The Purchase Agreement provides that the exact structure of the Purchase
Agreement Transaction will be determined by the parties acting in good faith to
accomplish the objectives of the Purchase Agreement and to minimize tax
liabilities. The Purchase Agreement provides certain principles which will
govern the form and terms of the Purchase Agreement Transaction, including that
GLI will pay a cash purchase price equal to a portion of the total acquisition
costs incurred in connection with the Offers and related transactions.
GLI is also entitled to share in the value of, and is to bear a portion of
the liabilities related to, all of Dominion Textile's assets other than the
Apparel Fabric Business and Nonwovens Business. The Purchase Agreement provides
that the Offeror and Polymer will become obligated to complete the Purchase
Agreement Transaction upon the Offeror acquiring all of the outstanding Common
Shares of Dominion Textile. The Purchase Agreement contemplates that the parties
will enter into a definitive acquisition agreement for the Purchase Agreement
Transaction. Pending the execution of such agreement, the parties have agreed
that the Purchase Agreement is binding upon them.
The Purchase Agreement also obligates GLI and Polymer to provide the
financing to the Offeror referred to under Section 10 of the Circular, "Source
of Funds".
The Purchase Agreement does not constitute an obligation of Dominion
Textile and completion of the Purchase Agreement Transaction is not a condition
to the Offers. Various corporate and regulatory approvals may be necessary in
connection with the completion of the Purchase Agreement Transaction.
6. Effect of the Offers on Outstanding Indebtedness of Dominion Textile
Dominion Textile (USA) Inc., a wholly-owned subsidiary of Dominion Textile,
has issued and outstanding US $150 million of unsecured 8.875% Guaranteed Senior
Notes due 2003 (the "2003 Notes") and US $125 million of unsecured 9.25%
Guaranteed Senior Notes due April 1, 2006 (the "2006 Notes"). The payment of
principal, premium, if any, and interest on the 2003 Notes and the 2006 Notes is
unconditionally guaranteed by Dominion Textile. The indentures pursuant to which
the Notes were issued and the guarantees provided by Dominion Textile in respect
thereof (the "Guarantees") contain covenants relating to, among other things, a
change of control of Dominion Textile.
In the case of the 2003 Notes, in the event of a "change of control" of
Dominion Textile, Dominion Textile (USA) Inc. must commence an offer within 30
days of the consummation of a transaction resulting in a change of control to
repurchase all outstanding 2003 Notes at a price equal to 101% of their
principal amount plus accrued interest to the date of purchase. A "change of
control" will be deemed to have occurred in the event that, among other things,
any person or any persons acting together that would constitute a group (for the
purposes of section 13(d) of the United States Securities Exchange Act of 1934,
or any successor provision thereto), together with any affiliates or related
persons thereof, shall beneficially own (as defined in Rule 13d-3 under the 1934
Act) at least 50% of the voting securities of Dominion Textile.
26
<PAGE>
In the case of the 2006 Notes, in the event of a "change of control
triggering event", Dominion Textile (USA) Inc. must commence an offer within 30
days of the occurrence of such event to repurchase all outstanding 2006 Notes at
a price equal to 101% of their principal amount plus accrued interest to the
date of purchase. A "change of control triggering event" will be deemed to have
occurred if a "change of control" (as defined above) has occurred and a "rating
decline" occurs. A "rating decline" will be deemed to have occurred if at any
time within 180 days (which period may be extended so long as the rating of the
2006 Notes is under publicly announced consideration for possible downgrade)
after the date of the public notice of a "change of control" or of the intention
of any person to effect a "change of control", the rating of the 2006 Notes is
decreased by both Standard & Poor's and Moody's (or such other rating agency as
may have been selected by Dominion Textile in substitution for either one of
them) (the "Rating Agencies") by one or more gradations within a rating category
and the resulting rating is below the investment grade rating category of such
Rating Agencies.
A "change of control" will also constitute an event of default under
Dominion Textile's US $100 million revolving credit facility thereby permitting
the acceleration of all outstanding amounts under such facility as well as
indebtedness under other instruments that contain cross-acceleration or cross-
default provisions. As of June 30, 1997, US $4.3 million was utilized under
Dominion Textile's US $100 million revolving credit facility.
In the event that the Offeror takes up and pays for Shares under the Offers
and acquires not less than 50% of the Shares (including Common Shares held on
the date of the Offers by or on behalf of the Offeror), a "change of control"
will likely be deemed to have occurred for the above purposes.
The Notes and Guarantees also contain covenants which may be breached in
the event that the Offeror implements certain of the transactions described in
Section 4 of the Circular, "Purpose of the Offers and the Offeror's Plans for
Dominion Textile" and Section 5 of the Circular, "Purchase Agreement".
Accordingly, it may be necessary for the Offeror or Dominion Textile to retire
the Notes or obtain certain waivers from the holders of outstanding Notes in
order to carry out such transactions.
It is a condition to the Offers that the Offeror shall have determined, in
its sole judgment, that the Notes may be repaid, repurchased or otherwise
acquired by Dominion Textile or its subsidiaries, associates or otherwise, upon
terms and conditions satisfactory to the Offeror. See Section 4 of the Offers,
"Conditions of the Offers".
7. Holdings of Securities of Dominion Textile
The Offeror owns 4,578,000 Common Shares (or approximately 11.1% of the
outstanding Common Shares) of Dominion Textile. Mr. Jerry Zucker, Chairman,
President and Chief Executive Officer of the Offeror, Polymer and ITG, owns
1,377,000 Common Shares (or approximately 3.4% of the outstanding Common
Shares). Mr. Zucker is treated as acting jointly and in concert with the Offeror
in connection with the Offers. Mr. Zucker is also one of the three trustees of a
charitable foundation which holds 265,000 Common Shares in its investment
portfolio. Mr. Zucker has no beneficial ownership of such Common Shares. The
Foundation has indicated that it currently intends to tender its Common Shares
to the Common Share Offer.
Apart from the foregoing, no securities of Dominion Textile are
beneficially owned by, nor is control or direction over any securities of
Dominion Textile exercised by the Offeror, Polymer, ITG, Jerry Zucker or by any
director or officer of the Offeror, Polymer or ITG or, to the knowledge of the
Offeror, by any associate of any director or senior officer of the Offeror,
Polymer or ITG, by any person holding more than 10% of any class of equity
securities of the Offeror, Polymer or ITG or by any person acting jointly or in
concert with the Offeror.
According to the management proxy circular dated August 29, 1997 of
Dominion Textile, there is no other person holding more than 10% of the Common
Shares of Dominion Textile other than the Ontario Teachers Pension Plan Board
which held 6,177,700 Common Shares, representing approximately 15.0% of the
Common Shares as of such date.
According to the list of shareholders of Dominion Textile dated September
30, 1997, there is no person holding more than 10% of the First Preferred Shares
of Dominion Textile other than Mr. Robert W. Smythe who held 215 First Preferred
Shares as of September 30, 1997, representing approximately 58% of all First
Preferred Shares currently outstanding.
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<PAGE>
8. Trading in Securities of Dominion Textile
No securities of Dominion Textile have been traded during the six month
period preceding the date of the Offers by the Offeror, Polymer, ITG, by
directors or officers of the Offeror, Polymer, or ITG or, to the knowledge of
the Offeror, by any associate of any such directors or officers, by any person
or company who beneficially owns, directly or indirectly, more than 10% of any
class of equity securities of the Offeror, Polymer or ITG, or by any person or
company acting jointly or in concert with the Offeror, except for the following
purchases made by Polymer and ITG during such period:
<TABLE>
<CAPTION>
Number of Common
Purchaser Purchase Date Shares Purchased Price
--------- ----------------- ---------------- ------
<S> <C> <C> <C>
ITG June 3, 1997 170,000 $ 6.60
ITG June 4, 1997 50,000 6.96
ITG June 5, 1997 20,000 7.22
ITG June 10, 1997 25,000 7.14
ITG June 11, 1997 10,000 7.28
ITG June 17, 1997 135,000 7.45
ITG June 19, 1997 10,000 7.58
ITG June 20, 1997 1,040,000 8.29
Polymer September 4, 1997 2,112,000 8.20
Polymer September 9, 1997 20,000 11.14
</TABLE>
Beneficial ownership of all of the Common Shares held by Polymer and ITG was
transferred to the Offeror prior to the making of the Offers.
9. Commitments to Acquire Securities
None of the Offeror, Polymer or ITG nor any of their respective directors
and officers, nor to the knowledge of the Offeror, any associates of such
directors and officers, any person holding more than 10% of any class of equity
securities of the Offeror, Polymer or ITG or any person or company acting
jointly or in concert with the Offeror, have entered into any commitments to
acquire any securities of Dominion Textile. To the knowledge of the Offeror,
neither Dominion Textile, nor any of its directors and officers, nor any
associates of such directors and officers or any person holding more than 10% of
any class of equity securities of Dominion Textile have entered into any
commitments to acquire any securities of Dominion Textile.
10. Source of Funds
The Offeror estimates that if it acquires all of the Common Shares (on a
fully diluted basis) and all of the First Preferred Shares pursuant to the
Offers, other than the Shares owned by the Offeror, the total amount of cash
required to purchase such Shares, to provide working capital for Dominion
Textile and to pay related fees and expenses is expected to be approximately
U.S.$475 million. The Offeror has made the following arrangements to fund this
amount.
Advances
Polymer, ZB Holdings Inc. ("ZBH"), a corporation associated with Mr. Jerry
Zucker and Mr. James G. Boyd, and GLI have agreed to advance to the Offeror an
aggregate of U.S.$220 million by means of unsecured subordinated loans. Polymer
has existing funds available to satisfy its portion of this commitment. ZBH and
GLI have each entered into a commitment letter with third party financial
institutions under which those financial institutions have agreed to provide and
make funds available to such parties to enable them to satisfy their respective
portions of this commitment. Such advances are collectively referred to as the
"Advances". The terms of each such Advance must be satisfactory to the Lenders
(as defined below), but shall provide in any event that the Advances be
subordinated to the Facilities (as defined below), that interest under the
Advances be capitalized for as long as loans under the Facilities are
outstanding, that no Advance shall mature earlier than 30 days after the
maturity of the Tender Facility (as defined below) and that each Advance be
automatically extended to a date 30 days after the maturity of the Additional
Facility (as defined below) in the event such facility is drawn down.
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<PAGE>
Tender Facility
The Offeror has entered into a commitment letter (the "Commitment Letter")
with The Chase Manhattan Bank ("Chase") and First Union National Bank ("First
Union", and together with Chase, the "Initial Lenders") under which the Initial
Lenders have agreed to provide and make available to the Offeror up to U.S.$255
million (the "Tender Facility") of which a portion is to be used to provide
working capital to Dominion Textile following the acquisition of all of the
outstanding Common Shares. The Initial Lenders are entitled to syndicate the
Tender Facility to other financial institutions (the Initial Lenders and such
financial institutions are hereinafter referred to as the "Lenders"). The
Offeror has agreed to pay the Initial Lenders customary fees for arranging and
providing the Facilities.
The Tender Facility is repayable upon the earlier of (i) the Offeror and
Dominion Textile being amalgamated, and (ii) 180 days after the date of first
drawdown under the Tender Facility. At the option of the Offeror, interest on
the Tender Facility is payable at the Base Rate of Chase plus 1.0% or at a rate
equal to the London Interbank Offered Rate ("LIBOR") plus 2.25%. For purposes of
the foregoing, the "Base Rate" is the higher of the Federal Funds Rate published
by the Federal Reserve Bank of New York plus 1/2 of 1%, or the prime commercial
lending rate of Chase as announced from time to time. Interest margins are
increased by 2% on any amounts not paid when due.
All or any portion of the loans under the Tender Facility ("Tender Loans")
may be repaid at any time and outstanding Tender Loans are required to be
prepaid (to the extent of the net cash proceeds received) from any asset sales
of the Offeror and its subsidiaries including from the Purchase Agreement
Transaction.
The Tender Facility is to be secured by a first priority security interest
in all of the Offeror's present and future assets (including the Shares and all
intercompany loans made by the Offeror to Dominion Textile from the Tender
Facility).
The obligations of the Initial Lenders under the Commitment Letter are
subject to (i) there not occurring or becoming known any material adverse
condition or material adverse change in or affecting the business, operations,
property, financial condition, or prospects of the Offeror, and the Initial
Lenders not becoming aware, after the date of the Commitment Letter, of any
information or other matter affecting the Offeror or the transactions
contemplated thereby which is inconsistent in a material and adverse manner with
any such information or other matter disclosed to them prior to the date of the
Commitment Letter, and (ii) there not having occurred, developed or come into
effect or existence any event, action, state, condition or major financial
occurrence of national or international consequence or any law, regulation,
action, government regulation, inquiry or other occurrence of any nature
whatsoever which adversely affects, or may adversely affect, the financial
markets in Canada or the United States generally.
The availability of the Tender Facility is also subject to the satisfaction
of customary conditions and to (i) the making of the Advances on terms
satisfactory to the Initial Lenders, (ii) satisfaction of the Initial Lenders as
to all determinations made by the Offeror with respect to the conditions set
forth in Section 4 of the Offers, "Conditions of the Offers", and (iii) the
Purchase Agreement not having been terminated. In addition, the Tender Facility
is or will be subject to representations and warranties, covenants and events of
default as are customary in documentation of this kind.
Additional Facility
The Initial Lenders have agreed to provide the Offeror up to U.S.$585
million (the "Additional Facility", and together with the Tender Facility, the
"Facilities") in order to refinance the Tender Facility, and, if necessary, to
refinance (or economically defease) the Notes and other indebtedness of Dominion
Textile and its subsidiaries, to pay related fees and expenses and to provide
ongoing working capital for Dominion Textile. It is anticipated that such
refinancing would occur, and the Additional Facility would be available,
concurrently with any amalgamation of the Offeror and Dominion Textile following
the acquisition by the Offeror of all the outstanding Common Shares. The
Additional Facility would mature on the earlier of (i) 180 days after the
Offeror and Dominion Textile amalgamate, and (ii) 364 days after the date of
first drawdown under the Tender Facility.
29
<PAGE>
Each of GLI and Polymer have also entered into commitment letters with
third party financial institutions to provide the funds necessary, when combined
with existing sources, to complete the Purchase Agreement Transaction.
11. Price Range and Trading Volume of Shares
The Common Shares are listed and posted for trading on the TSE and the ME.
The volume of trading and the price ranges of the Common Shares of Dominion
Textile on the TSE and ME (as reported by the TSE and ME, respectively) are set
forth in the following table for the periods indicated:
<TABLE>
<CAPTION>
TSE ME
--------------------------- ---------------------------
High Low Volume High Low Volume
------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
1996
March............ $ 7.125 $ 6.625 428,300 $ 7.000 $ 6.750 1,334,300
April............ 7.450 6.375 233,900 7.400 6.375 603,900
May.............. 7.350 6.750 881,500 7.300 6.750 231,600
June............. 7.300 6.600 2,402,500 7.300 6.600 145,600
July............. 7.700 7.250 642,300 7.650 7.250 638,600
August........... 7.750 7.250 303,400 7.750 7.250 777,900
September........ 7.500 7.200 172,000 7.500 7.250 371,100
October.......... 7.950 7.250 304,600 7.900 7.250 291,500
November......... 8.150 7.700 482,600 8.150 7.750 987,400
December......... 8.250 6.500 1,052,200 8.200 6.500 648,900
1997
January.......... 7.000 6.400 404,500 7.000 6.400 777,000
February......... 7.000 6.350 763,600 6.950 6.350 131,400
March............ 6.700 6.100 369,200 6.750 6.150 217,400
April............ 6.400 5.000 387,800 6.400 5.000 73,200
May.............. 6.350 5.600 299,300 6.250 5.500 280,700
June............. 8.200 6.100 1,566,300 8.150 6.150 737,700
July............. 8.450 7.500 366,900 8.400 7.500 169,800
August........... 8.100 7.000 784,200 8.250 6.900 151,700
September........ 12.250 7.250 1,543,118 12.250 7.200 3,857,277
October.......... 13.000 11.900 2,065,527 12.750 11.950 473,421
</TABLE>
The closing price of the Common Shares on October 24, 1997, the last day on
which the Common Shares traded prior to the announcement of the Offers, was
$12.25 per share on each of the TSE and the ME. The closing price of the Common
Shares on September 3, 1997, the last day on which the Common Shares traded
prior to the announcement by Polymer on September 4, 1997 that it, and certain
persons treated as acting jointly or in concert with Polymer, had acquired
approximately 14.5% of the outstanding Common Shares, was $8.00 per share on the
TSE and $7.85 per share on the ME.
To the knowledge of the Offeror, the First Preferred Shares are not listed
on any stock exchange but are quoted on the over-the-counter trade reporting and
quotation system maintained by The Canadian Dealing Network Inc. ("CDN"). There
was no trading of the First Preferred Shares reported on CDN in respect of the
six-month period preceding the date of this Offer.
12. Effect of the Offers on Market and Listings
The purchase of Common Shares by the Offeror pursuant to the Common Share
Offer will reduce the number of Common Shares which might otherwise trade
publicly, as well as the number of Shareholders, and, depending on the number of
Shareholders depositing and the number of Common Shares purchased under the
Common Share Offer, could adversely affect the liquidity and market value of the
remaining Common Shares held by the public. After the purchase of Common Shares
under the Common Share Offer, it may be possible for Dominion Textile to take
steps to cease to be subject to applicable public reporting requirements under
applicable securities legislation in any province in which it has an
insignificant number of security holders.
30
<PAGE>
The rules and regulations of the TSE and the ME establish certain criteria
which, if not met, could lead to the delisting of the Common Shares from such
exchanges. Among such criteria are the number of Shareholders and the number and
aggregate market value of Common Shares publicly held. Depending on the number
of Common Shares purchased pursuant to the Common Share Offer, it is possible
that the Common Shares would fail to meet the criteria for continued listing on
such exchanges. If this were to happen, the Common Shares could be delisted and
this could, in turn, adversely affect the market or result in a lack of an
established market for the Common Shares. It is the intention of the Offeror to
apply to delist the Common Shares from each such exchange as soon as practicable
after completion of the Common Share Offer or after a Compulsory Acquisition or
Subsequent Acquisition Transaction, if any.
To the knowledge of the Offeror, there is currently no active trading
market in the First Preferred Shares. Accordingly, the purchase by the Offeror
of the First Preferred Shares pursuant to the Preferred Share Offer is not
likely to adversely affect the liquidity of the First Preferred Shares.
13. Acquisition of Shares Not Deposited Under the Offers
Compulsory Acquisition
If within 120 days after the date hereof, (i) the Common Share Offer has
been accepted by holders of not less than 90% of the Common Shares (on a fully
diluted basis), other than Common Shares held on the date of the Common Share
Offer by or on behalf of the Offeror or its affiliates and associates (as those
terms are defined in the CBCA) or (ii) the Preferred Share Offer has been
accepted by holders of not less than 90% of the First Preferred Shares, other
than First Preferred Shares held on the date of the Preferred Share Offer by or
on behalf of the Offeror or its affiliates and associates (as those terms are
defined in the CBCA) and the Offeror acquires such deposited Common Shares or
First Preferred Shares, as the case may be, the Offeror intends to acquire the
remainder of the Common Shares or First Preferred Shares, as the case may be, on
the same terms as such shares were acquired under the relevant Offer pursuant to
the provisions of Section 206 of the CBCA (a "Compulsory Acquisition").
To exercise such statutory right, the Offeror must give notice (the
"Offeror's Notice") to each holder of Common Shares or First Preferred Shares,
as the case may be, who did not accept the relevant Offer (and to each person
who subsequently acquires any such Common Shares or First Preferred Shares, as
the case may be) (in each case a "Dissenting Offeree") and to the Director under
the CBCA of such proposed acquisition on or before the earlier of 60 days from
the Expiry Time of the relevant Offer and 180 days from the date of such Offer.
Within 20 days of giving the Offeror's Notice, the Offeror must pay or transfer
to Dominion Textile the consideration the Offeror would have had to pay or
transfer to the Dissenting Offerees if they had elected to accept the relevant
Offer, to be held in trust for the Dissenting Offerees. In accordance with
Section 206 of the CBCA, within 20 days after receipt of the Offeror's Notice,
each Dissenting Offeree must send the certificates representing the applicable
securities held by such Dissenting Offeree to Dominion Textile, and may elect
either to transfer such shares to the Offeror on the terms of the relevant Offer
or to demand payment of the fair value of such shares held by such holder by so
notifying the Offeror. If a Dissenting Offeree has elected to demand payment of
the fair value of such shares, the Offeror may apply to a court having
jurisdiction to hear an application to fix the fair value of such shares of that
Dissenting Offeree. If the Offeror fails to apply to such court within 20 days
after it made the payment or transferred the consideration to Dominion Textile
referred to above, the Dissenting Offeree may then apply to the court within a
further period of 20 days to have the court fix the fair value. If no such
application is made by the Dissenting Offeree within such period, the Dissenting
Offeree will be deemed to have elected to transfer such shares to the Offeror on
the terms of the relevant Offer. Any judicial determination of the fair value of
the shares could be more or less than the amount paid pursuant to the relevant
Offer.
The foregoing is a summary only. Reference is made to Section 206 of the
CBCA for the text of the relevant provisions. Strict adherence to notice and
timing provisions of section 206 of the CBCA may be required, failing which such
rights may be lost or altered. Shareholders who wish to be better informed about
these provisions should consult their legal advisers.
31
<PAGE>
Subsequent Acquisition Transaction
If the Offeror takes up and pays for Common Shares or First Preferred
Shares, as the case may be, validly deposited under the relevant Offer and the
statutory right of acquisition described above is not available, or if the
Offeror elects not to proceed under such provisions, then the Offeror intends to
cause a special meeting of Shareholders to be called to consider an
amalgamation, a statutory arrangement or another transaction involving the
Offeror or an affiliate of the Offeror and Dominion Textile for the purposes of
enabling the Offeror to acquire all of the Common Shares or First Preferred
Shares, as the case may be, not deposited under the relevant Offer (a
"Subsequent Acquisition Transaction"). If, after taking up and paying for Common
Shares under the Common Share Offer, the Offeror holds Common Shares equal to
not less than 66 2/3% of the Common Shares and not less than 66 2/3% of the
aggregate of the Common Shares and First Preferred Shares, it will have acquired
sufficient Common Shares to approve, as a corporate law matter, the acquisition
of all of the remaining Common Shares. If, in addition, after taking up and
paying for the First Preferred Shares under the Preferred Share Offer, the
Offeror holds not less than 66 2/3% of the First Preferred Shares, it will have
acquired sufficient First Preferred Shares to approve, as a corporate law
matter, the acquisition of the remaining First Preferred Shares. In any
Subsequent Acquisition Transaction, the holders of Common Shares or First
Preferred Shares, as the case may be, may have a right of dissent under the CBCA
to be paid the fair value of their Common Shares or First Preferred Shares, as
the case may be, with such fair value to be determined by a court (an "appraisal
right").
Each of the methods of acquiring the remaining outstanding Common Shares
described above, other than a Compulsory Acquisition would be a "going private
transaction" within the meaning of the regulations to the Securities Act
(Ontario), Policy 9.1 and Policy Q-27 if such method would result in the
interest of a holder of Common Shares (the "Affected Securities") being
terminated without the consent of the holder and without the substitution
therefor of an interest of equivalent value in a participating security of
Dominion Textile, a successor to the business of Dominion Textile or a person
who controls Dominion Textile or, in the case of Policy 9.1 and Policy Q-27, a
person who controls a successor to the business of Dominion Textile.
Policy 9.1 and Policy Q-27 provide that, unless exempted, a corporation
proposing to carry out a going private transaction is required to prepare a
valuation of the Affected Securities (and any non-cash consideration being
offered therefor) and provide to the holders of the Affected Securities a
summary of such valuation. The Offeror intends to seek waivers pursuant to
Policy 9.1 and Policy Q-27 exempting it from the requirement to prepare a
valuation in connection with any going private transaction proposed by the
Offeror.
Policy 9.1 and Policy Q-27 would also require that, in addition to any
other required security holder approval, in order to complete a going private
transaction, the approval of a simple majority, or in certain circumstances of
66 2/3%, of the votes cast by "minority" holders of the Affected Securities be
obtained. Policy 9.1 and Policy Q-27 contain similar minority approval
requirements for related party transactions. In relation to the Offers and any
related party or going private transaction, the "minority" holders will be,
unless an exemption is available or discretionary relief is granted by the OSC
and QSC, all holders of Shares other than the Offeror, Polymer, ITG, Jerry
Zucker and GLI, the respective directors and senior officers of the Offeror,
Polymer and ITG, any of their respective affiliates or any person which
beneficially owns or exercises control or direction over 10% or more of the
outstanding voting rights of any of Polymer or ITG. Policy 9.1 and Policy Q-27
also provide that the Offeror may treat Shares acquired pursuant to the Offers
as "minority" shares and to vote them, or to consider them voted, in favour of
such related party or going private transaction if the consideration per
security in the related party or going private transaction is at least equal in
value to the consideration paid under the relevant Offer. The Offeror intends
that the consideration offered under any subsequent related party or going
private transaction proposed by it would be identical to the consideration
offered under the Offers.
In addition, under Policy 9.1 and Policy Q-27, if, following the Offers,
the Offeror and its affiliates are the registered holders of 90% or more of the
Common Shares or the First Preferred Shares, as the case may be, at the time the
Subsequent Acquisition Transaction is initiated, the requirement for minority
approval would not apply to the transaction if an enforceable appraisal right or
a substantially equivalent right is made available to the minority shareholders.
32
<PAGE>
See Section 22 of the Circular, "Canadian Federal Income Tax
Considerations" for a discussion of the tax consequences to Shareholders of a
going private transaction that is an amalgamation involving Dominion Textile.
In September, 1994, the Director appointed under the CBCA released a policy
on "going private transactions" stating, among other things, that the Director
is of the opinion that going private transactions arc permitted under the CBCA
provided the transaction is not oppressive or unfairly prejudicial to, or
unfairly disregards the interests of, a person whose interest in a participating
security is being terminated without his or her consent. In determining whether
a "going private transaction" is fair, the policy states that compliance with
the requirements set forth in Policy 9.1 or Policy Q-27 will usually be viewed
by the Director as sufficient.
Any Subsequent Acquisition Transaction carried out by the Offeror will
likely be by way of an amalgamation or a statutory arrangement pursuant to which
the Offeror would acquire all Shares not tendered to the Offers. It is also
possible that the transactions referred to under Section 4 of the Circular,
"Purpose of the Offers and the Offeror's Plans for Dominion Textile" and Section
5 of the Circular, "Purchase Agreement" may be carried out as part of any such
amalgamation or arrangement.
In the event that the Offeror takes up and pays for Common Shares under the
Common Share Offer and acquires all of the outstanding Common Shares but fails
to acquire sufficient First Preferred Shares in order to ensure that the Offeror
can carry out a Subsequent Acquisition Transaction with respect to the First
Preferred Shares, the Offeror may either leave the balance of the First
Preferred Shares outstanding or take other actions which may be available to it
in order to acquire or cancel the First Preferred Shares.
Judicial Developments
Certain judicial decisions may be considered relevant to any Subsequent
Acquisition Transaction which may be proposed or effected subsequent to the
expiry of either Offer. Prior to the adoption of Policy 9.1 and Policy Q-27,
Canadian courts, in a few instances, granted preliminary injunctions to prohibit
transactions involving going private amalgamations. The current trend both in
legislation and in the American jurisprudence upon which the previous Canadian
decisions were based is toward permitting going private transactions to proceed
subject to compliance with procedures designed to ensure substantive fairness to
the minority shareholders.
Shareholders should consult their legal advisors for a determination of
their legal rights with respect to a "going private transaction".
14. Regulatory Matters
Competition Act (Canada)
The merger provisions of the Competition Act (Canada) permit the Director
of Investigation and Research appointed under the Competition Act (Canada) (the
"Director") to apply to the Competition Tribunal (the "Tribunal") to seek relief
in respect of merger transactions (including share acquisitions) which are
likely to prevent or lessen competition substantially. The relief that may be
ordered by the Tribunal includes, in the case of a proposed merger transaction,
prohibiting completion of the transaction. Proceedings under the merger
provisions of the Competition Act (Canada) may be instituted by the Director for
a period of three years after a merger transaction has been substantially
completed.
The Competition Act (Canada) also requires the parties to certain proposed
merger transactions which exceed specified size thresholds to provide the
Director with prior notice of and information relating to the transaction and
the parties thereto, and to await the expiration of a prescribed "waiting
period" prior to completing the transaction. Alternatively, the Competition Act
(Canada) permits parties to proposed merger transactions to apply to the
Director for an advance ruling certificate which may be issued by the Director
if he is satisfied he would not have sufficient grounds on which to apply in
respect of the transaction to the Tribunal for an order under the merger
provisions of the Competition Act (Canada).
The Offeror intends to apply to the Director for an advance ruling
certificate and concurrently submit a short-form premerger notification in
respect of the Offers.
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Based upon an examination of publicly available information relating to the
business of Dominion Textile, the Offeror believes that the completion of the
Offers will not give rise to substantive competition law concerns in Canada.
Investment Canada Act (Canada)
Under the Investment Canada Act (Canada) the acquisition by a non-Canadian
of control of a Canadian business which exceeds certain size thresholds is
reviewable and subject to approval by the Minister of Industry (the "Minister").
Such approval is to be granted where the Minister is satisfied that the
acquisition is likely to be of net benefit to Canada. The Offeror intends to
file an application under the Investment Canada Act (Canada) seeking the
approval of the Minister for the acquisition. The Offeror will not take up and
pay for Shares unless it has first received the approval of the Minister for the
acquisition of control. The Minister has 45 days from the date of receipt by
Investment Canada of a completed application to decide whether the investment is
likely to be of net benefit to Canada, This 45 day period may be extended for a
further 30 days or such longer period as is agreed upon between the applicant
and the Minister. If no notice is sent to the applicant within the 45 day (or
longer) period, the investment is deemed to be approved.
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (United States)
Under the United States Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations that have been promulgated
thereunder by the FTC (collectively, the "HSR Act"), certain transactions may
not be consummated until certain information and documentary materials have been
furnished to the Antitrust Division and the FTC and certain waiting period
requirements have been satisfied. Polymer has made the necessary filings under
the HSR Act to acquire all of the outstanding Shares and the Nonwovens Business
and the applicable waiting period has expired. No other filings are required to
be made with respect to the acquisition of Shares by the Offeror or the
Nonwovens Business by Polymer under the HSR Act.
The Purchase Agreement Transaction may be subject to such requirements and
GLI intends to promptly file a Premerger Notification and Report Form with the
Antitrust Division and the FTC in connection with the Purchase Agreement
Transaction (the "HSR Filing"),
Under the applicable provisions of the HSR Act, the Purchase Agreement
Transaction may not be consummated until the expiration or early termination by
the FTC and the Antitrust Division of a 30 calendar day waiting period following
the HSR Filing by GLI. GLI will request early termination of this waiting
period; however, there can be no assurance that the 30-day waiting period will
be terminated early. If, within the 30-day waiting period, either the Antitrust
Division or the FTC issues a request for additional information or documentary
materials (a "Second Request"), the waiting period will be extended for an
additional period of 15 calendar-days following the date of substantial
compliance by GLI with such Second Request.
If the Purchase Agreement Transaction is delayed by the issuance of a
Second Request, the Offers may be extended. In any event, the Purchase Agreement
Transaction must be deferred until 15 days after GLI substantially complies with
such Second Request or until the additional waiting period is earlier terminated
by the FTC and the Antitrust Division. Only one extension of the waiting period
pursuant to a Second Request is authorized by the HSR Act and, thereafter, the
waiting period can be extended only by court order. Under the terms of the HSR
Act, GLI may not consummate the Purchase Agreement Transaction unless and until
the filing and waiting period requirements of the HSR Act applicable to the
Purchase Agreement Transaction have been satisfied.
Valuation Requirements
Because the Offeror and persons acting jointly or in concert with the
Offeror own more than 10% of the outstanding Common Shares of Dominion Textile,
the Offers are technically "insider bids" for purposes of securities
legislation. Pursuant to the Securities Acts of each of Ontario, Quebec,
Alberta, British Columbia, Manitoba, Saskatchewan, Newfoundland and Nova Scotia,
a take-over bid circular in connection with an insider bid or where a subsequent
going private transaction is contemplated is generally required to contain a
summary of a formal valuation of the target and an outline of certain prior
valuations. In Ontario, an exemption from the valuation requirement is contained
in Policy 9.1 and related Rule 61-5B and may be relied upon if the Offeror
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<PAGE>
certifies that it has no knowledge of any material non-public information and
has not had access to the target sufficient to provide the Offeror with an
informational advantage over other securityholders. Neither the Offeror nor any
person acting jointly or in concert with the Offeror has any such knowledge with
respect to Dominion Textile or has had any such access to Dominion Textile.
Accordingly, in Ontario, the Offeror is relying upon the exemption available in
such circumstances. The Offeror has applied for waivers of the valuation
requirement in each of the other provinces where a valuation would be otherwise
required.
15. Material Changes and Other Information
The Offeror has no knowledge of any matter that has not previously been
generally disclosed but which would reasonably be expected to affect the
decision of Shareholders to accept or reject either Offer.
16. Agreements, Arrangements or Understandings
There are no arrangements or agreements made or proposed to be made between
the Offeror and any of the directors or officers of Dominion Textile and no
payments or other benefits are proposed to be made or given by the Offeror by
way of compensation for loss of office or as to such directors or officers
remaining in or retiring from office following the completion of the Offers.
There are no agreements, arrangements or understandings, formal or
informal, between the Offeror, Polymer or ITG and any security holder of
Dominion Textile with respect to the Offer or between the Offeror, Polymer or
ITG or any person or company with respect to any securities of Dominion Textile
in relation to the Offers.
Mr. Jerry Zucker has advised the Offeror that he currently intends to
accept the Common Share Offer. See Section 23 of the Circular, "Acceptance of
the Offers".
17. Previous Distributions
Based on publicly available information, the Offeror believes that the only
distributions of Common Shares effected during the previous five completed
fiscal years of Dominion Textile were as follows:
<TABLE>
<CAPTION>
Number of Common Shares Issued/Amount Added to Stated Capital (in millions of $)
------------------------------------------------------------------------------------
Dividend
Fiscal Employee Share Executive Stock Reinvest. Other Common
Year Purchase Plan Option Plan Plan Shares Issues Totals
- ------ -------------- --------------- ----------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
1997......................................... 6,134/0 400/0 109,083/0.8 0/0 115,617/0.8
1996......................................... 11,744/0.1 7,600/0 253,958/2.0 178,450/1.6 451,752/3.7
1995......................................... 8,922/0.1 21,400/0.1 151,249/1.2 254,210/1.6 435,781/3.0
1994......................................... 11,935/0.1 10,600/0.1 0/0 151,371/1.6 173,906/1.7
1993......................................... 16,251/0.1 9,600/0.07 0/0 6,249,609/55.6 6,275,460/55.77
</TABLE>
Based on publicly available information, the Offeror believes that there
has not been any distribution of First Preferred Shares during the previous five
completed fiscal years of Dominion Textile.
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<PAGE>
18. Dividend Record of Dominion Textile
Based on publicly available information, the Offeror believes that during
the two years preceding the date hereof, Dominion Textile has paid the following
dividends on a per share basis:
<TABLE>
<CAPTION>
Second Second
Payment Common First Preferred Shares Preferred Shares
Date Shares Preferred Shares Series D Series E
- ------- ------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
January 13, 1995....... $0.05/1/ $1.75 - -
March 31, 1995......... - - 0.4469 0.4469
April 14, 1995......... $0.05 $1.75 - -
June 30, 1995.......... - - 0.4519 0.4519
July 14, 1995.......... $0.05 $1.75 - -
October 13, 1995....... $0.05 $1.75 0.4568 0.4568
December 31, 1995...... - - 0.4569 0.4569
January 12, 1996....... $0.05 $1.75 - -
March 31, 1996......... - - 0.4507 0.4507
April 11, 1996......... $0.05 $1.75 - -
June 30, 1996.......... - - 0.4506 0.4506
July 11, 1996.......... $0.05 $1.75 - -
September 30, 1996..... - - 0.4556 0.4556
October 14, 1996....... $0.05 $1.75 - -
January 9, 1997........ $0.05 $1.75 - -
March 3, 1997.......... - - 0.4469 0.4469
April 11, 1997......... $0.05 $1.75 - -
July 11, 1997.......... $0.05 - - -
October 13, 1997....... $0.05 - - -
</TABLE>
/1/ Prior to this date the dividend payable on the Common Shares had been
suspended since January 1991.
In addition to the foregoing, Dominion Textile's 1995 annual report
indicates that a dividend payment of $0.17 million was paid in fiscal 1995 in
connection with the Second Preferred Shares, Series C.
19. Depositary
The Offeror has engaged the Depositary for the receipt of certificates in
respect of Shares and related Letters of Transmittal and Notice of Guaranteed
Delivery deposited under the Offers and for the payment for Shares purchased by
the Offeror pursuant to the Offers. The Depositary will receive reasonable and
customary compensation from the Offeror for its services in connection with the
Offers, will be reimbursed for certain out-of-pocket expenses and will be
indemnified against certain liabilities, including liabilities under securities
laws and expenses in connection therewith.
20. Dealer Managers and Soliciting Dealer Group
The Offeror has engaged the services of CIBC Wood Gundy Securities Inc. as
Canadian Dealer Manager to solicit acceptances of the Offers in Canada. Chase
Securities Inc. has been engaged by the Offeror as U.S. Dealer Manager to
provide information services in the United States in connection with the Offers.
The Canadian Dealer Manager has undertaken to form a soliciting dealer group
comprising members of the Investment Dealers Association of Canada and members
of the stock exchanges in Canada to solicit acceptances of the Offers in Canada.
Each member of the soliciting dealer group, including the Canadian Dealer
Manager, is referred to herein as a "Soliciting Dealer". The Offeror has agreed
to pay to each Soliciting Dealer whose name appears in the appropriate space in
the Letter of Transmittal accompanying a deposit of Common Shares a fee of $0.06
for each such Common Share deposited and taken up by the Offeror under the
Common Share Offer in Canada. In the absence of a specification of a Soliciting
Dealer in the Letter of Transmittal, no fee will be paid to any member of the
soliciting dealer group. The aggregate amount payable to a Soliciting Dealer
with respect to any single depositing Shareholder will be not less than $75.00
nor more than $1,500.00. Where Shares deposited and registered in a single name
are beneficially owned by more than one person, the minimum and maximum amounts
will be applied separately in respect of each such beneficial owner. The Offeror
may require the
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<PAGE>
Soliciting Dealers to furnish evidence of such beneficial ownership satisfactory
to the Offeror before payment of such fee.
The Dealer Managers will be reimbursed by the Offeror for their reasonable
out-of-pocket expenses and will be indemnified against certain liabilities,
including liabilities under securities laws.
No fee or commission will be payable by any Shareholder who transmits his,
her or its Shares directly to the Depositary or who makes use of the facilities
of a Soliciting Dealer to accept an Offer. Shareholders should contact the
Depositary, the Dealer Managers or a broker or dealer for assistance in
accepting an Offer and in depositing Shares with the Depositary.
The Dealer Managers are also providing advisory services to the Offeror in
conjunction with the Offers.
21. Rights Plan
Effect of Shareholder Rights Plan on the Common Share Offer
The Common Share Offer is being made on the condition, among others, that
the board of directors of Dominion Textile has redeemed the Rights or waived the
application to the Common Share Offer of the Rights Plan or that the Offeror is
otherwise satisfied that the Rights Plan does not affect the Common Share Offer,
any Compulsory Acquisition or any Subsequent Acquisition Transaction. See
Section 4(c) of the Offers, "Conditions of the Offers". Under the terms of the
Rights Plan, if the Offeror were to take up and pay for Common Shares under the
Common Share Offer without this condition being satisfied, the Offeror would
suffer significant dilution as a result of the operation of the Rights Plan. The
Offeror has requested that the Board of Directors of Dominion Textile delay the
Separation Time (as that term is defined below) which will otherwise occur as a
result of the public announcement of the Common Share Offer, and that the board
redeem the Rights. The Offeror believes that the Common Share Offer is in the
best interests of Shareholders and that they should be free to make their own
investment decisions whether or not to accept the Common Share Offer without
hindrance. If the board of directors of Dominion Textile does not redeem the
Rights, the Offeror intends to take legal action that may include application to
the relevant securities regulatory authorities to obtain orders to cease trade
the Rights and permitting the Offeror to take up and pay for the Common Shares
deposited under the Common Share Offer. Shareholders are encouraged to deposit
Common Shares to the Common Share Offer on or prior to 4:00 p.m. (Toronto time)
on November 20, 1997, since the number of Common Shares so deposited is a
relevant consideration of securities regulatory authorities in deciding whether
to issue such orders.
On August 9, 1989, the board of directors of Dominion Textile approved and
entered into a rights agreement (the "Rights Plan") with The Royal Trust Company
(now CIBC Mellon Trust Company) as rights agent. The Rights Plan was ratified by
shareholders at Dominion Textile's annual shareholders' meeting held on October
25, 1989.
The Rights Plan provides each registered holder of Common Shares the right
(a "Right") to purchase from Dominion Textile one Common Share, at a price of
$60 per Common Share (or its U.S. dollar equivalent), subject to adjustment (the
"Exercise Price").
Summary of Rights Plan
Until the earlier to occur of (a) the first date on which a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 20% or more of the
outstanding Common Shares (a "Flip-In Event"), the date of which public
announcement being called the "Stock Acquisition Date", or (b) ten (10) days
following the commencement of, or the first public announcement of an intention
to make a tender offer or exchange offer, the consummation of which would result
in the beneficial ownership by a person or group of 20% or more of such
outstanding Common Shares (the earlier of such events referred to in
subparagraphs (a) and (b) being called the "Separation Time"), the Rights are
evidenced by Common Share certificates.
The Rights are not exercisable until the Separation Time. The Rights Plan
provides that, until the Separation Time, the Rights will be transferred with
and only with the Common Shares and as soon as practicable following the
Separation Time, separate certificates evidencing the Rights ("Rights
Certificates")
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<PAGE>
will be mailed to the holders of record of the Common Shares as of the close of
business on the Separation Time and such separate Rights Certificates alone will
evidence the Rights.
If the directors of Dominion Textile do not exercise their discretion to
delay the Separation Time, the Separation Time will occur as a result of the
announcement of the Common Share Offer. The directors of Dominion Textile have
the discretion, through an amendment to the Rights Plan, to delay the Separation
Time. Pursuant to a letter dated October 27, 1997, the Offeror has requested
that the directors exercise this discretion and delay the Separation Time.
The Rights Plan provides that upon any person becoming an Acquiring Person,
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person, will thereafter have the right to receive, upon exercise thereof, that
number of Common Shares having an aggregate Market Price (as defined below) on
the date of such Flip-In Event equal to Twice the Exercise Price for an amount
in cash equal to the Exercise Price, subject to adjustment. "Market Price" on
any date means the average of the daily closing prices per share on each of the
20 consecutive trading days through and including the trading day immediately
preceding such date, subject to adjustment in certain circumstances.
The Rights Plan permits an Acquiror of Common Shares to avoid the dilutive
elements of the Rights Plan if they undertake a "Permitted Bid", as defined in
the Rights Plan. The concept of a Permitted Bid is very restrictive in that,
among other matters, it would prohibit a person beneficially owning more than 5%
of the outstanding Common Shares from making a take-over bid and would require
that before Common Shares are taken up and paid for under the take-over bid a
resolution is passed approving the take-over bid at a special meeting of
Shareholders by a majority of not less than 51% of the votes cast at the
special meeting. The Common Share Offer does not constitute a Permitted Bid.
Prior to the occurrence of a Flip-In Event, the Board of Directors of
Dominion Textile may redeem the rights in whole, but not in part, at a price of
$0.001 per Right (the "Redemption Price"). The redemption of the Rights may be
effective at such time on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
With certain exceptions, the terms of the Rights may be amended by the
Board of Directors of Dominion Textile without the consent of the holders of the
Rights at any time prior to the Stock Acquisition Date. Thereafter, the Rights
may be amended with the consent of the holders of the Rights, or without such
consent if to make such changes would not materially adversely affect the
interests of the holders of the Rights.
22. Canadian Federal Income Tax Considerations
In the opinion of Tory Tory DesLauriers & Binnington, counsel to the
Offeror, the following summary fairly presents the principal considerations
under the Tax Act generally applicable to Shareholders who dispose of their
Shares pursuant to an Offer or pursuant to certain transactions described in
Section 13 of the Circular, "Acquisition of Shares Not Deposited Under the
Offers". The summary is based upon the current provisions of the Tax Act, the
regulations thereunder, all specific proposals to amend the Tax Act and
regulations publicly announced by the Minister of Finance prior to the date
hereof (the "Proposed Amendments") and counsel's understanding of the current
published administrative policies of Revenue Canada. Except for the Proposed
Amendments, the summary does not take into account or anticipate changes in the
law, whether by way of judicial decision or legislative action, nor does it take
into account tax legislation of countries other than Canada or any relevant
provincial or territorial tax legislation. The summary is not intended to be,
nor should it be construed to be, legal or tax advice to any particular
Shareholder.
Residents of Canada
The following summary is applicable to Shareholders who, for the purposes
of the Tax Act, are resident in Canada, who hold their Shares as capital
property and who deal at arm's length with the Offeror and Dominion Textile (a
"Holder"). Shares held by certain "financial institutions" (as defined in the
Tax Act) will generally not be held as capital property by such holders and will
be subject to special "mark-to-market" rules.
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<PAGE>
The Offers
A Holder whose Shares are taken up and paid for under an Offer will realize
a capital gain (or capital loss) to the extent that the amount of cash received
for the Holder's Shares, net of any reasonable costs of disposition, exceeds (or
is less than) the adjusted cost base of the Shares to the Holder. In the case
of a Holder that is a corporation, any such capital loss may in certain
circumstances be reduced by the amount of any dividends which have been
previously received on the Shares. Analogous rules may apply in respect of a
partnership or trust that owns Shares.
Generally, three-quarters of any such capital gain will be included as a
taxable capital gain in computing the Holder's income for tax purposes and
three-quarters of any such capital loss may be deducted from the Holder's
taxable capital gains in accordance with the rules contained in the Tax Act.
Taxable capital gains of a Canadian-controlled private corporation may be
subject to an additional refundable tax at a rate of 6 2/3%.
Compulsory Acquisition
A Holder whose Shares arc acquired by the Offeror pursuant to the
compulsory acquisition provisions of section 206 of the CBCA will be subject to
the same tax consequences as would be applicable if the Holder disposed of
Shares pursuant to an Offer.
Subsequent Acquisition Transaction
If the Offeror effects a Subsequent Acquisition Transaction, the Offeror
may propose an amalgamation involving Dominion Textile pursuant to which Holders
who do not tender their Shares under an Offer will have their Shares exchanged
for redeemable preference shares ("Preference Shares") of the amalgamated
corporation, such Preference Shares to be redeemed forthwith for cash. A Holder
will realize no capital gain or capital loss as a result of such exchange, and
the aggregate cost to the Holder of the Preference Shares received on the
exchange will be equal to the aggregate adjusted cost base to the Holder of the
Shares so exchanged.
Upon the redemption of Preference Shares, the Holder thereof will be deemed
to have received a taxable dividend equal to the amount by which the redemption
price of the Preference Shares exceeds the paid-up capital of those shares. In
the case of a Holder who is an individual, any such dividend will be included in
computing the Holder's income and will be subject to the gross-up and dividend
tax credit rules normally applicable to taxable dividends received from taxable
Canadian corporations. Such a dividend received by a corporate Holder will be
included in computing the corporation's income and will generally be deductible
in computing the corporation's taxable income. A private corporation and
certain other corporations controlled by or for the benefit of an individual or
a related group of individuals will be liable to pay a 33 1/3% refundable tax
under Part IV of the Tax Act in respect of such dividend. In the case of a
corporate Holder, it is possible that, in certain circumstances, some or all of
the amount of any such dividend may be treated as proceeds of disposition for
the purpose of computing capital gains and not as a dividend.
Such a Holder will also be regarded as having disposed of such Preference
Shares on the redemption and will realize a capital gain (or capital loss) per
share to the extent that the paid-up capital per share plus any amount treated
as proceeds of disposition exceeds (or is less than) the adjusted cost base
thereof to the Holder. The treatment of any such capital gain (or capital loss)
will generally be the same as described above.
As discussed in Section 13 of the Circular, "Acquisition of Shares Not
Deposited Under the Offers", a Holder who dissents with respect to such an
amalgamation is entitled to receive the fair value of his or her Shares as
determined by a court. Under the current published administrative practice of
Revenue Canada, such payments (other than interest awarded by a court) would be
treated as proceeds of disposition giving rise to a capital gain or capital
loss. The calculation and tax treatment of any such capital gain or capital
loss would be the same as described in this Section 22.
As an alternative to the amalgamation discussed above, the Offeror may
propose a statutory arrangement, consolidation, reclassification, continuance or
other transaction, the tax consequences of which may differ from those arising
on the sale of Shares under an Offer or an amalgamation involving Dominion
Textile. No opinion is expressed herein as to the tax consequences of any such
transaction to a Holder.
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<PAGE>
Non-Residents of Canada
The following summary is applicable to Shareholders who, for the purposes
of the Tax Act, are neither resident nor deemed to be resident in Canada, deal
at arm's length with the Offeror and Dominion Textile, hold their Shares as
capital property, do not use or hold and are not deemed to use or hold their
Shares in carrying on a business in Canada and whose Common Shares do not
otherwise constitute "taxable Canadian property" as defined in the Tax Act (a
"Non-Resident Holder"). Common Shares will generally not constitute taxable
Canadian property to a Non-Resident Holder unless, at any time during the five-
year period immediately preceding the disposition of the Common Shares, not less
than 25% of the issued shares of any class or series of a class of capital stock
of Dominion Textile were owned or deemed under the Tax Act to be owned by the
Non-Resident Holder, by persons with whom the Non-Resident Holder did not deal
at arm's length, or by any combination thereof.
No tax will be payable on any capital gain realized by a Non-Resident
Holder whose Common Shares are taken up and paid for under an Offer or are
acquired by the Offeror pursuant to the compulsory acquisition provisions of
section 206 of the CBCA.
Under the Proposed Amendments, First Preferred Shares will be taxable
Canadian property of a Non Resident Holder and a Non-Resident Holder may be
subject to Canadian tax in respect of any capital gain realized on a disposition
thereof, subject to the terms of any applicable bilateral tax treaty. A
Shareholder whose First Preferred Shares are acquired by the Offeror will be
required either to represent and warrant that the Shareholder is a resident of
Canada or to produce an appropriate certificate from Revenue Canada pursuant to
section 116 of the Tax Act, failing which the Offeror will withhold 33 1/3% of
the purchase price on account of any Canadian tax liability of the Shareholder.
In the event the Offeror effects an amalgamation involving Dominion Textile
as described in this Section 22 above under "Subsequent Acquisition
Transaction", Non-Resident Holders who do not tender their Shares under an Offer
will have their Shares exchanged for Preference Shares of the amalgamated
corporation, such Preference Shares to be redeemed forthwith for cash. No tax
will be payable by a Non-Resident Holder as a result of the amalgamation except
as described below. Upon the redemption of a Preference Share, the holder
thereof will be deemed to have received a taxable dividend equal to the amount
by which the redemption price of the Preference Shares exceeds their paid-up
capital and such dividend will be subject to non-resident withholding tax at a
rate of 25% or such lower rate as may be provided for under the terms of an
applicable bilateral tax treaty. The redemption may also give rise to a capital
gain which, subject to the terms of an applicable bilateral tax treaty, may be
subject to Canadian tax if the Preference Shares so redeemed are taxable
Canadian property of the Holder. Preference Shares received in exchange for
First Preferred Shares of a Non-Resident Holder will be taxable Canadian
property of that Holder under the Proposed Amendments. A holder of Preference
Shares received in exchange for First Preferred Shares will be required either
to represent and warrant that the holder is a resident of Canada or to produce
an appropriate certificate from Revenue Canada pursuant to section 116 of the
Tax Act, failing which the Offeror will withhold a portion of the redemption
price on account of any Canadian tax liability of the holder.
Under the current administrative practice of Revenue Canada, the receipt by
a Non-Resident Holder who dissents with respect to the amalgamation of a cash
payment equal to the fair value of his or her Shares will be treated as proceeds
of disposition of such Shares (except for any amount received as interest). No
tax will be payable on any capital gain realized by a Non-Resident Holder in
these circumstances. Any amount received as interest will be subject to non-
resident withholding tax at a rate of 25% or such lower rate as may be provided
for under the terms of an applicable bilateral tax treaty.
The Canadian federal income tax consequences set forth above are for
general information only. Shareholders are urged to consult their own tax
advisors to determine the particular tax effects to them of the Offers.
23. Acceptance of the Offers
The Offeror has been advised by Mr. Zucker that he currently intends to
accept the Common Share Offer and to tender to such Offer all of the Common
Shares owned by him. As disclosed in Section 7 of the Circular,
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<PAGE>
"Holding of Securities in Dominion Textile", the charitable foundation, of which
Mr. Zucker is one of the three trustees, has indicated that it currently intends
to tender the 265,000 Common Shares which it holds to the Common Share Offer.
Except for the foregoing, the Offeror has no knowledge regarding whether any
Shareholders will accept the Offers.
24. Statutory Rights
Securities legislation in certain of the provinces and territories of
Canada provides Shareholders with, in addition to any other rights they may have
at law, rights of rescission or to damages, or both, if there is a
misrepresentation in a circular or a notice that is required to be delivered to
Shareholders. However, such rights must be exercised within prescribed time
limits. Shareholders should refer to the applicable provisions of the
securities legislation of their province or territory for particulars of those
rights or consult with a lawyer.
25. Consents
CONSENT OF COUNSEL
TO: The Directors of DT Acquisition Inc.
We hereby consent to the reference to our opinion contained under "Canadian
Federal Income Tax Considerations" in the Circular accompanying the Offers dated
October 29, 1997 made by DT Acquisition Inc. to the holders of Common Shares and
of First Preferred Shares of Dominion Textile.
Dated: October 29, 1997 (Signed) TORY TORY DESLAURIERS & BINNINGTON
41
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APPROVAL AND CERTIFICATE
The contents of the Offers and the Circular have been approved, and the
sending, communication or delivery thereof to the Shareholders of Dominion
Textile has been authorized by, the board of directors of the Offeror. The
foregoing contains no untrue statement of a material fact and does not omit to
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in which it was made.
In addition, the foregoing does not contain any misrepresentation likely to
affect the value or the market price of the Common Shares which are the subject
of the Common Share Offer or the First Preferred Shares which are the subject of
the Preferred Share Offer.
DATED: October 29, 1997
(Signed) Jerry Zucker (Signed) James G. Boyd
Chairman, President and Executive Vice-President,
Chief Executive Officer Chief Financial Officer, Treasurer and Secretary
On behalf of the Board of Directors
(Signed) Peter Bourgeois (Signed) Warren Turnbull
42
<PAGE>
The Depositary, Montreal Trust Company of Canada
By Mail
Stock Transfer Services
151 Front Street West
8th Floor
Toronto, Ontario
M5J 2NI
Tel: (800) 663-9097
Fax: (416) 981-9000
By Hand
Stock Transfer Services
Western Gas Tower
530 - 8th Avenue S.W
Calgary, Alberta
T2P 3S8
Attn: Re-org Department
Tel: (403) 267-6555
Fax: (403) 266-1490
Stock Transfer Services
Place Montreal Trust
1800 McGill College Ave.
Montreal, Quebec
H3A 3K9
Tel: (514) 982-7555
Fax: (514) 982-7347
Stock Transfer Services
151 Front Street West
8th Floor
Toronto, Ontario
M5J 2NI
Attn: Re-org Department
Tel: (800) 639-0802
Fax: (416) 981-9645
Stock Transfer Services
4th Floor
510 Burrard Street
Vancouver, B.C.
V6C 3B9
Attn: Re-org Department
Tel: (888) 661-0222
Fax: (604) 661-9480
Office of CIBC Wood Gundy Securities Inc., the Dealer Manager In Canada
Toronto Office
BCE Place, RO. Box 500
161 Bay Street
Toronto, Ontario
M51 2S8
Tel: (416) 594-7000
Fax: (416) 594-7225
Montreal Office
Suite 3050
600 ouest Boul de Maisonneuve
Montreal, Quebec
H3A 3J2
Tel: (514) 847-6300
Fax: (514) 847-6480
Office of Chase Securities Inc., the Dealer Manager In the United States
270 Park Avenue
New York, New York
10017
Tel : (212) 270-4216
Fax: (212) 270-2131
Any questions and requests for assistance may be directed by Shareholders
to the Dealer Managers and the Depositary
at their respective telephone numbers and locations set out above.
43
<PAGE>
This document is important and requires your immediate attention. If you are in
doubt as to how to deal with it, you should consult your investment dealer,
lawyer or other advisor.
NOTICE OF EXTENSION AND VARIATION
by
DT ACQUISITION INC.
in respect of its
OFFERS TO PURCHASE
all of the Common Shares and all of the First Preferred Shares of
DOMINION TEXTILE INC.
- --------------------------------------------------------------------------------
on the basis of an amended price of Cdn. $14.50 cash per Common Share and an
amended price of Cdn. $112.00 cash per First Preferred Share
- --------------------------------------------------------------------------------
On November 17, 1997, DT Acquisition Inc. (the "Offeror") announced that
it intended to extend and vary its Offers by increasing the price payable for
the Common Shares to Cdn. $14.50 per Common Share, by increasing the price
payable for the First Preferred Shares to Cdn. $112.00 per First Preferred Share
and by making certain other changes to the terms of the Offers and the Circular.
The Offers, as extended in accordance with this Notice, are open for
acceptance until 12:00 midnight (Toronto time) on Friday, November 28, 1997 (the
"Expiry Time"), unless withdrawn or extended.
Holders of Common Shares who wish to accept the Common Share Offer must
properly complete and execute the Letter of Transmittal (printed on blue paper)
that accompanied the Common Share Offer and holders of First Preferred Shares
who wish to accept the Preferred Share Offer must properly complete and execute
the Letter of Transmittal (printed on green paper) that accompanied the
Preferred Share Offer or, in each case, a manually executed facsimile thereof
and deposit it, together with certificates representing their Shares, in
accordance with the instructions in the relevant Letter of Transmittal at any of
the offices of the Depositary specified in such Letter of Transmittal, so as to
arrive there not later than the Expiry Time. Alternatively, Shareholders
tendering Common Shares may follow the procedure for guaranteed delivery
described in Section 3 of the Original Offers, "Manner of Acceptance -
Procedure for Guaranteed Delivery", using the Notice of Guaranteed Delivery
(printed on yellow paper) that accompanied the Common Share Offer. The Dealer
Managers for the Offers:
-------------------------
The Dealer Managers for the Offers:
CIBC Wood Gundy Securities Inc. Chase Securities Inc.
in Canada in the United States
November 18, 1997
Questions and requests for assistance may be directed to the Dealer
Managers or the Depositary, and additional copies of this Notice, the Offers and
Circular, the Letters of Transmittal and the Notice of Guaranteed Delivery may
be obtained without charge on request from the Dealer Managers or the Depositary
at their respective offices shown on the last page of this Notice.
<PAGE>
The Offers are made for the securities of a Canadian issuer and while the
Offers are subject to Canadian disclosure requirements, investors should be
aware that those requirements are different from those of the United States.
Financial statements included in the Offers and Circular, as varied by this
Notice, regarding Dominion Textile, if any, have been prepared in accordance
with Canadian generally accepted accounting principles and thus may not be
comparable to financial statements of United States companies.
The enforcement by investors of civil liabilities under the United States
federal securities laws may be affected adversely by the fact that the Offeror
is incorporated and located in Canada, that some or all of its officers and
directors are residents of Canada, that the Canadian Dealer Manager is a
resident of Canada, and that all or a substantial portion of the assets of the
Offeror and such persons are located outside the United States.
You should be aware that the Offeror or its affiliates, directly or
indirectly, may bid for or make purchases of Dominion Textile's securities
subject to the Offers, or of Dominion Textile's related securities, during the
period of the Offers, as permitted by applicable Canadian laws, provincial laws
and regulations.
All currency amounts expressed herein and in the Offers and the Circular
are in Canadian dollars unless otherwise indicated.
This document does not constitute an offer or a solicitation to any person
in any jurisdiction in which such offer or solicitation is unlawful. The Offers
are not being made to, nor will deposits be accepted from or on behalf of,
Shareholders in any jurisdiction in which the making or acceptance of the Offers
would not be in compliance with the laws of such jurisdiction. However, the
Offeror may, in its sole judgment, take such action as it may deem necessary to
extend either of the Offers to Shareholders in such jurisdiction.
2
<PAGE>
NOTICE OF EXTENSION AND VARIATION
TO: THE HOLDERS OF COMMON SHARES AND THE HOLDERS OF FIRST PREFERRED
SHARES OF DOMINION TEXTILE INC.
By this Notice, DT Acquisition Inc. (the "Offeror") is amending its offers
dated October 29, 1997 pursuant to which the Offeror is offering to purchase all
of the outstanding common shares (the "Common Shares") of Dominion Textile
Inc. ("Dominion Textile") and all of the outstanding first preferred shares
(the "First Preferred Shares") of Dominion Textile. The offers dated October
29, 1997 are referred to as the "Original Offers". The circular which
accompanied the Original Offers is referred to as the "Circular". The Original
Offers and the Circular, all as varied by this Notice, are referred to as the
"Offers".
Except as otherwise set forth in this Notice, the information, terms and
conditions contained in the Original Offers and Circular continue to be
applicable in all respects and this Notice should be read in conjunction
therewith. Unless the context otherwise requires, terms denoted by initial
capital letters and not defined herein have the respective meanings set forth in
the Original Offers and the Circular. References in this Notice to the "Letter
Agreement" mean the letter agreement dated November 16, 1997 between the
Offeror, Polymer and Dominion Textile. The Letter Agreement is described more
fully below under Section 4, "Recent Developments - Letter Agreement".
1. INCREASE IN PRICE OFFERED FOR SHARES
By this Notice the Offeror is hereby amending the Common Share Offer by
increasing the consideration payable for each Common Share tendered to the
Common Share Offer from Cdn. $11.75 cash per Common Share to Cdn. $14.50 cash
per Common Share and by increasing the consideration payable for each First
Preferred Share tendered to the Preferred Share Offer from Cdn. $109.50 cash per
First Preferred Share to Cdn. $112.00 cash per First Preferred Share. All
holders of Shares who tender their Shares to the Offers will receive the
increased price, including those shareholders who have already tendered their
Shares to the relevant Offer. Shareholders who have already tendered to an Offer
need do nothing further. The Offeror will pay the increased price to such
Shareholders at the time of take up and payment by the Offeror of Shares under
the Offers.
2. EXTENSION OF THE OFFERS
The Offeror is hereby amending the Original Offers by extending the time
during which each Offer is open for acceptance to 12:00 midnight (Toronto time)
on Friday, November 28, 1997 unless the particular Offer is withdrawn or further
extended. Accordingly, the Expiry Time shall be 12:00 midnight (Toronto time) on
Friday, November 28, 1997.
3. REVISED CONDITIONS
The Offeror is varying the Original Offers by deleting Section 4 of the
Original Offers, "Conditions of the Offers" and replacing it with the
following:
"4. CONDITIONS OF THE OFFERS
The Offeror shall have the right to withdraw either Offer and not take
up and pay for, or extend the period of time during which either Offer is
open, and postpone taking up and paying for, any Shares deposited under the
Offers unless, in respect of the Common Share Offer, all of the conditions
set forth below in respect of that Offer, and in respect of the Preferred
Share Offer, all of the conditions set forth below in respect of that
Offer, are satisfied or waived by the Offeror at or prior to the Expiry
Time of the particular Offer:
Conditions to the Common Share Offer
The following are the conditions to the Common Share Offer:
(a) there shall have been validly deposited under the Common Share
Offer and not withdrawn that number of Common Shares which
represents at least 66 2/3% of the Common Shares on a fully
diluted basis, excluding Common Shares held as of the date hereof
by the Offeror, its affiliates and associates or by persons whose
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<PAGE>
Common Shares may not be voted as part of the "minority" on any
subsequent going private transaction pursuant to Policy 9.1 and
Policy Q-27;
(b) the applicable waiting period under the Competition Act (Canada)
shall have expired; any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (United
States) shall have expired or been earlier terminated; and the
Minister of Industry (Canada) shall have allowed or have been
deemed to allow the implementation of the proposed transaction
and the Purchase Agreement Transaction pursuant to the provisions
of the Investment Canada Act;
(c) there shall not exist any prohibition at law against the Offeror
making the Common Share Offer or taking up and paying for any
Common Shares deposited under the Common Share Offer or
completing a Compulsory Acquisition, any Subsequent Acquisition
Transaction or the right of the Offeror to complete the Purchase
Agreement Transaction;
(d) that (i) no act, action, suit or proceeding shall have been
threatened or taken before or by any court or tribunal or
governmental agency or other regulatory authority or
administrative agency or commission or by any elected or
appointed public official, in any case with applicable
jurisdiction, or by any private person (including, without
limitation, any individual, corporation, firm, group or other
entity) in Canada or elsewhere, and (ii) no law or regulation
shall have been proposed, enacted, promulgated or applied, in the
case of either (i) or (ii), the legal effect of which is:
(A) to cease trade, enjoin, prohibit or impose material
limitations or conditions on the purchase by or the sale to
the Offeror of the Common Shares, the right of the Offeror
to own Dominion Textile or exercise full rights of ownership
of the Common Shares or the right of the Offeror to complete
the Purchase Agreement Transaction; or
(B) which would prevent or make materially uncertain completion
of the acquisition by the Offeror of Common Shares pursuant
to a Compulsory Acquisition or any Subsequent Acquisition
Transaction or completion of the Purchase Agreement
Transaction;
(e) except as disclosed in Dominion Textile's public filings or as
otherwise publicly disclosed as of the date hereof, following the
date hereof, there shall not exist or have occurred (or, if there
does exist or shall have previously occurred, there shall not
have been disclosed, generally or to the Offeror) any change (or
any condition, event or development involving a prospective
change) in the operations, assets, capitalization, condition
(financial or otherwise), results of operations, cash flows,
properties, licenses, permits, rights, privileges or liabilities,
whether contractual or otherwise, of Dominion Textile or any of
its subsidiaries which would be materially adverse to Dominion
Textile and its subsidiaries and associates taken as a whole,
other than: (i) any change or effect resulting from general
economic, financial or market conditions; (ii) any change or
effect resulting from conditions or circumstances generally
affecting the Apparel Fabric Business or Nonwovens Business; or
(iii) any change or effect resulting directly or indirectly from
the public announcement of the Offeror's acquisition of an
interest in the Common Shares, the publication of the Offers or
the expected or actual consummation of the Offers or the Purchase
Agreement Transaction;
(f) following the date hereof, there shall not have occurred,
developed or come into effect or existence and be continuing any
event, action, state, condition or financial occurrence of
national or international consequence, which adversely affects,
in any material respect, the financial markets in Canada or the
United States, generally, provided that for the purposes hereof a
decline measured from November 15, 1997 in The Toronto Stock
Exchange ("TSE") 35 Index of less than 20% which does not
continue for more than five trading days shall not be material;
and
(g) Dominion Textile shall not be, in any material respect, in breach
of or default under the Letter Agreement and such agreement shall
not have been terminated in accordance with its terms other than
by reason of the breach or default of the Offeror thereunder.
Conditions to the Preferred Share Offer
The following are the conditions to the Preferred Share Offer:
(a) there shall have been validly deposited under the Preferred Share
Offer and not withdrawn that number of First Preferred Shares
which represents at least 66 2/3% of the First Preferred Shares
on a fully diluted basis, excluding First Preferred Shares held
as of the date hereof by the Offeror, its affiliates and
associates or by persons whose First Preferred Shares may not be
voted as part of the "minority" on any subsequent going private
transaction pursuant to Policy 9.1 and Policy Q-27;
4
<PAGE>
(b) the Offeror shall have taken up and paid for Common Shares under
the Common Share Offer or shall have determined to
contemporaneously take up and pay for such Common Shares;
(c) the applicable waiting period under the Competition Act (Canada)
shall have expired; any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (United
States) shall have expired or been earlier terminated; and the
Minister of Industry (Canada) shall have allowed or have been
deemed to allow the implementation of the proposed transaction
pursuant to the provisions of the Investment Canada Act;
(d) there shall not exist any prohibition at law against the Offeror
making the Preferred Share Offer or taking up and paying for any
First Preferred Shares deposited under the Preferred Share Offer
or completing a Compulsory Acquisition, any Subsequent
Acquisition Transaction or the Purchase Agreement Transaction;
and
(e) that (i) no act, action, suit or proceeding shall have been
threatened or taken before or by any court or tribunal or
governmental agency or other regulatory authority or
administrative agency or commission or by any elected or
appointed public official, in any case with applicable
jurisdiction, or by any private person (including, without
limitation, any individual, corporation, firm, group or other
entity) in Canada or elsewhere, whether or not having the force
of law, and (ii) no law, regulation or policy shall have been
proposed, enacted, promulgated or applied, in the case of either
(i) or (ii):
(i) to cease trade, enjoin, prohibit or impose material
limitations or conditions on the purchase by or the sale to
the Offeror of the First Preferred Shares or the right of
the Offeror to exercise full rights of ownership of the
First Preferred Shares; or
(ii) which would prevent or make materially uncertain completion
of the acquisition by the Offeror of First Preferred Shares
pursuant to a Compulsory Acquisition or any Subsequent
Acquisition Transaction or completion of the Purchase
Agreement Transaction.
The foregoing conditions are for the exclusive benefit of the Offeror.
The Offeror may assert any of the foregoing conditions at any time,
regardless of the circumstances giving rise to such assertion (including
any action or inaction by the Offeror). The Offeror may waive any of the
foregoing conditions with respect to one or both of the Offers in whole or
in part at any time and from time to time without prejudice to any other
rights which the Offeror may have. The failure by the Offeror at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
Any waiver of a condition or the withdrawal of either Offer shall be
effective upon written notice or other communication to that effect (to be
confirmed in writing) to the Depositary at its principal office in Toronto.
The Offeror, forthwith after giving any such notice, shall make a public
announcement of such waiver or withdrawal, shall cause the Depositary, if
required by law, as soon as practicable thereafter to notify the relevant
Shareholders in the manner set forth in Section 10 of the Offers, "Notices
and Delivery" and shall provide a copy of the aforementioned notice to the
TSE and the ME. If either Offer is withdrawn, the Offeror shall not be
obligated to take up or pay for any Shares deposited under such Offer and
the Depositary will promptly return all certificates for deposited Shares,
Letters of Transmittal, Notices of Guaranteed Delivery and related
documents to the parties by whom they were deposited."
4. RECENT DEVELOPMENTS - LETTER AGREEMENT
Pursuant to the Letter Agreement the Offeror agreed, among other things, to
increase the purchase price per Common Share pursuant to the Common Share Offer
and to increase the purchase price per First Preferred Share under the Preferred
Share Offer and to amend the conditions to each of the Common Share Offer and
the Preferred Share Offer, all as reflected in this Notice. The Letter Agreement
provides that, in addition to the covenants and other terms summarized below,
Dominion Textile will recommend to Shareholders that they accept the Offers and
will mail forthwith to the Shareholders amended directors' circulars containing
such recommendations (the "Recommendations").
5
<PAGE>
Representations, Warranties and Covenants of the Offeror
The Letter Agreement contains customary representations and warranties of
the Offeror. In addition to covenants of the Offeror which have resulted in the
variations to the Offers reflected in this Notice, the Letter Agreement also
contains certain covenants of the Offeror, including covenants to the following
effect:
(a) upon the take up of Common Shares under the Common Share Offer, the
Offeror shall proceed expeditiously with a Compulsory Acquisition or
Subsequent Acquisition Transaction whereby holders of Common Shares
receive at least Cdn. $14.50 cash per Common Share, in a transaction
which is at least as favourable to holders of Common Shares as the
Common Share Offer, as amended; and
(b) upon the take up of First Preferred Shares under the Preferred Share
Offer, the Offeror shall proceed expeditiously with a Compulsory
Acquisition or Subsequent Acquisition Transaction whereby holders of
First Preferred Shares receive at least Cdn. $112.00 cash per First
Preferred Share, in a transaction which is at least as favourable to
holders of First Preferred Shares as the Preferred Share Offer, as
amended.
Representations, Warranties and Covenants of Dominion Textile
The Letter Agreement contains customary representations and warranties of
Dominion Textile. The Letter Agreement also contains covenants of Dominion
Textile, including covenants to the following effect:
(a) except as otherwise contemplated by the Letter Agreement or with the
prior written consent of the Offeror, Dominion Textile has agreed
that, until the Common Shares are taken up by the Offeror under the
Common Share Offer, or the obligations of Dominion Textile thereunder
have been terminated, the business and affairs of Dominion Textile and
its subsidiaries will be operated in the ordinary course of business
and in substantially the same manner as previously conducted and
Dominion Textile (i) will not take any actions such as declaring or
paying dividends, except for the payment of regular dividends
consistent with past practice; (ii) will not authorize or issue any
securities, including any Common Shares or securities convertible into
Common Shares (other than pursuant to the exercise of options or other
rights to purchase Common Shares, in each case as were outstanding as
of the date of the Letter Agreement); (iii) will not, and will not
permit any of its subsidiaries to, enter into any transaction to
acquire any assets of any business or undertaking except for
transactions which, individually or in the aggregate, are not material
to Dominion Textile and its subsidiaries taken as whole; (iv) will
not, and will not permit any of its subsidiaries to, dispose of or
encumber any of its properties or assets that, individually or in the
aggregate, are material to Dominion Textile and its subsidiaries taken
as a whole, except in the ordinary course of business; (v) will not,
and will not permit any of its subsidiaries to (subject to certain
exceptions) grant to any executive or senior officers of Dominion
Textile or of any subsidiary any increase in compensation or in
severance or in termination pay, or enter into any employment
agreement with any of such persons; (vi) will not, and will not allow
any of its subsidiaries to, enter into, amend or terminate any
agreements which are, individually or in the aggregate, material to
Dominion Textile and its subsidiaries taken as a whole; (vii) will
not, other than in the ordinary course of business and consistent with
the past practice, guarantee or permit its subsidiaries to guarantee,
the payment of any material liabilities or to incur material
indebtedness for borrowed money; and (viii) will advise the Offeror as
soon as practicable of any matter coming to its attention that might
constitute or give rise to a material change in the affairs of
Dominion Textile (within the meaning of the Securities Act (Ontario);
(b) Dominion Textile will take all such actions as may be required to
redeem the Rights immediately prior to the take up of Common Shares
under the Common Share Offer;
(c) Dominion Textile agrees to fully co-operate with the Offeror in
structuring a transaction or carrying out a reorganization immediately
prior to completion of the Offers that is beneficial to the Offeror
and not detrimental to the Shareholders provided that it does not
delay completion of the Offers;
(d) Dominion Textile will use its best efforts to cause all options,
warrants, rights or convertible securities of Dominion Textile which
entitle the holders thereof to acquire Common Shares to be exercised
prior to the expiration of the Common Share Offer;
6
<PAGE>
(e) Dominion Textile and its subsidiaries shall participate and cooperate
in obtaining all regulatory approvals as may be necessary or desirable
to complete the transactions contemplated by the Offers and the
Purchase Agreement Transaction;
(f) upon the take up and payment by the Offeror of not less than 66 2/3%
of the outstanding Common Shares, Dominion Textile shall (i) take all
necessary action to ensure that the Offeror will have the ability to
immediately replace the current members of the Board of Directors of
Dominion Textile with individuals designated by the Offeror, and (ii)
assist the Offeror in acquiring pursuant to a Subsequent Acquisition
Transaction, or other transaction proposed by the Offeror, all of the
Common Shares and First Preferred Shares not tendered to the Offers on
the terms set out in paragraphs (a) and (b) under "Representations,
Warranties and Covenants of the Offeror" above; and
(g) from the date of the mailing of this Notice, Dominion Textile will,
subject to certain confidentiality requirements, provide the Offeror
with access to non-public information and to senior management of
Dominion Textile.
Exclusivity
Dominion Textile, on behalf of itself and its affiliated entities and
subsidiaries, has agreed that neither it nor any of its representatives,
directors, officers, agents or affiliates nor any of their respective
representatives, directors, officers, stockholders (unless such stockholders are
also Shareholders and are acting in their capacity as such), agents or
affiliates will, without the Offeror's prior written consent, encourage,
entertain, solicit or initiate any inquiries, proposals or offers from,
entertain, engage in or participate in any discussions or negotiations with, or
provide any information to, any person or entity (or group thereof) in
connection with or for the purpose of soliciting a competing offer or
transaction, an alternate proposal, indication of interest or letter of intent
with respect to (i) an offer for or the acquisition of Dominion Textile's
capital stock, or any part thereof, (ii) the sale of all or any portion of the
assets of Dominion Textile or its subsidiaries other than in the ordinary course
of business, (iii) any amalgamation, merger or other business combination
involving Dominion Textile or its subsidiaries, (iv) any reorganization,
recapitalization, liquidation or winding-up of or similar transaction involving
Dominion Textile or its subsidiaries, or (v) any similar transaction which would
accomplish the goal(s) to be achieved pursuant to the Offers or any of the
transactions described in clauses (i), (ii), (iii) or (iv) above or which would
prevent the successful completion of the Offers (any of the foregoing
transactions being a "Competing Proposal").
In connection with the foregoing, Dominion Textile has agreed that it shall
immediately close any data room which it has established, shall cease to provide
any access whatsoever to any third party to any non-public information (whether
or not in writing) of Dominion Textile (other than access provided pursuant to a
legal obligation of Dominion Textile entered into prior to the date of the
Letter Agreement) and shall not enter into any confidentiality or other
agreement with any third party under which it agrees to provide access to such
non-public information. Notwithstanding these restrictions, the Board of
Directors of Dominion Textile may take such actions as the Board determines are
reasonably required in the exercise of its fiduciary duties to respond to an
unsolicited inquiry, proposal or offer received from any third party if the
Board of Directors of Dominion Textile concludes that such inquiry, proposal or
offer, would, if consummated in accordance with its terms, result in a
transaction at least Cdn. $0.50 per Common Share more favourable to the holders
of Common Shares than the Common Share Offer (a "Superior Proposal"). Dominion
Textile has agreed to immediately inform the Offeror of, and immediately provide
the Offeror with full details and complete copies of and any other information
regarding, any other such offers, proposals or expressions of interest (whether
oral or in writing).
Termination and Break-Up Fees
The Letter Agreement may be terminated at the option of the Offeror if (a)
the Board of Directors of Dominion Textile makes any material amendment,
supplement or other modification to, or withdraws, the Recommendation with
respect to the Common Share Offer, or recommends a Superior Proposal, or (b)
Dominion Textile is in breach of or in default under any material obligation
contained in the Letter Agreement or any of the representations and warranties
of Dominion Textile, as set forth in the Letter Agreement, is inaccurate or
untrue in any material respect, or (c) the Offeror fails to acquire a majority
of the
7
<PAGE>
Common Shares and a third party is successful in doing so pursuant to a
Competing Proposal which was publicly announced, initiated or commenced prior to
the Expiry Time.
The Letter Agreement may be terminated at the option of Dominion Textile if
(a) Dominion Textile receives an unsolicited bona fide Superior Proposal that is
a Superior Proposal which the Board of Directors is recommending to shareholders
provided that, within three days of the Offeror receiving written notice of the
terms of such Superior Proposal from Dominion Textile, the Offeror has not
agreed to increase the consideration payable pursuant to the Common Share Offer
to an amount at least equal to the cash consideration offered pursuant to the
Superior Proposal, or (b) the Offeror is in breach of or in default under any
material obligation contained in the Letter Agreement or any of the
representations and warranties of the Offeror, as set forth in the Letter
Agreement, is inaccurate or untrue in any material respect.
In the event that the Letter Agreement is so terminated by the Offeror or
the Letter Agreement is terminated by Dominion Textile as a result of a Superior
Proposal, then Dominion Textile shall immediately pay to the Offeror a
termination fee equal to Cdn. $22 million.
In the event that the Offeror fails to take up and pay for Common Shares
under the Common Share Offer, Dominion Textile shall forthwith pay to the
Offeror an amount equal to Cdn. $3 million on account of the costs, fees and
expenses of the Offeror in entering into the Letter Agreement and making the
Offers. This amount is not payable if the reason the Common Share Offer is not
completed is due to failure to receive regulatory approvals or failure to meet
the minimum tender condition in circumstances in which a Superior Proposal has
not been publicly announced or made.
Representations, Warranties and Covenants of Polymer
The Letter Agreement contains certain representations and warranties of
Polymer in favour of Dominion Textile, including that the Offeror has entered
into adequate arrangements to ensure, upon satisfaction of the conditions of the
respective Offers, that the required funds are available to effect full payment
by the Offeror of the cash consideration payable pursuant to the Offers and the
Offeror will, upon satisfaction of the conditions of the Offers, be able to
obtain the funds under such arrangements. In addition, Polymer has agreed with
Dominion Textile, in its capacity as a shareholder of the Offeror, to cause the
Offeror to take whatever action may be necessary in order to obtain the
financing under its financing arrangements, subject to the satisfaction of the
conditions to the Offers, and to comply with all of its covenants and agreements
contained in or contemplated by the Letter Agreement, subject to the terms and
conditions of the Letter Agreement.
5. OWNERSHIP OF THE OFFEROR
On November 16, 1997, in connection with the entering into of the Letter
Agreement, the Offeror and ITG effected a transaction to make the Offeror a
wholly-owned subsidiary of Polymer. This was accomplished by having the Offeror
transfer to ITG the 1,470,000 Common Shares acquired by the Offeror from ITG as
consideration for the repurchase of the common shares of the Offeror owned by
ITG. Polymer and ITG currently intend that, immediately prior to the completion
of the Common Share Offer ITG will transfer its 1,470,000 Common Shares to the
Offeror in exchange for common shares of the Offeror with the result that ITG
will own 40% of the outstanding common shares of the Offeror.
These transactions were entered into to facilitate Polymer's participation
in the Letter Agreement by ensuring that Polymer will be in compliance with its
obligations to third parties under its existing outstanding indebtedness which
indebtedness includes restrictions on, among other things, the provision of
financial assistance to subsidiaries which are not "restricted" and wholly-
owned by Polymer.
6. RIGHTS PLAN AGREEMENT
On November 7, 1997, the Offeror submitted a joint application to the OSC
and the QSC requesting, among other things, a permanent cease trade order of the
Rights. No hearing to consider the application has been convened by either the
OSC or the QSC. Subject to completion of the Offers as contemplated by the
Letter Agreement, the Offeror intends to withdraw its application.
8
<PAGE>
7. WITHDRAWAL OF DEPOSITED SHARES
As a result of the extension of the Offers, Section 8 of the Original
Offers, "Withdrawal of Deposited Shares" is hereby amended to provide that
shareholders will have the right to withdraw Shares at any time on or before
12:00 midnight (Toronto time) on November 28, 1997, prior to which the Offeror
is not entitled to take up and pay for Shares deposited under the Offers.
Shareholders will otherwise have the rights of withdrawal in the circumstances
and in the manner described in Section 8 of the Original Offers, "Withdrawal of
Deposited Shares".
8. VARIATION OF THE OFFERS
The Offeror reserves the right, in its sole discretion, at any time and
from time to time while the Offers are open for acceptance, to extend the Expiry
Time of the Common Share Offer and/or the Preferred Share Offer or to further
vary the terms of either Offer by giving oral notice (to be confirmed in
writing) or written notice of such extension or variation to the Depositary at
its principal office in Toronto, and by causing the Depositary to provide as
soon as practicable thereafter a copy of such notice in the manner set forth in
Section 10 of the Original Offers, "Notices and Delivery", to all holders of
Common Shares or Preferred Shares, as applicable, whose Shares have not been
taken up prior to the extension or variation. The Offeror shall, as soon as
possible after giving notice of an extension or variation to the Depositary,
make a public announcement of the extension or variation and provide a copy of
the notice thereof to the TSE and the ME. Any notice of extension or variation
will be deemed to have been given and to be effective on the day on which and at
the time at which it is delivered or otherwise communicated to the Depositary at
its principal office in Toronto.
During any such extension or in the event of any variation, all Shares
previously deposited and not taken up or withdrawn will remain subject to the
Offers. An extension of the Expiry Time or a variation of the Offers does not
constitute a waiver by the Offeror of its rights under Section 4 of the Offers,
"Conditions of the Offers" (as amended hereby).
9. AMENDMENTS TO OFFERS AND LETTERS OF TRANSMITTAL
The Original Offers, the Circular, the Definitions, the Letters of
Transmittal and the Notice of Guaranteed Delivery shall be amended mutatis
mutandis to reflect the amendments made by this Notice.
10. STATUTORY RIGHTS
Securities legislation in certain of the provinces and territories of
Canada provides Shareholders with, in addition to any other rights they may have
at law, rights of rescission or to damages, or both, if there is a
misrepresentation in a circular or a notice that is required to be delivered to
Shareholders. However, such rights must be exercised within prescribed time
limits. Shareholders should refer to the applicable provisions of the securities
legislation of their province or territory for particulars of those rights or
consult with a lawyer.
9
<PAGE>
APPROVAL AND CERTIFICATE
The contents of the Original Offers, the Circular and this Notice of
Extension and Variation have been approved, and the sending, communication or
delivery thereof to the Shareholders of Dominion Textile has been authorized by,
the board of directors of the Offeror. The Offers contain no untrue statement of
a material fact and do not omit to state a material fact that is required to be
stated or that is necessary to make a statement not misleading in the light of
the circumstances in which it was made. In addition, the Offers do not contain
any misrepresentation likely to affect the value or the market price of the
Common Shares and the First Preferred Shares which are the subject of the
Offers.
DATED: November 18, 1997
(Signed) JERRY ZUCKER (Signed) JAMES G. BOYD
Chairman, President Executive Vice-President, Chief
and Chief Executive Officer Financial Officer,Treasurer and
Secretary
On behalf of the Board of Directors
(Signed) PETER BOURGEOIS (Signed) WARREN TURNBULL
Director Director
10
<PAGE>
The Depositary, Montreal Trust Company of Canada
By Mail
Stock Transfer Services
151 Front Street West
8th Floor
Toronto, Ontario
M5J 2N1
Attn: Re-org Department
Tel: (800) 639-0802
Fax: (416) 981-9645
By Hand
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Stock Transfer Services Stock Transfer Services Stock Transfer Services Stock Transfer Services
Western Gas Tower Place Montreal Trust 151 Front Street West 4th Floor
530 - 8th Avenue S.W. 1800 McGill College Ave. 8th Floor 510 Burrard Street
Calgary, Alberta Montreal, Quebec Toronto, Ontario Vancouver, B.C.
T2P 3S8 H3A 3K9 M5J 2N1 V6C 3B9
Attn: Re-org Department Attn: Re-org Department Attn: Re-org Department
Tel: (403) 267-6555 Tel: (514) 982-7535 Tel: (800) 639-0802 Tel: (888) 661-0222
Fax: (403) 266-1490 Fax: (514) 982-7580 Fax: (416) 981-9645 Fax: (604) 661-9480
</TABLE>
Office of CIBC Wood Gundy Securities Inc., the Dealer Manager, In Canada
In Canada
Toronto Office Montreal Office
BCE Place, P.O. Box 500 Suite 3050
161 Bay Street 600 ouest Boul de Maisonneuve
Toronto, Ontario Montreal, Quebec
M5J 2S8 H3A 3J2
Tel: (416) 594-7000 Tel: (514) 847-6300
Fax: (416) 594-7225 Fax: (514) 847-6480
Office of Chase Securities Inc., the Dealer Manager in the United States
270 Park Avenue
New York, New York
10017
Tel: (212) 270-4216
Fax: (212) 270-2131
Any questions and requests for assistance may be directed by Shareholders to the
Dealer Managers and the Depositary at their respective telephone numbers and
locations set out above.
11
<PAGE>
This document is important and requires your immediate attention. If you are in
doubt as to how to deal with it, you should consult your investment dealer,
lawyer or other advisor.
NOTICE OF EXTENSION
by
DT ACQUISITION INC.
in respect of its
OFFERS TO PURCHASE
all of the Common Shares and all of the First Preferred Shares of
DOMINION TEXTILE INC.
- --------------------------------------------------------------------------------
on the basis of a price of Cdn. $14.50 cash per Common Share and a price of Cdn.
$112.00 cash per First Preferred Share
- --------------------------------------------------------------------------------
On November 28, 1997, DT Acquisition Inc. (the "Offeror") extended its
Offers by notice delivered to the Depositary.
The Offers, as extended, are open for acceptance until 12:00 midnight
(Toronto time) on Monday, December 15, 1997 (the "Expiry Time"), unless
withdrawn or extended.
Holders of Common Shares who wish to accept the Common Share Offer must
properly complete and execute the Letter of Transmittal (printed on blue paper)
that accompanied the Common Share Offer and holders of First Preferred Shares
who wish to accept the Preferred Share Offer must properly complete and execute
the Letter of Transmittal (printed on green paper) that accompanied the
Preferred Share Offer or, in each case, a manually executed facsimile thereof
and deposit it, together with certificates representing their Shares, in
accordance with the instructions in the relevant Letter of Transmittal at any of
the offices of the Depositary specified in such Letter of Transmittal, so as to
arrive there not later than the Expiry Time. Alternatively, Shareholders
tendering Common Shares may follow the procedure for guaranteed delivery
described in Section 3 of the Original Offers, "Manner of Acceptance - Procedure
for Guaranteed Delivery", using the Notice of Guaranteed Delivery (printed on
yellow paper) that accompanied the Common Share Offer.
-------------------
The Dealer Managers for the Offers:
CIBC Wood Gundy Securities Inc. Chase Securities Inc.
in Canada in the United States
December 2, 1997
Questions and requests for assistance may be directed to the Dealer
Managers or the Depositary, and additional copies of this Notice, the Offers and
Circular, the Letters of Transmittal and the Notice of Guaranteed Delivery may
be obtained without charge on request from the Dealer Managers or the Depositary
at their respective offices shown on the last page of this Notice.
<PAGE>
The Offers are made for the securities of a Canadian issuer and while the
Offers are subject to Canadian disclosure requirements, investors should be
aware that those requirements are different from those of the United States.
Financial statements included in the Offers and Circular, as varied by this
Notice, regarding Dominion Textile, if any, have been prepared in accordance
with Canadian generally accepted accounting principles and thus may not be
comparable to financial statements of United States companies.
The enforcement by investors of civil liabilities under the United States
federal securities laws may be affected adversely by the fact that the Offeror
is incorporated and located in Canada, that some or all of its officers and
directors are residents of Canada, that the Canadian Dealer Manager is a
resident of Canada, and that all or a substantial portion of the assets of the
Offeror and such persons are located outside the United States.
You should be aware that the Offeror or its affiliates, directly or
indirectly, may bid for or make purchases of Dominion Textile's securities
subject to the Offers, or of Dominion Textile's related securities, during the
period of the Offers, as permitted by applicable Canadian laws, provincial laws
and regulations.
All currency amounts expressed herein and in the Offers and the Circular
are in Canadian dollars unless otherwise indicated.
This document does not constitute an offer or a solicitation to any person
in any jurisdiction in which such offer or solicitation is unlawful. The Offers
are not being made to, nor will deposits be accepted from or on behalf of,
Shareholders in any jurisdiction in which the making or acceptance of the Offers
would not be in compliance with the laws of such jurisdiction. However, the
Offeror may, in its sole judgement, take such action as it may deem necessary to
extend either of the Offers to Shareholders in such jurisdiction.
2
<PAGE>
NOTICE OF EXTENSION
TO: THE HOLDERS OF COMMON SHARES AND THE HOLDERS OF FIRST PREFERRED
SHARES OF DOMINION TEXTILE INC.
By notice to the Depositary given on November 28, 1997, DT Acquisition Inc.
(the "Offeror") extended its offers dated October 29, 1997, as varied on
November 18, 1997, pursuant to which the Offeror is offering to purchase all of
the outstanding common shares (the "Common Shares") of Dominion Textile Inc.
("Dominion Textile") and all of the outstanding first preferred shares (the
"First Preferred Shares") of Dominion Textile. The offers dated October 29,
1997, as varied on November 18, 1997, are referred to as the "Original
Offers". The circular which accompanied the Original Offers is referred to as
the "Circular". The Original Offers and the Circular, all as extended by this
Notice, are referred to as the "Offers".
Except as otherwise set forth in this Notice, the information, terms and
conditions contained in the Original Offers and Circular continue to be
applicable in all respects and this Notice should be read in conjunction
therewith. Unless the context otherwise requires, terms denoted by initial
capital letters and not defined herein have the respective meanings set forth in
the Original Offers and the Circular.
1. EXTENSION OF THE OFFERS
The Offeror has amended the Original Offers by extending the time during
which each Offer is open for acceptance to 12:00 midnight (Toronto time) on
Monday, December 15, 1997 unless the particular Offer is withdrawn or further
extended. Accordingly, the Expiry Time shall be 12:00 midnight (Toronto time) on
Monday, December 15, 1997.
2. RECENT DEVELOPMENTS
Deposits to the Offers
Each of the Offers is subject to a condition (the "Minimum Condition")
that at least 66 2/3% of the Common Shares and 66 2/3% of the First
Preferred Shares, as the case may be, held by the public be validly deposited
and not withdrawn prior to the Expiry Time.
As at 12:00 midnight (Toronto time) on Friday, November 28, 1997,
approximately 35,200,000 Common Shares representing approximately 96% of the
outstanding Common Shares held by the public were tendered to the Common Share
Offer. As at 12:00 midnight (Toronto time) on Friday, November 28, 1997, 128
First Preferred Shares representing approximately 35% of the First Preferred
Shares were tendered to the Preferred Share Offer. Accordingly, the Minimum
Condition was satisfied with respect to the Common Share Offer and the Minimum
Condition was not satisfied with respect to the Preferred Share Offer.
Investment Canada Approval
The Offers are subject to a condition that the Minister of Industry shall
have allowed the implementation of the proposed transaction and the Purchase
Agreement Transaction pursuant to the provisions of the Investment Canada Act.
The Offeror and Polymer are currently in discussions with representatives of
Industry Canada in order to provide assurances that the acquisition of Dominion
Textile will be of net benefit to Canada. Polymer and the Offeror are confident
that the approval of the Minister of Industry will be granted. The Offeror is
using its best efforts to obtain such approval as soon as possible.
3. WITHDRAWAL OF DEPOSITED SHARES
As a result of the extension of the Offers, Section 8 of the Original
Offers, "Withdrawal of Deposited Shares" is hereby amended to provide that
Shareholders will have the right to withdraw Shares at any time prior to the
take up by the Offeror of any Shares tendered to the Offers.
3
<PAGE>
4. VARIATION OF THE OFFERS
The Offeror reserves the right, in its sole discretion, at any time and
from time to time while the Offers are open for acceptance, to extend the Expiry
Time of the Common Share Offer and/or the Preferred Share Offer or to further
vary the terms of either Offer by giving oral notice (to be confirmed in
writing) or written notice of such extension or variation to the Depositary at
its principal office in Toronto, and by causing the Depositary to provide as
soon as practicable thereafter a copy of such notice in the manner set forth in
Section 10 of the Original Offers, "Notices and Delivery", to all holders of
Common Shares or Preferred Shares, as applicable, whose Shares have not been
taken up prior to the extension or variation. The Offeror shall, as soon as
possible after giving notice of an extension or variation to the Depositary,
make a public announcement of the extension or variation and provide a copy of
the notice thereof to the TSE and the ME. Any notice of extension or variation
will be deemed to have been given and to be effective on the day on which and at
the time at which it is delivered or otherwise communicated to the Depositary at
its principal office in Toronto.
During any such extension or in the event of any variation, all Shares
previously deposited and not taken up or withdrawn will remain subject to the
Offers. An extension of the Expiry Time or a variation of the Offers does not
constitute a waiver by the Offeror of its rights under Section 4 of the Offers,
"Conditions of the Offers" (as amended hereby).
5. AMENDMENTS TO OFFERS AND LETTERS OF TRANSMITTAL
The Original Offers, the Circular, the Definitions, the Letters of
Transmittal and the Notice of Guaranteed Delivery shall be amended mutatis
mutandis to reflect the amendments made by this Notice.
6. STATUTORY RIGHTS
Securities legislation in certain of the provinces and territories of
Canada provides Shareholders with, in addition to any other rights they may have
at law, rights of rescission or to damages, or both, if there is a
misrepresentation in a circular or a notice that is required to be delivered to
Shareholders. However, such rights must be exercised within prescribed time
limits. Shareholders should refer to the applicable provisions of the securities
legislation of their province or territory for particulars of those rights or
consult with a lawyer.
4
<PAGE>
APPROVAL AND CERTIFICATE
The contents of the Original Offers, the Circular and this Notice of
Extension have been approved, and the sending, communication or delivery thereof
to the Shareholders of Dominion Textile has been authorized by, the board of
directors of the Offeror. The Offers contain no untrue statement of a material
fact and do not omit to state a material fact that is required to be stated or
that is necessary to make a statement not misleading in the light of the
circumstances in which it was made. In addition, the Offers do not contain any
misrepresentation likely to affect the value or the market price of the Common
Shares and the First Preferred Shares which are the subject of the Offers.
DATED: December 2, 1997
<TABLE>
<CAPTION>
<S> <C>
(Signed) Jerry Zucker (Signed) James G. Boyd
Chairman, President and Executive Vice-President, Chief Financial Officer,
Chief Executive Officer Treasurer and Secretary
On behalf of the Board of Directors
(Signed) Peter Bourgeois (Signed) Warren Turnbull
Director Director
</TABLE>
5
<PAGE>
The Depositary, Montreal Trust Company of Canada
By Mail
Stock Transfer Services
151 Front Street West
8th Floor
Toronto, Ontario
M5J 2N1
Attn: Re-org Department
Tel: (800) 639-0802
Fax: (416) 981-9645
By Hand
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Stock Transfer Services Stock Transfer Services Stock Transfer Services Stock Transfer Services
Western Gas Tower Place Montreal Trust 151 Front Street West 4th Floor
530 - 8th Avenue S.W. 1800 McGill College Ave. 8th Floor 510 Burrard Street
Calgary, Alberta Montreal, Quebec Toronto, Ontario Vancouver, B.C.
T2P 3S8 H3A 3K9 M5J 2N1 V6C 3B9
Attn: Re-org Department Attn: Re-org Department Attn: Re-org Department
Tel: (403) 267-6555 Tel: (514) 982-7535 Tel: (800) 639-0802 Tel: (888) 661-0222
Fax: (403) 266-1490 Fax: (514) 982-7580 Fax: (416) 981-9645 Fax: (604) 661-9480
</TABLE>
Office of CIBC Wood Gundy Securities Inc., the Dealer Manager, In Canada
In Canada
<TABLE>
<CAPTION>
Toronto Office Montreal Office
<S> <C>
BCE Place, P.O. Box 500 Suite 3050
161 Bay Street 600 ouest Boul de Maisonneuve
Toronto, Ontario Montreal, Quebec
M5J 2S8 H3A 3J2
Tel: (416) 594-7000 Tel: (514) 847-6300
Fax: (416) 594-7225 Fax: (514) 847-6480
</TABLE>
Office of Chase Securities Inc., the Dealer Manager in the United States
270 Park Avenue
New York, New York
10017
Tel: (212) 270-4216
Fax: (212) 270-2131
Any questions and requests for assistance may be directed by Shareholders to the
Dealer Managers and the Depositary at their respective telephone numbers and
locations set out above.
6
<PAGE>
This document is important and requires your immediate attention. If you are in
doubt as to how to deal with it, you should consult your investment dealer,
lawyer or other advisor.
NOTICE OF EXTENSION AND VARIATION
by
DT ACQUISITION INC.
in respect of its
OFFER TO PURCHASE
all of the First Preferred Shares of
DOMINION TEXTILE INC.
on the basis of an amended price of Cdn. $150.00 cash per First Preferred Share
On the date hereof, DT Acquisition Inc. (the "Offeror") announced that it
intended to extend and vary its Preferred Share Offer by increasing the price
payable for the First Preferred Shares to Cdn. $150.00 per First Preferred
Share.
The Preferred Share Offer, as extended, is open for acceptance until 12:00
midnight (Toronto time) on Thursday, December 18, 1997 (the "Expiry Time"),
unless withdrawn or extended.
Holders of First Preferred Shares who wish to accept the Preferred Share
Offer must properly complete and execute the Letter of Transmittal (printed on
green paper) that accompanied the Preferred Share Offer or a manually executed
facsimile thereof and deposit it, together with certificates representing their
First Preferred Shares, in accordance with the instructions in the Letter of
Transmittal at any of the offices of the Depositary specified in the Letter of
Transmittal, so as to arrive there not later than the Expiry Time.
-------------------------------------------
The Dealer Managers for the Preferred Share Offer:
CIBC Wood Gundy Securities Inc. Chase Securities Inc.
in Canada in the United States
December 8, 1997
Questions and requests for assistance may be directed to the Dealer
Managers or the Depositary, and additional copies of this Notice, the Preferred
Share Offer and Circular and the Letter of Transmittal may be obtained without
charge on request from the Dealer Managers or the Depositary at their respective
offices shown on the last page of this Notice.
The Preferred Share Offer is made for the securities of a Canadian issuer
and while the Preferred Share Offer is subject to Canadian disclosure
requirements, investors should be aware that those requirements are different
from those of the United States. Financial statements included in the Preferred
Share Offer and Circular, as varied by this Notice, regarding Dominion Textile,
if any, have been prepared in accordance with Canadian generally accepted
accounting principles and thus may not be comparable to financial statements of
United States companies.
<PAGE>
The enforcement by investors of civil liabilities under the United States
federal securities laws may be affected adversely by the fact that the Offeror
is incorporated and located in Canada, that some or all of its officers and
directors are residents of Canada, that the Canadian Dealer Manager is a
resident of Canada, and that all or a substantial portion of the assets of the
Offeror and such persons are located outside the United States.
You should be aware that the Offeror or its affiliates, directly or
indirectly, may bid for or make purchases of Dominion Textile's securities
subject to the Offer, or of Dominion Textile's related securities, during the
period of the Preferred Share Offer, as permitted by applicable Canadian laws,
provincial laws and regulations.
All currency amounts expressed herein and in the Preferred Share Offer and
the Circular are in Canadian dollars unless otherwise indicated.
This document does not constitute an offer or a solicitation to any person
in any jurisdiction in which such offer or solicitation is unlawful. The
Preferred Share Offer is not being made to, nor will deposits be accepted from
or on behalf of, holders of First Preferred Shares in any jurisdiction in which
the making or acceptance of the Preferred Share Offer would not be in compliance
with the laws of such jurisdiction. However, the Offeror may, in its sole
judgement, take such action as it may deem necessary to extend the Preferred
Share Offer to shareholders in such jurisdiction.
2
<PAGE>
NOTICE OF EXTENSION AND VARIATION
TO: THE HOLDERS OF FIRST PREFERRED SHARES OF DOMINION TEXTILE INC.
By this Notice, DT Acquisition Inc. (the "Offeror") is amending its offer
dated October 29, 1997, as varied on November 18, 1997 and as extended on
November 28, 1997, pursuant to which the Offeror is offering to purchase all of
the outstanding first preferred shares (the "First Preferred Shares") of
Dominion Textile Inc. ("Dominion Textile"). The offer for the First Preferred
Shares dated October 29, 1997, as varied on November 18, 1997 and as extended on
November 28, 1997, is referred to as the "Original Offer". The circular which
accompanied the Original Offer is referred to as the "Circular". The Original
Offer and the Circular, all as extended and varied by this Notice, are referred
to as the "Preferred Share Offer".
Except as otherwise set forth in this Notice, the information, terms and
conditions contained in the Original Offer and Circular continue to be
applicable in all respects and this Notice should be read in conjunction
therewith. Unless the context otherwise requires, terms denoted by initial
capital letters and not defined herein have the respective meanings set forth in
the Original Offer and the Circular.
1. INCREASE IN PRICE FOR FIRST PREFERRED SHARES
The Offeror is amending the Original Offer by increasing the consideration
payable for each First Preferred Share tendered to the Preferred Share Offer
from Cdn. $112.00 cash per First Preferred Share to Cdn. $150.00 cash per First
Preferred Share.
This increase represents a total aggregate increase of Cdn.$14,060.00 in
the price of the Preferred Share Offer. After giving effect to the increase in
the price payable pursuant to the Preferred Share Offer, the total aggregate
amount payable by the Offeror if all of the First Preferred Shares are tendered
to and taken up under the Preferred Shares Offer is $55,500.00.
2. EXTENSION OF THE PREFERRED SHARE OFFER
The Offeror is also amending the Original Offer by extending the time
during which the Preferred Share Offer is open for acceptance to 12:00 midnight
(Toronto time) on Thursday, December 18, 1997 unless the Preferred Share Offer
is withdrawn or further extended. Accordingly, the Expiry Time of the Preferred
Share Offer shall be 12:00 midnight (Toronto time) on Thursday, December 18,
1997.
3. RECENT DEVELOPMENTS
Deposits to the Preferred Share Offer
The Preferred Share Offer is subject to a condition (the "Minimum
Condition") that at least 66 2/3% of the First Preferred Shares held by the
public be validly deposited and not withdrawn prior to the Expiry Time.
On December 5, 1997, Mr. Robert W. Smythe, who holds 215 First Preferred
Shares representing approximately 58% of the outstanding First Preferred Shares,
agreed with the Offeror to tender his 215 First Preferred Shares to the
Preferred Share Offer provided the consideration payable for each First
Preferred Share tendered to the Preferred Share Offer is increased to Cdn.
$150.00 cash per First Preferred Share. This extension and variation of the
Preferred Share Offer is being made in connection with that agreement.
On December 1, 1997, the Offeror announced that 128 First Preferred Shares
representing approximately 35% of the outstanding First Preferred Shares were
tendered to the Preferred Share Offer as of November 28, 1997. On the
3
<PAGE>
assumption that none of such shares are withdrawn from the Preferred Share Offer
and that Mr. Smythe tenders his First Preferred Shares to the Preferred Share
Offer, the Minimum Condition would be satisfied.
4. WITHDRAWAL OF DEPOSITED SHARES
Section 8 of the Original Offer, "Withdrawal of Deposited Shares" is hereby
amended to provide that holders of First Preferred Shares (the "Shareholders")
will have the right to withdraw First Preferred Shares at any time prior to the
take up by the Offeror of First Preferred Shares tendered to the Preferred Share
Offer.
5. VARIATION OF THE PREFERRED SHARE OFFER
The Offeror reserves the right, in its sole discretion, at any time and
from time to time while the Preferred Share Offer is open for acceptance, to
extend the Expiry Time of the Preferred Share Offer or to further vary the terms
of the Preferred Share Offer by giving oral notice (to be confirmed in writing)
or written notice of such extension or variation to the Depositary at its
principal office in Toronto, and by causing the Depositary to provide as soon as
practicable thereafter a copy of such notice in the manner set forth in Section
10 of the Original Offer, "Notices and Delivery", to all Shareholders whose
First Preferred Shares have not been taken up prior to the extension or
variation. The Offeror shall, as soon as possible after giving notice of an
extension or variation to the Depositary, make a public announcement of the
extension or variation and provide a copy of the notice thereof to the TSE and
the ME. Any notice of extension or variation will be deemed to have been given
and to be effective on the day on which and at the time at which it is delivered
or otherwise communicated to the Depositary at its principal office in Toronto.
During any such extension or in the event of any variation, all First
Preferred Shares previously deposited and not taken up or withdrawn will remain
subject to the Preferred Share Offer. An extension of the Expiry Time or a
variation of the Offer does not constitute a waiver by the Offeror of its rights
under Section 4 of the Preferred Share Offer, "Conditions of the Offer".
6. AMENDMENTS TO PREFERRED SHARE OFFER AND LETTER OF TRANSMITTAL
The Original Offer, the Circular, the Definitions and the Letter of
Transmittal (printed on green paper) shall be amended mutatis mutandis to
reflect the amendments made by this Notice. No amendment, variation or extension
of the Common Share Offer is being made by this Notice.
7. STATUTORY RIGHTS
Securities legislation in certain of the provinces and territories of
Canada provides Shareholders with, in addition to any other rights they may have
at law, rights of rescission or to damages, or both, if there is a
misrepresentation in a circular or a notice that is required to be delivered to
Shareholders. However, such rights must be exercised within prescribed time
limits. Shareholders should refer to the applicable provisions of the securities
legislation of their province or territory for particulars of those rights or
consult with a lawyer.
4
<PAGE>
APPROVAL AND CERTIFICATE
The contents of the Original Offer, the Circular and this Notice of
Extension and Variation have been approved, and the sending, communication or
delivery thereof to the Shareholders of Dominion Textile has been authorized by,
the board of directors of the Offeror. The Preferred Share Offer contains no
untrue statement of a material fact and does not omit to state a material fact
that is required to be stated or that is necessary to make a statement not
misleading in the light of the circumstances in which it was made. In addition,
the Preferred Share Offer does not contain any misrepresentation likely to
affect the value or the market price of the First Preferred Shares which are the
subject of the Preferred Share Offer.
DATED: December 8, 1997.
Jerry Zucker James G. Boyd
Chairman, President and Chief Executive Vice-President, Chief
Executive Officer Financial Officer,
Treasurer and Secretary
On behalf of the Board of Directors
Peter Bourgeois Warren Turnbull
Director Director
<PAGE>
The Depositary, Montreal Trust Company of Canada
By Mail
Stock Transfer Services
151 Front Street West
8th Floor
Toronto, Ontario
M5J 2N1
Attn: Re-org Department
Tel: (800) 639-0802
Fax: (416) 981-9645
By Hand
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Stock Transfer Services Stock Transfer Services Stock Transfer Services Stock Transfer Services
Western Gas Tower Place Montreal Trust 151 Front Street West 4th Floor
530 - 8th Avenue S.W. 1800 McGill College Ave. 8th Floor 510 Burrard Street
Calgary, Alberta Montreal, Quebec Toronto, Ontario Vancouver, B.C.
T2P 3S8 H3A 3K9 M5J 2N1 V6C 3B9
Attn: Re-org Department Attn: Re-org Department Attn: Re-org Department
Tel: (403) 267-6555 Tel: (514) 982-7535 Tel: (800) 639-0802 Tel: (888) 661-0222
Fax: (403) 266-1490 Fax: (514) 982-7580 Fax: (416) 981-9645 Fax: (604) 661-9480
</TABLE>
Office of CIBC Wood Gundy Securities Inc., the Dealer Manager, In Canada
In Canada
Toronto Office Montreal Office
BCE Place, P.O. Box 500 Suite 3050
161 Bay Street 600 ouest Boul de Maisonneuve
Toronto, Ontario Montreal, Quebec
M5J 2S8 H3A 3J2
Tel: (416) 594-7000 Tel: (514) 847-6300
Fax: (416) 594-7225 Fax: (514) 847-6480
Office of Chase Securities Inc., the Dealer Manager in the United States
270 Park Avenue
New York, New York
10017
Tel: (212) 270-4216
Fax: (212) 270-2131
Any questions and requests for assistance may be directed by Shareholders to the
Dealer Managers and the Depositary at their respective telephone numbers and
locations set out above.
<PAGE>
- --------------------------------------------------------------------------------
This document is important and requires your immediate attention. If you are in
doubt as to how to deal with it, you should consult your investment dealer,
lawyer or other advisor.
NOTICE OF EXTENSION
by
DT ACQUISITION INC.
in respect of its
OFFERS TO PURCHASE
all of the Common Shares and all of the First Preferred Shares of
DOMINION TEXTILE INC.
------------------------------------------------------------------
| on the basis of a price of Cdn. $14.50 cash per Common Share |
| and a price of Cdn. $150.00 cash per First Preferred Share |
------------------------------------------------------------------
On December 15, 1997, DT Acquisition Inc. (the "Offeror") extended its
Offers by notice delivered to the Depositary.
The Offers, as extended, are open for acceptance until 4:00 p.m. (Toronto
time) on Monday, December 29, 1997 (the "Expiry Time"), unless withdrawn or
extended.
Holders of Common Shares who wish to accept the Common Share Offer must
properly complete and execute the Letter of Transmittal (printed on blue paper)
that accompanied the Common Share Offer and holders of First Preferred Shares
who wish to accept the Preferred Share Offer must properly complete and execute
the Letter of Transmittal (printed on green paper) that accompanied the
Preferred Share Offer or, in each case, a manually executed facsimile thereof
and deposit it, together with certificates representing their Shares, in
accordance with the instructions in the relevant Letter of Transmittal at any of
the offices of the Depositary specified in such Letter of Transmittal, so as to
arrive there not later than the Expiry Time. Alternatively, Shareholders
tendering Common Shares may follow the procedure for guaranteed delivery
described in Section 3 of the Original Offers, "Manner of Acceptance --
Procedure for Guaranteed Delivery", using the Notice of Guaranteed Delivery
(printed on yellow paper) that accompanied the Common Share Offer.
---------------------------
The Dealer Managers for the Offers:
CIBC Wood Gundy Securities Inc. Chase Securities Inc.
in Canada in the United States
December 17, 1997
Questions and requests for assistance may be directed to the Dealer
Managers or the Depositary, and additional copies of this Notice, the Offers and
Circular, the Letters of Transmittal and the Notice of Guaranteed Delivery may
be obtained without charge on request from the Dealer Managers or the Depositary
at their respective offices shown on the last page of this Notice.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
The Offers are made for the securities of a Canadian issuer and while the
Offers are subject to Canadian disclosure requirements, investors should be
aware that those requirements are different from those of the United States.
Financial statements included in the Offers and Circular, as varied by this
Notice, regarding Dominion Textile, if any, have been prepared in accordance
with Canadian generally accepted accounting principles and thus may not be
comparable to financial statements of United States companies.
The enforcement by investors of civil liabilities under the United States
federal securities laws may be affected adversely by the fact that the Offeror
is incorporated and located in Canada, that some or all of its officers and
directors are residents of Canada, that the Canadian Dealer Manager is a
resident of Canada, and that all or a substantial portion of the assets of the
Offeror and such persons are located outside the United States.
You should be aware that the Offeror or its affiliates, directly or
indirectly, may bid for or make purchases of Dominion Textile's securities
subject to the Offers, or of Dominion Textile's related securities, during the
period of the Offers, as permitted by applicable Canadian laws, provincial laws
and regulations.
All currency amounts expressed herein and in the Offers and the Circular
are in Canadian dollars unless otherwise indicated.
This document does not constitute an offer or a solicitation to any person
in any jurisdiction in which such offer or solicitation is unlawful. The Offers
are not being made to, nor will deposits be accepted from or on behalf of,
Shareholders in any jurisdiction in which the making or acceptance of the Offers
would not be in compliance with the laws of such jurisdiction. However, the
Offeror may, in its sole judgement, take such action as it may deem necessary to
extend either of the Offers to Shareholders in such jurisdiction.
- --------------------------------------------------------------------------------
2
<PAGE>
NOTICE OF EXTENSION
TO: THE HOLDERS OF COMMON SHARES AND THE HOLDERS OF FIRST PREFERRED SHARES OF
DOMINION TEXTILE INC.
By notice to the Depositary given on December 15, 1997, DT Acquisition Inc.
(the "Offeror") extended its offers dated October 29, 1997, as varied on
November 18, 1997, as extended on November 28, 1997 and, in the case of the
Preferred Share Offer, as varied on December 8, 1997, pursuant to which the
Offeror is offering to purchase all of the outstanding common shares (the
"Common Shares") of Dominion Textile Inc. ("Dominion Textile") and all of the
outstanding first preferred shares (the "First Preferred Shares") of Dominion
Textile. The offers dated October 29, 1997, as varied on November 18, 1997, as
extended on November 28, 1997 and, in the case of the Preferred Share Offer, as
varied on December 8, 1997, are referred to as the "Original Offers". The
circular which accompanied the Original Offers is referred to as the "Circular".
The Original Offers and the Circular, all as extended by this Notice, are
referred to as the "Offers".
Except as otherwise set forth in this Notice, the information, terms and
conditions contained in the Original Offers and Circular continue to be
applicable in all respects and this Notice should be read in conjunction
therewith. Unless the context otherwise requires, terms denoted by initial
capital letters and not defined herein have the respective meanings set forth in
the Original Offers and the Circular.
1. EXTENSION OF THE OFFERS
The Offeror has amended the Original Offers by extending the time during
which each Offer is open for acceptance to 4:00 p.m. (Toronto time) on Monday,
December 29, 1997 unless the particular Offer is withdrawn or further extended.
Accordingly, the Expiry Time shall be 4:00 p.m. (Toronto time) on Monday,
December 29, 1997.
2. RECENT DEVELOPMENTS
Deposits to the Offers
Each of the Offers is subject to a condition (the "Minimum Condition") that
at least 66 2/3% of the Common Shares and 66 2/3% of the First Preferred Shares,
as the case may be, held by the public be validly deposited and not withdrawn
prior to the Expiry Time.
As at 12:00 midnight (Toronto time) on Monday, December 15, 1997,
approximately 37,367,943 Common Shares representing approximately 98.5% of the
outstanding Common Shares held by the public were tendered to the Common Share
Offer. As at 12:00 midnight (Toronto time) on Monday, December 15, 1997, 343
First Preferred Shares representing approximately 93.0% of the First Preferred
Shares were tendered to the Preferred Share Offer. Accordingly, the Minimum
Condition was satisfied with respect to each of the Original Offers.
Investment Canada Approval
The Offers are subject to a condition that the Minister of Industry shall
have allowed the implementation of the proposed transaction and the Purchase
Agreement Transaction pursuant to the provisions of the Investment Canada Act.
The Offeror received such approval under the Investment Canada Act on December
16, 1997 after the Original Offers had been extended.
The Offeror intends to apply to the relevant securities regulatory
authorities to obtain exemption orders permitting the Offeror to take up and pay
for Shares tendered to the Offers as soon as practicable. If granted, such
orders would allow the Offeror to take up and pay for Shares tendered to the
Offers, subject to satisfaction or waiver of all conditions to the Offers, prior
to the Expiry Time.
3. WITHDRAWAL OF DEPOSITED SHARES
Shareholders have the right to withdraw any Shares tendered to the Offers
at any time prior to the take up and payment by the Offeror of such Shares.
3
<PAGE>
4. VARIATION OF THE OFFERS
The Offeror reserves the right, in its sole discretion, at any time and
from time to time while the Offers are open for acceptance, to extend the Expiry
Time of the Common Share Offer and/or the Preferred Share Offer or to further
vary the terms of either Offer by giving oral notice (to be confirmed in
writing) or written notice of such extension or variation to the Depositary at
its principal office in Toronto, and by causing the Depositary to provide as
soon as practicable thereafter a copy of such notice in the manner set forth in
Section 10 of the Original Offers, "Notices and Delivery", to all holders of
Common Shares or Preferred Shares, as applicable, whose Shares have not been
taken up prior to the extension or variation. The Offeror shall, as soon as
possible after giving notice of an extension or variation to the Depositary,
make a public announcement of the extension or variation and provide a copy of
the notice thereof to the TSE and the ME. Any notice of extension or variation
will be deemed to have been given and to be effective on the day on which and at
the time at which it is delivered or otherwise communicated to the Depositary at
its principal office in Toronto.
During any such extension or in the event of any variation, all Shares
previously deposited and not taken up or withdrawn will remain subject to the
Offers. An extension of the Expiry Time or a variation of the Offers does not
constitute a waiver by the Offeror of its rights under Section 4 of the Offers,
"Conditions of the Offers" (as amended hereby).
5. AMENDMENTS TO OFFERS AND LETTERS OF TRANSMITTAL
The Original Offers, the Circular, the Definitions, the Letters of
Transmittal and the Notice of Guaranteed Delivery shall be amended mutatis
mutandis to reflect the amendments made by this Notice.
6. STATUTORY RIGHTS
Securities legislation in certain of the provinces and territories of
Canada provides Shareholders with, in addition to any other rights they may have
at law, rights of rescission or to damages, or both, if there is a
misrepresentation in a circular or a notice that is required to be delivered to
Shareholders. However, such rights must be exercised within prescribed time
limits. Shareholders should refer to the applicable provisions of the securities
legislation of their province or territory for particulars of those rights or
consult with a lawyer.
4
<PAGE>
APPROVAL AND CERTIFICATE
The contents of the Original Offers, the Circular and this Notice of
Extension have been approved, and the sending, communication or delivery thereof
to the Shareholders of Dominion Textile has been authorized by, the board of
directors of the Offeror. The Offers contain no untrue statement of a material
fact and do not omit to state a material fact that is required to be stated or
that is necessary to make a statement not misleading in the light of the
circumstances in which it was made. In addition, the Offers do not contain any
misrepresentation likely to affect the value or the market price of the Common
Shares and the First Preferred Shares which are the subject of the Offers.
DATED: December 17, 1997
(Signed) Jerry Zucker (Signed) James G. Boyd
Chairman, President and Executive Vice-President, Chief Financial
Chief Executive Officer Officer, Treasurer and Secretary
On behalf of the Board of Directors
(Signed) Peter Bourgeois (Signed) Warren Turnbull
Director Director
5
<PAGE>
The Depositary, Montreal Trust Company of Canada
By Mail
Stock Transfer Services
151 Front Street West
8th Floor
Toronto, Ontario
M5J 2N1
Attn: Re-org Department
Tel : (800) 639-0802
Fax : (416) 981-9645
By Hand
<TABLE>
<S> <C> <C> <C>
Stock Transfer Services Stock Transfer Services Stock Transfer Services Stock Transfer Services
Western Gas Tower Place Montreal Trust 151 Front Street West 4th Floor
530 - 8th Avenue S.W. 1800 McGill College Ave. 8th Floor 510 Burrard Street
Calgary, Alberta Montreal, Quebec Toronto, Ontario Vancouver, B.C.
T2P 3S8 H3A 3K9 M5J 2N1 V6C 3B9
Attn: Re-org Department Tel: (514) 982-7535 Attn: Re-org Department Attn: Re-org Department
Tel: (403) 267-6555 Fax: (514) 982-7580 Tel: (800) 639-0802 Tel: (888) 661-0222
Fax: (403) 266-1490 Fax: (416) 981-9645 Fax: (604) 661-9480
</TABLE>
Office of CIBC Wood Gundy Securities Inc., the Dealer Manager, In Canada
In Canada
<TABLE>
<CAPTION>
Toronto Office Montreal Office
<S> <C>
BCE Place, P.O. Box 500 Suite 3050
161 Bay Street 600 ouest Boul de Maisonneuve
Toronto, Ontario Montreal, Quebec
M5J 2S8 H3A 3J2
Tel: (416) 594-7000 Tel: (514) 847-6300
Fax: (416) 594-7225 Fax: (514) 847-6480
</TABLE>
Office of Chase Securities Inc., the Dealer Manager in the United States
270 Park Avenue
New York, New York
10017
Tel: (212) 270-4216
Fax: (212) 270-2131
Any questions and requests for assistance may be directed by Shareholders to
the Dealer Managers and the Depositary at their respective telephone numbers
and locations set out above.
.
QUEBECOR MERRILL
CANADA INC
<PAGE>
EXHIBIT 2.9
DT ACQUISITION INC.
4838 JENKINS AVENUE
NORTH CHARLESTON, S.C. 29405
(803)566-7293
FAX:(803) 747-4092
November 16, 1997
CONFIDENTIAL
- ------------
Mr. Charles H. Hantho
Chairman
Dominion Textile Inc.
1950 Sherbrooke Street West
Montreal, Quebec
H3H 1E7
Dear Mr. Hantho
RE: DT ACQUISITION INC.
OFFERS FOR COMMON AND PREFERRED SHARES
OF DOMINION TEXTILE INC.
------------------------------------------
On October 29, 1997 DT Acquisition Inc. (the "Offeror") mailed an
offer to purchase (the "Common Share Offer") all of the publicly held common
shares, together with associated Rights (as defined below), (collectively, the
"Common Shares") of Dominion Textile Inc. ("Dominion Textile") for a purchase
price of CDN $11.75 cash per Common Share and an offer (the "Preferred Share
Offer") to purchase all of the publicly held first preferred shares (the "First
Preferred Shares") of Dominion Textile for a purchase price of CDN $109.50 cash
per First Preferred Share. The holders of Common Shares and First Preferred
Shares are hereinafter referred to as the "Shareholders". The Common Share
Offer and Preferred Share Offer are hereinafter referred to as the "Offers".
Unless the context otherwise requires, all capitalized terms in this letter
agreement shall have the meanings attributed thereto in the Offers, unless
otherwise defined in this agreement.
Until the execution of this letter agreement by Dominion Textile,
Dominion Textile shall not disclose publicly or to any third party the existence
or any of the terms of this
<PAGE>
-2-
letter agreement, without the prior written approval of the Offeror. In the
event of any such disclosure by Dominion Textile, the proposal represented by
this letter is immediately and automatically withdrawn and terminated.
1. COVENANTS OF THE OFFEROR. We are pleased to confirm that upon
------------------------
execution of this letter by Dominion Textile, the Offeror will forthwith:
(a) amend the Common Share Offer by increasing the purchase price payable
pursuant to the Common Share Offer to CDN $14.50 cash per Common
Share;
(b) amend the Common Share Offer by making such Common Share Offer subject
only to the conditions set forth below;
(i) there shall have been validly deposited under the Common Share
Offer and not withdrawn that number of Common Shares which
represents at least 66 2/3% of the Common Shares on a fully
diluted basis, excluding Common Shares held as of the date
hereof by the Offeror, its affiliates and associates or by
persons whose Common Shares may not be voted as part of the
"minority" on any subsequent going private transaction pursuant
to Policy 9.1 and Policy Q-27;
(ii) the applicable waiting period under the Competition Act
(Canada) shall have expired; any applicable waiting periods
under the Hart-Scott-Rodino Antritrust Improvements Act of 1976
(United States) shall have expired or been earlier terminated;
the Minister of Industry (Canada) shall have allowed or have
been deemed to allowed the implementation of the proposed
transaction and the Purchase Agreement Transaction pursuant to
the provisions of the Investment Canada Act;
(iii) there shall not exist any prohibition at law against the
Offeror making the Common Share Offer or taking up and paying
for any Common Shares deposited under the Common Share Offer or
completing a Compulsory
<PAGE>
-3-
Acquisition, any Subsequent Acquisition Transaction or the right
of the Offeror to complete the Purchase Agreement Transaction;
(iv) that (i) no act, action, suit or proceeding shall have been
threatened or taken before or by any court or tribunal or
governmental agency or other regulatory authority or
administrative agency or commission or by any elected or
appointed public official, in any case with applicable
jurisdiction, or by any private person (including, without
limitation, any individual, corporation, firm, group or other
entity) in Canada or elsewhere, and (ii) no law or regulation
shall have been proposed, enacted, promulgated or applied, in the
case of either (i) or (ii) the legal effect of which is:
(A) to cease trade, enjoin, prohibit or impose material
limitations or conditions on the purchase by or the sale to
the Offeror of the Common Shares, the right of the Offeror
to own Dominion Textile or exercise full rights of ownership
of the Common Shares of the rights of the Offeror to
complete the Purchase Agreement Transaction; or
(B) which would prevent or make materially uncertain completion
of the acquisition by the Offeror of Common Shares pursuant
to a Compulsory Acquisition of any Subsequent Acquisition
Transaction or completion of the Purchase Agreement
Transaction;
(v) except as disclosed in Dominion Textile's public filings or as
otherwise publicly disclosed as of the date hereof, following the
date hereof, there shall not exist or have occurred (or, if there
does exist or shall have previously occurred, there shall not
have been disclosed, generally or to the Offeror) any change (or
any condition, event or development involving a prospective
change) in the operations, assets, capitalization, condition
(financial or otherwise), results of operations, cash flows,
properties.
<PAGE>
-4-
licenses, permits, rights, privileges or liabilities, whether
contractual or otherwise, of Dominion Textile or any of its
subsidiaries, which would be materially adverse to Dominion
Textile and its subsidiaries and associates taken as a whole,
other than: (i) any change or effect resulting from general
economic, financial or market conditions; (ii) any change or
effect resulting from conditions or circumstances generally
affecting the Apparel Fabric Business or Nonwovens Business; or
(iii) any change or effect resulting directly or indirectly from
the public announcement of the Offeror's acquisition of an
interest in the Common Shares, the publication of the Offers or
the expected or actual consummation of the Offers or the Purchase
Agreement Transaction;
(vi) following the date hereof, there shall not have occurred,
developed or come into effect or existence and be continuing any
event, action, state, condition or financial occurrence of
national or international consequence, which adversely affects,
in any material respect, the financial markets in Canada or the
United States, generally, provided that for the purposes hereof a
decline measured from November 15, 1997 in The Toronto Stock
Exchange ("TSE") 35 Index of less than 20% which does not
continue for more than five trading days shall not be material;
and
(vii) Dominion Textile shall not be, in any material respect, in breach
of or default under the Letter Agreement and such agreement shall
not have been terminated in accordance with its terms other than
by reason of the breach or default of the Offeror thereunder.
(c) amend the Preferred Share Offer by increasing the purchase price
payable pursuant to the Preferred Share Offer to CDN $112.00 cash per
First Preferred Share;
(d) amend the Preferred Share Offer by making such offer subject only to
the conditions set forth below:
<PAGE>
-5-
(i) there shall have been validly deposited under the Preferred Share
Offer and not withdrawn that number of First Preferred Shares
which represents at least 66 2/3% of the First Preferred Shares
on a fully diluted basis, excluding First Preferred Shares held
as of the date hereof by the Offeror, its affiliates and
associates or by persons whose First Preferred Shares may not be
voted as part of the "minority" on any subsequent going private
transaction pursuant to Policy 9.1 and Policy Q-27;
(ii) the Offeror shall have taken up and paid for Common Shares under
the Common Share Offer or shall have determined to
contemporaneously take up and pay for such Common Shares;
(iii) the applicable waiting period under the Competition Act (Canada)
shall have expired; any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (United
States) shall have expired or been earlier terminated; the
Minister of Industry (Canada) shall have allowed or have been
deemed to allow the implementation of the proposed transaction
pursuant to the provisions of the Investment Canada Act;
(iv) there shall not exist any prohibition at law against the Offeror
making the Preferred Share Offer or taking up and paying for any
First Preferred Shares deposited under the Preferred Share Offer
or completing a Compulsory Acquisition, any Subsequent
Acquisition Transaction or the Purchase Agreement Transaction;
(v) that (i) no act, action, suit or proceeding shall have been
threatened or taken before or by any court or tribunal or
governmental agency or other regulatory authority or
administrative agency or commission or by any elected or
appointed public official, in any case with applicable
jurisdiction, or by any private person (including, without
limitation, any individual, corporation, firm, group or other
entity) in Canada or elsewhere, whether or not having the force
of law, and (ii) no law,
<PAGE>
-6-
regulation or policy shall have been proposed, enacted,
promulgated or applied, in the case of either (i) or (ii):
(A) to cease trade, enjoin, prohibit or impose material
limitations or conditions on the purchase by or the
sale to the Offeror of the First Preferred Shares or
the right of the Offeror to exercise full rights of
ownership of the First Preferred Shares; or
(B) which would prevent or make materially uncertain
completion of the acquisition by the Offeror of First
Preferred Shares pursuant to a Compulsory Acquisition
or any Subsequent Acquisition Transaction or completion
of the Purchase Agreement Transaction:
(e) except as expressly contemplated above, eliminate any
cross-conditionality between the Common Share Offer and the
Preferred Share Offer such that each is a separate and
independent offer;
(f) extend the Offers in accordance with Canadian securities laws in
order to effect such amendment;
(g) upon the take-up of Common Shares under the Common Share Offer,
proceed expeditiously with a Compulsory Company Acquisition or
Subsequent Acquisition Transaction whereby holders of Common
Shares receive at least $14.50 cash per Common Share, in a
transaction which is at least as favourable to holders of Common
Shares as the Common Share Offer, as hereby amended;
(h) upon the take-up of First Preferred Shares under the Preferred
Share Offer, proceed expeditiously with a Compulsory Acquisition
or Subsequent Acquisition Transaction whereby holders of
Preferred Shares receive at least $112.00 cash per First
Preferred Share, in a transaction which is at least as favourable
to holders of First Preferred Shares as the Preferred Share
Offer, as hereby amended;
<PAGE>
-7-
(i) exercise all reasonable best efforts to obtain the regulatory
approvals referred to in clause 1 (b)(ii) above;
(j) subject to the terms and conditions of the Common Share Offer and
Preferred Share Offer, as amended, take-up and pay for Shares
tendered to such Offers in accordance with applicable Canadian
securities laws; and
(k) exercise all reasonable best efforts to complete the Purchase
Agreement Transaction.
2. RECOMMENDATION. Dominion Textile agrees to recommend to
--------------
Shareholders the acceptance of the Common Share Offer, as amended hereby,
and of the Preferred Share Offer, as amended hereby, and shall mail
forthwith to Shareholders an amended directors' circular containing such
recommendations. The form of such amended directors' circular shall be
provided to the Offeror in advance of mailing and Dominion Textile agrees
to discuss with the Offeror such changes as the Offeror shall reasonably
request. Dominion Textile also agrees to seek to cause its investment
advisors to provide an opinion to be included in the amended directors'
circular referred to above, that the Offers, as amended as contemplated by
this letter agreement, are fair from a financial point of view to the
Shareholders. The form of amendment to the Offers and accompanying circular
shall be provided to Dominion Textile in advance of mailing and the Offeror
agrees to discuss with Dominion Textile such changes as Dominion Textile
shall reasonably request.
3. COVENANTS OF THE COMPANY.
------------------------
(a) Except as otherwise contemplated by this letter agreement or
with the prior written consent of the Offeror, Dominion
Textile agrees that, until the Common Shares are taken-up by
the Offeror under the Common Share Offer or the obligations
of Dominion Textile hereunder shall have been terminated in
accordance with paragraph 10 hereof, the business and
affairs of Dominion Textile and its subsidiaries shall be
operated in the
<PAGE>
-8-
ordinary course of business in substantially the same manner as
previously conducted and, in furtherance of the foregoing:
(i) Dominion Textile will not declare or pay any dividends on or
make other distributions or payments (whether in cash, stock,
securities or other property or any combination thereof) in
respect of any Common Shares or take or authorize any action to
implement any of the foregoing, except for the payment of
regular dividends consistent with past practice;
(ii) Dominion Textile will not reserve, set aside, issue, authorize
or propose or commit to the issuance (whether through the
allotment, reservation or issuance of or granting options,
warrants, commitments, subscriptions, rights to purchase or
otherwise) of any securities of Dominion Textile, including any
Common Shares or any securities convertible into or
exchangeable for, or rights, warrants or options to acquire,
any Common Shares (other than the issuance of Common Shares
pursuant to the exercise of options or other rights to purchase
Common Shares, in each case as are outstanding as of the date
hereof);
(iii) Dominion Textile will not, and will not permit any of its
subsidiaries, to, acquire or agree to acquire, by amalgamating,
merging, consolidating or entering into a business combination
with or purchasing or leasing substantially all of the assets
of or otherwise, any business or undertaking or any
corporation, partnership, association or other business
organization or division thereof, except for transactions that,
individually or in the aggregate, are not material to Dominion
Textile and its subsidiaries taken as a whole;
<PAGE>
-9-
(iv) Dominion Textile will not, and will not permit any of its
subsidiaries to, sell, lease, transfer, mortgage or otherwise
dispose of or encumber any of its property or assets, real or
personal, that, individually or in the aggregate, are material to
Dominion Textile and its subsidiaries taken as a whole, except in
the ordinary course of business;
(v) Dominion Textile will not, and will not permit any of its
subsidiaries to, grant to any executive or senior officers of
Dominion Textile or any subsidiary any increase in compensation
or in severance or termination pay, or enter into any employment
agreement with any executive or senior officer of Dominion
Textile or any subsidiary, except (A) as may be required under
employment and termination agreements in effect as of the date
hereof, (B) compensation increases in the ordinary course of
business consistent with past practice and (C) amendment to stock
option, stock purchase or similar plans to ensure that Common
Shares issuable or held pursuant to such plans may be tendered
under the Common Share Offer or that the persons entitled to
Common Shares under such plans will otherwise receive the benefit
of the Common Share Offer, provided that it is expressly agreed
that Dominion Textile shall comply with, and the Offeror shall
not challenge, the compensation arrangements and matters referred
to under the headings "Service Contracts" and "Arrangements or
Agreements Between the Corporation and Its Directors and
Officers" in the directors' circulars of Dominion Textile dated
November 10, 1997;
(vi) except as otherwise contemplated hereby and in the ordinary
course of business, Dominion Textile will not, and will not allow
any of its subsidiaries to, enter into, amend or terminate any
<PAGE>
-10-
existing agreements, covenants or contracts that, individually
or in the aggregate, are material to Dominion Textile and its
subsidiaries taken as a whole and will not modify, amend,
waive or terminate any confidentiality agreement Dominion
Textile has entered into with third parties;
(vii) Dominion Textile will not, other than in the ordinary course
of business and consistent with past practice, guarantee, or
permit is subsidiaries to guarantee, the payment of any
material indebtedness or incur, or permit any subsidiary to
incur, any material liability or material indebtedness or
borrowed money; and
(viii) Dominion Textile will advise the Offeror as soon as
practicable of any matter coming to its attention that might
constitute or give rise to a material change in the affairs
of Dominion Textile (within the meaning of the Securities Act
(Ontario)).
(b) Dominion Textile will take all such actions as may be required to
redeem the common share purchase rights (the "Rights") outstanding
pursuant to the rights plan agreement approved by the Board of
Directors of Dominion Textile on August 9, 1989 effective at such time
as the Offeror provides written notice to Dominion Textile that it
will take up and pay for the Common Shares, all conditions of the
Common Share Offer, as amended, having been satisfied.
(c) Dominion Textile agrees to fully co-operate with the Offeror in
structuring a transaction or carrying out a reorganization immediately
prior to completion of the Offers that is beneficial to the Offeror
and not detrimental to the Shareholders of Dominion Textile provided
such transaction or reorganization shall not delay the completion of
the Offers.
<PAGE>
-11-
(d) Dominion Textile will use its best efforts to cause all options,
warrants, rights or convertible securities of Dominion Textile that
entitle the holders thereof to acquire Common Shares to be exercised
prior to the expiration of the Common Share Offer.
(e) Dominion Textile and its subsidiaries shall participate and co-operate
in all reasonable respects with the Offeror and should use all
reasonable efforts to obtain such consents, permits and regulatory
approvals as may be necessary or desirable in connection with the
completion of the transactions contemplated by the Offers and the
Purchase Agreement Transaction.
(f) Upon the take-up and payment for Common Shares by the Offeror pursuant
to the Common Share Offer and provided the Offeror thereby acquires
not less than 66 2/3% of the outstanding Common Shares, Dominion
Textile shall (i) take all actions necessary to ensure that the
Offeror will have the ability to immediately replace the members of
the Board of Directors of Dominion Textile with individuals designated
by the Offeror, and (ii) assist the Offeror in acquiring pursuant to a
Subsequent Acquisition Transaction, or other transaction proposed by
the Offeror, all of the Common Shares and First Preferred Shares not
tendered to the Offers, on the terms referred to in Section 1(g) and
1(h).
(g) Effective from the date of the mailing of the Offeror's notice of
change or variation of the Offers and so long as the Offers are
outstanding, Dominion Textile shall permit the Offeror and its
authorized representatives (including representatives of Galey & Lord
Inc. and of any lenders to the Offeror) to have reasonable access to
such information concerning the business, operations, assets,
liabilities, financial condition and affairs of Dominion Textile and
its subsidiaries as the Offeror may reasonably request, including
reasonable access to senior management of
<PAGE>
-12-
Dominion Textile, provided that Dominion Textile shall not be
required to provide access to or furnish information which senior
management of Dominion Textile believes to be commercially
sensitive or competitive information (other than such sensitive
or competitive information as Dominion Textile shall have made
available to any other third party which is a competitor of
Dominion Textile) and further provided that the Offeror shall
sign the Dominion Textile confidentiality agreement in the form
attached hereto as Schedule "A" along with the other parties to
such agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE OFFEROR. The Offeror
---------------------------------------------
represents and warrants to Dominion Textile as follows:
(a) The Offeror is a corporation duly organized and validly existing
under the laws of Canada.
(b) The Offeror has the corporate power and authority to enter in
this letter agreement, to make the Offers and to carry out the
transactions contemplated hereby and by the Offers. The execution
and delivery of this letter agreement and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the
Offeror, and no other corporate proceedings on the part of the
Offeror are necessary to authorize this letter agreement. This
letter agreement has been duly executed and delivered by the
Offeror and constitutes a legal, valid and binding obligation of
the Offeror.
(c) Neither the execution and delivery of this letter agreement nor
the consummation of the transactions contemplated hereby nor
compliance with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the Offeror's
Certificate of Incorporation or Bylaws, (ii) result in a
violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of
<PAGE>
-13-
termination cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, contract, agreement or other
instrument or obligation to which the Offeror or any of its
subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, other than such violations,
breaches or defaults that shall have been waived, cured or
otherwise consented to in accordance with the terms of such
agreements or instruments or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the
Offeror or any of its subsidiaries or any of their properties or
assets, except in the case of (ii) and (iii) for violations,
breaches or defaults that would not in the aggregate materially
and adversely affect the Offeror and its subsidiaries taken as
a whole.
(d) The Offeror has entered into adequate arrangements sufficient to
ensure, upon satisfaction of the conditions of the respective
Offers, as amended hereby, that the required funds are available
to effect the full payment by the Offeror of the cash
consideration payable pursuant to Offers, as amended hereby.
(e) The Offers comply in all material respects with applicable
Canadian securities legislation.
5. REPRESENTATIONS AND WARRANTIES OF DOMINION TEXTILE. Dominion Textile
--------------------------------------------------
represents and warrants to the Offeror as follows:
(a) Dominion Textile is a corporation duly organized and validly
existing under the laws of Canada and has all requisite corporate
power and authority to own, lease and operate its properties and
to carry on its business as now being conducted. Each subsidiary
of Dominion Textile is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation and
has all requisite corporate power and
<PAGE>
-14-
authority to own, lease and operate its properties and to carry
on its business as now being conducted.
(b) Dominion Textile has the corporation power and authority to enter
into this letter agreement and to carry out the transactions
contemplated hereby; the execution and delivery of this letter
agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary
corporate action on the part of Dominion Textile and no other
corporate proceedings on the part of Dominion Textile are
necessary to authorize this letter agreement; and this letter
agreement has been duly executed and delivered by Dominion
Textile and constitutes a legal, valid and binding obligation of
Dominion Textile.
(c) Neither the execution and delivery of this letter agreement nor
the consummation of the transactions contemplated hereby nor
compliance with any of the provisions hereby will (i) conflict
with or result in any breach of any provision of Dominion
Textile's Articles of Incorporation or By-laws, (ii) to the best
of its knowledge, result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license,
lease, contract, agreement or other instrument or obligation to
which Dominion Textile or any of its subsidiaries is a party or
by which any of them or any of their properties or assets may be
bound, other than the effect of the change in control of Dominion
Textile under the terms of its outstanding Guaranteed Senior
Notes due 2003 and 2006, and the Nationsbank credit agreement of
April 9, 1996 or (iii) to the best of its knowledge, violate any
order, writ, injunction, decree, statute, rule or regulation
applicable to Dominion Textile or any of its subsidiaries or any
of their properties or assets, except in the case of (ii) and
(iii), for violations, breaches or defaults that would
<PAGE>
-15-
not in the aggregate materially and adversely affect Dominion
Textile and its subsidiaries taken as a whole.
(d) Dominion Textile has filed all material forms, reports and
documents with Canadian securities commissions since December 31,
1996 required to be filed by it under applicable Canadian
securities legislation (collectively, the "Reports"). None of the
Reports, including without limitation any financial statements or
schedules included therein, at the time filed, contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
under which they are made, not misleading. The consolidated
financial statements of Dominion Textile as of and for the year
ended June 30, 1997 have been prepared in accordance with
Canadian generally accepted accounting principles applied on a
consistent basis (except as otherwise stated in such financial
statements) and present fairly the consolidated financial
position of Dominion Textile and its subsidiaries for the periods
and as of the date thereof.
(e) The authorized capital of Dominion Textile consists of (i) an
unlimited number of Common Shares of which 41,092,037 Common
Shares were issued and outstanding as at October 29, 1997, 4,306
First Preferred Shares of which 370 First Preferred Shares were
issued and outstanding as at June 30, 1997, and an unlimited
number of second preferred shares issuable in series of which
1,919,600 redeemable second preferred shares, series D and
600,000 redeemable second preferred shares, series E were issued
and outstanding as at June 30, 1997, (ii) as at November 5, 1997
1,400,800 options to acquire Common Shares that have been granted
to directors, officers and employees of Dominion Textile, and
(iii) the Rights. No securities have been issued since the
respective dates referred to above other than Common Shares
issuable upon the exercise of currently
<PAGE>
-16-
outstanding options, warrants or rights to purchase Common Shares, the
dividend reinvestment plan or the employee share purchase plan.
(f) Except for changes resulting from the transactions contemplated
hereby or as disclosed in material change reports, the directors'
circulars of Dominion Textile dated November 10, 1997 and press
releases filed by Dominion Textile with Canadian securities
commissions since June 30, 1997, as at the date hereof, there has been
no material adverse change in the working capital, financial
condition, assets, liabilities or operations of Dominion Textile and
its subsidiaries taken as a whole since June 30, 1997.
(g) Except as adequately provided for or reserved against in the balance
sheet of Dominion Textile dated as of June 30, 1997 or the notes
thereto, or except as publicly disclosed or as referred to elsewhere
in this letter agreement or in the public disclosure of Dominion
Textile or its subsidiaries, as at the date hereof, there are no
material (measured in the context of Dominion Textile on a
consolidated basis) undisclosed liabilities of any nature, contingent
or otherwise, of Dominion Textile which should have been reflected or
reserved against in a balance sheet (including the notes thereto)
prepared in accordance with Canadian generally accepted accounting
principles, consistently applied, including:
(i) any actions, suits or proceedings pending, taken or, to Dominion
Textile's knowledge, threatened, before any governmental entity
or by any elected or appointed public official or private person
in Canada or elsewhere, whether or not having the force of law,
which are likely to have a material adverse effect on Dominion
Textile and its subsidiaries taken as a whole:
(ii) any taxes, interest and penalties, if any, which have become due
pursuant to any tax returns, pursuant to any reassessment
received
<PAGE>
-17-
by Dominion Textile or its subsidiaries or in connection
with any of its or its subsidiaries property by any relevant
taxing authority which would be material to Dominion Textile
and its subsidiaries taken as a whole, and adequate
provision for payment has been made for taxes not yet due;
and
(iii) any material proceeding or order before any governmental
entity requiring Dominion Textile or any of its subsidiaries
to comply with or take action under any environmental laws
(including all applicable laws relating to the environment,
health and safety matters or condition, hazardous
substances, pollution or protection of the environment) or
any state of affairs on the properties of Dominion Textile
or its subsidiaries which is likely to give rise to a future
claim of any nature whatsoever, including any demand,
liability, obligation, cause of action, suit, proceeding,
judgement, award, assessment or reassessment and which is
likely to have a material adverse effect on Dominion Textile
and its subsidiaries taken as a whole.
6. EXCLUSIVITY. Dominion Textile, on behalf or itself and its affiliated
-----------
entities and subsidiaries, agrees that neither it nor any of its
representatives, directors, officers, agents or affiliates nor any of their
respective representatives, directors, officers, stockholders (unless such
stockholders are also Shareholders and are acting in their capacity as such),
agents or affiliates will, without the Offeror's prior written consent,
encourage, entertain, solicit or initiate any inquiries, proposal or offers
from, entertain, engage in or participate in any discussions or negotiations
with, or provide any information to, any person or entity (or group thereof) in
connection with or for the purpose of soliciting a competing offer or
transaction, an alternate proposal, indication of interest or letter of intent
with respect to (i) an offer for or the acquisition of Dominion Textile's
capital stock, or any part thereof, (ii) the sale of all or any portion of the
assets of Dominion Textile or its subsidiaries other than in the ordinary course
of business, (iii) any amalgamation, merger or other business combination
involving Dominion Textile or its
<PAGE>
-18-
subsidiaries, (iv) any reorganization, recapitalization, liquidation or
winding-up of or similar transaction involving Dominion Textile or its
subsidiaries, or (v) any similar transaction which would accomplish the goals(s)
to be achieved pursuant to the Offers or any of the transactions described in
clauses (i), (ii), (iii) or (iv) above or which would prevent the successful
completion of the Offers. Without limiting the generality of the foregoing,
Dominion Textile shall immediately close any data room which it has established,
shall cease to provide any access whatsoever to any third party to any
non-public information (whether or not in writing) of Dominion Textile (other
than access provided pursuant to a legal obligation of Dominion Textile entered
into prior to the date hereof) and shall not after the date hereof enter into
any confidentiality or other agreement with any third party under which it
agrees to provide access to such non-public information. Nothing contained in
this Section 6 or any other provision of this Agreement shall prevent the Board
of Directors of Dominion Textile from taking such actions as the Board
determines are reasonably required in the exercise of its fiduciary duties to
respond to an unsolicited inquiry, proposal or offer received from any third
party, if the Board of Directors of Dominion Textile concludes that such
inquiry, proposal or offer, would, if consummated in accordance with its terms,
result in a transaction at least $0.50 per Common Share more favourable to the
holders of Common Shares than the Common Share Offer (a "Superior Proposal").
Dominion Textile shall immediately inform the Offeror of, and immediately
provide the Offeror with full details and complete copies of and any other
information regarding, any other such offers, proposals or expressions of
interest (whether oral or in writing).
7. FEES AND EXPENSES. Dominion Textile and the Offeror will each pay
-----------------
their respective fees and expenses (including fees and expenses of legal
counsel, investment bankers, brokers or other representatives or consultants) in
connection with the transactions contemplated hereby.
8. COMMISSIONS. Dominion Textile represents and warrants to the Offeror
-----------
that, except as noted below, it has not dealt with any broker or finder in
connection with this letter or the transactions contemplated herein and that no
other person or entity is entitled to any brokerage or finder's fee, commission
or other compensation on account of any such dealings with Dominion Textile.
Dominion Textile represents that it has retained Nesbitt Burns Inc. and
<PAGE>
-19-
Goldman, Sachs & Co. to advise it with respect to implementing transactions to
maximize shareholder value and that a true copy of the agreements under which
such persons have been retained will be provided to the Offeror not later than
November 17, 1997. Dominion Textile shall indemnify, save and hold the Offeror
harmless from and against any and all losses, costs or expenses (including,
without limitation, any and all attorneys' fees related to suits, actions or
judgements incident hereto), whether direct, contingent or consequential, and no
matter how arising, in any way related to or arising from any breach of the
representations and warranties contained in this paragraph.
9. BINDING NATURE. The parties acknowledge that this letter agreement
--------------
represents the binding and legally enforceable obligations of the parties hereto
with respect of the matters covered hereby. The parties each agree to proceed in
good faith to cause their respective counsel, accountants and personnel to
obtain any and all necessary authorizations, regulatory approvals and consents
as may be required or desirable to consummate the Offers.
10. TERMINATION: BREAK-UP FEE.
-------------------------
(a) This letter agreement may be terminated (i) at the option of the
Offeror, by written notice to Dominion Textile, if (A) the Board of
Directors of Dominion Textile makes any material amendment, supplement
or other modification to, or withdraws, its recommendation to holders
of Common Shares described in paragraph 2, or recommends a Superior
Proposal, or (B) Dominion Textile is in breach of or in default under
any material obligation contained in this letter agreement or any of
the representations and warranties of Dominion Textile set forth in
paragraph 5 hereof is inaccurate or untrue in any material respect as
at the date hereof, or (C) the Offeror fails to take-up and pay for
Common Shares under the Common Share Offer sufficient to give the
Offeror a majority of the outstanding Common Shares and a third party
acquires, directly or indirectly, pursuant to a competing offer or
transaction of the nature referred to in paragraph 6 at least a
majority of the outstanding Common Shares (and for purposes of
<PAGE>
-20-
the foregoing a "competing" offer or transaction is one which is
publicly announced, initiated or commenced prior to the expiry of the
Common Share Offer); or (ii) at the option of Dominion Textile, by
written notice to the Offeror, if (A) Dominion Textile shall have
received an unsolicited bona fide Superior Proposal that is, in the
opinion of the Board of Directors of Dominion Textile, acting in good
faith, financially superior to the price per Common Share payable
under the Common Share Offer, which proposal the Board of Directors of
Dominion Textile is recommending to Shareholders, provided that such
right of termination may be exercised by Dominion Textile only if
after giving written notice to the Offeror of the terms of such
Superior Proposal, the Offeror has not within a period of three days
following receipt of such notice, agreed to increase the cash
consideration payable pursuant to the Common Share Offer to an amount
at least equal to the consideration offered pursuant to the Superior
Proposal, or (B) the Offeror is in breach of or in default under any
material obligation contained in this letter agreement or any of the
representations and warranties of the Offeror set forth in paragraph 4
hereof is inaccurate or untrue in any material respect.
Notwithstanding anything to the contrary in this paragraph, the
termination of this letter agreement shall not affect any right any
party has with respect to the breach of this letter by another party
prior to the termination of this letter agreement.
(b) In the event that (i) this letter agreement is terminated by the
Offeror pursuant to paragraph 10(a)(i), or this letter agreement is
terminated by Dominion Textile under paragraph 10(a)(ii)A, then
Dominion Textile shall immediately pay to the Offeror a termination
fee equal to CDN $22 million.
(c) In the event that the Offeror fails to take-up and pay for Common
Shares under the Common Share Offer, as amended, other than the
failure of the
<PAGE>
-21-
Offeror to do so by reason of its failure to obtain any
regulatory consents or approvals necessary in order to do so or
the failure to satisfy the condition set forth in Section 1(b)(i)
in circumstances in which a Superior Proposal has not been
publicly announced or made, Dominion Textile shall forthwith pay
to the Offeror an amount equal to CDN $3 million on account of
the costs, fees and expenses of the Offeror in entering into this
letter agreement and making the Offers, as amended, and any
payment under this Section 10(e) shall be in addition to any
amount payable under Section 10(b) hereof.
11. PUBLICATION/DISCLOSURE. Except as may otherwise be required by law or
----------------------
by regulatory authorities having discretion over such matters, each party hereto
agrees that it will not make any public disclosure with respect to this letter
agreement or the negotiations related to such agreement in each case without the
prior approval of the other party, which approval will not be unreasonably
withheld. If any party deems that it is required by law or such regulatory
authority to make any public announcement or release concerning this letter
agreement, such party agrees to provide a written copy thereof to the other
party in advance of any such announcement or release and to reasonably consider
any suggested modifications, which will be provided by the other party in a
timely matter. The parties acknowledge that the terms of this letter agreement
will be summarized in the amended Offers and in the amendment to the directors'
circular of Dominion Textile referred to in paragraph 2 hereof.
12. OFFICERS' AND DIRECTORS' INSURANCE. The Offeror agrees to use
----------------------------------
reasonable efforts to secure directors and officers liability insurance coverage
for Dominion Textile's current and former directors and officers on a seven year
"trailing" or "run off" basis from and after the successful completion of the
Offers. If a trailing policy is not available, then the Offeror agrees that for
the entire period from the successful completion of the Offers until three years
after the successful completion of the Offers, the Offeror will cause Dominion
Textile or any successor to Dominion Textile to maintain Dominion Textile's
current directors' and officers' insurance policy or an equivalent policy,
subject in either case to terms and conditions no less advantageous to the
directors and officers of Dominion Textile than those contained in the policy
<PAGE>
-22-
in effect on the date hereof, for all present and former directors and officers
of Dominion Textile covering claims made prior to or within three years after
the successful completion of the Offers. Further, the Offeror agrees that after
the expiration of such three year period it will use reasonable efforts to cause
such directors and officers to be covered under its then existing directors and
officer insurance policy.
13. NOTICES. Any notice required or permitted to be given hereunder shall
-------
be written, and shall be either (i) personally delivered, (ii) sent by Federal
Express or other reputable common carrier guaranteeing next business day
delivery, or (iii) sent by facsimile, to the respective addresses of the parties
set forth below, or to such other place as any party hereto may by notice given
as provided herein designate for receipt of notices hereunder. Any such notice
shall be deemed given and effective upon receipt or refusal of receipt thereof
by the primary party to whom it is to be sent.
If to Dominion Textile Inc.: Dominion Textile Inc.
1950 Sherbrooke Street West
Montreal, Quebec
H3H 1E7
Attention: Charles H. Hantho
Chairman
Facsimile: (514) 989-6073
with a required copy to: Osler, Hoskin & Harcourt
1 First Canadian Place
P.O. Box 50, Stn. First Canadian Place
Toronto, Ontario
M5X 1B8
Attention: Stan Magidson
Facsimile: (416) 862-6666
<PAGE>
-23-
If to the Offeror: DT Acquisition Inc.
4838 Jenkins Avenue
North Charleston, SC 29405
Attention: Jerry Zucker
Chairman, President and Chief
Executive Officer
Facsimile: (803) 747-4092
If to Polymer: Polymer Group, Inc.
4838 Jenkins Avenue
North Charleston, SC 29405
Attention: Jerry Zucker
Chairman, President and Chief
Executive Officer
Facsimile: (803) 747-4092
with a required copy to: Kirkland & Ellis
200 East Randolph Drive
Chicago, ILL. 60601
Attention: H. Kurt von Moltke
Facsimile: (312) 861-2200
with a required copy to: Tory Tory DesLauriers & Binnington
Suite 3000, Aetna Tower
P.O. Box 270
Toronto-Dominion Centre
Toronto, Ontario
M5K 1N2
Attention: James E.A. Turner
Facsimile: (416) 865-7380
14. GOVERNING LAW. This agreement shall be governed by and construed in
-------------
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
15. COUNTERPARTS. This letter may be executed by facsimile signature, or
------------
otherwise, in two or more counterparts, all of which taken together will
constitute one binding agreement.
16. ENTIRE AGREEMENT. This letter constitutes and comprises the entire
----------------
agreement and understanding between Dominion Textile, the Offeror and Polymer
Group, Inc. ("Polymer") as of the date hereof with regard to the subject matter
hereof and there is no other prior or
<PAGE>
-24-
contemporaneous written, oral or collateral agreements, undertakings, promises,
warranties or covenants respecting such subject matter not expressly set forth
herein.
17. POLYMER PROVISIONS. Polymer represents and warrants to Dominion
------------------
Textile as follows:
(a) Polymer is a corporation duly organized and validly existing under the
laws of the state of Delaware;
(b) Polymer has the corporate power and authority to enter into this
letter agreement. The execution and delivery of this letter agreement
has been duly and validly authorized by all necessary corporate action
on the part of Polymer, and no other corporate proceedings on the part
of Polymer are necessary to authorize this letter agreement. This
letter agreement has been duly executed and delivered by Polymer and
constitutes a legal, valid and binding obligation of Polymer;
(c) the execution and delivery of this letter agreement will not (i)
conflict with or result in any breach of any provision of Polymer's
Certificate of Incorporation or By-laws, (ii) to the best of its
knowledge result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, contract, agreement or other instrument or
obligation to which Polymer or any of its subsidiaries is a party or
by which any of them or any of their properties or assets may be
bound, (iii) to the best of its knowledge violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Polymer
or any of its subsidiaries or any of their properties or assets,
except in the case of (ii) and (iii), for violations, breaches or
defaults that would not in the aggregate materially and adversely
affect Polymer and its subsidiaries taken as a whole, or (iv) have any
adverse effect on the financing for the Offers, as amended, or the
ability of the Offeror to draw down on its financing and consummate
the Offers, as amended; and
<PAGE>
-25-
(d) the Offeror has entered into adequate arrangements sufficient to
ensure, upon satisfaction of the conditions of the respective Offers,
as amended, that the required funds are available to effect the full
payment by the Offeror of the cash consideration payable pursuant to
the Offers, as amended, and the Offeror will, upon satisfaction of the
conditions of the Offers, as amended, be able to obtain the funds
under such arrangements.
18. COVENANT OF POLYMER. Upon execution of this letter agreement by
-------------------
Dominion Textile, Polymer agrees, in its capacity as a shareholder of the
Offeror, to cause the Offeror to take whatever action may be necessary in
order to obtain the financing under its financing arrangements, subject to
the satisfaction of the conditions of the Offers, as amended, required for
consummation of the Offers, as amended, and to comply with all of its
covenants and agreements contained in, or contemplated by, this letter
agreement, subject to the terms and conditions hereof.
<PAGE>
If the foregoing accurately expresses Dominion Textile's understanding and
agreement with respect to the matters described in this letter, please execute
this letter below and return it to us.
Very truly yours
DT ACQUISITION INC.
By: /s/ James G. Boyd
-----------------------------
James G. Boyd
Executive Vice President, Chief
Financial Officer, Secretary
and Treasurer
Very truly yours
POLYMER GROUP, INC.
By: /s/ James G. Boyd
-----------------------------
James G. Boyd
Executive Vice President, Chief
Financial Officer, Secretary
and Treasurer
Accepted and Agreed as of November , 1997
DOMINION TEXTILE INC.
By: /s/ C.H. Hantho
---------------------
<PAGE>
THIS DOCUMENT IS IMPORTANT AND REQUIRES
YOUR IMMEDIATE ATTENTION
You are required under the Canada Business Corporations Act to send the
certificates for your Common Shares of Dominion Textile Inc. to Dominion Textile
c/o Montreal Trust Company of Canada by no later than January 26, 1998. If you
require further information about this notice, please call Montreal Trust
Company of Canada at 1-800-639-0802 or (514) 982-7535 in the Montreal area.
DT ACQUISITION INC.
OFFER TO PURCHASE THE COMMON SHARES OF
DOMINION TEXTILE INC.
NOTICE PURSUANT TO THE PROVISIONS OF SECTION 206
OF THE CANADA BUSINESS CORPORATIONS ACT
TO: HOLDERS OF COMMON SHARES OF DOMINION TEXTILE INC.
Pursuant to an offer dated October 29, 1997 (the "Offer"), DT Acquisition
Inc. ("DTA") offered to purchase all of the Common Shares (the "Common Shares")
of Dominion Textile Inc. ("Dominion Textile") at a price of $11.75 (Cdn.) cash
per Common Share. DTA subsequently increased the consideration payable for each
Common Share tendered to the Offer to $14.50 (Cdn.) cash per Common Share and
extended the time during which the Offer was open for acceptance to 4:00 p.m.
(Toronto time) on December 29, 1997 (the "Expiry Time").
As of the Expiry Time, the holders of more than 90% of the Common Shares to
which the Offer relates have accepted the Offer and DTA has taken up and paid
for the Common Shares tendered to the Offer.
In accordance with the Canada Business Corporations Act (the "Act"), you
are hereby given notice that you are required under the Act to elect by no later
than January 26, 1998, either:
(i) to transfer your Common Shares to DTA on the terms on which it
acquired the Common Shares of the holders who accepted the Offer (i.e.
for $14.50 (Cdn.) cash per Common Share), or
(ii) to demand payment of the fair value of your Common Shares by notifying
DTA of your election.
<PAGE>
-2-
If you elect to transfer your Common Shares to DTA as contemplated under
clause (i) above, you should deliver the certificate(s) representing your Common
Shares and a letter advising DTA of your election to:
By Mail
Montreal Trust Company of Canada
Stock Transfer Services
151 Front Street West
8th Floor
Toronto, Ontario
Attn: Re-Org Department
M5J 2N1
By Hand
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Montreal Trust Montreal Trust Montreal Trust Montreal Trust
Company of Canada Company of Canada Company of Canada Company of Canada
Stock Transfer Services Stock Transfer Services Stock Transfer Services Stock Transfer Services
Western Gas Tower Place Montreal Trust 151 Front Street West 4th Floor
530-8th Avenue S.W. 1800 McGill College Ave. 8th Floor 510 Burrard Street
Calgary, Alberta Montreal, Quebec Toronto, Ontario Vancouver, B.C.
T2P 3S8 H3A 3K9 M5J 2N1 V6C 3B9
Attn: Re-Org Department Attn: Re-Org Department Attn: Re-Org Department
</TABLE>
Upon receipt of your election and certificate(s), Montreal Trust Company of
Canada ("Montreal Trust") will send you a cheque for the amount to which you are
entitled.
If you elect to demand payment of the fair value of your Common Shares as
contemplated under clause (ii) above, you should deliver the certificates(s)
representing your Common Shares and a letter advising DTA of your election to
Montreal Trust at one of the above addresses. You must notify DTA of such
election by no later than January 26, 1998. You must then apply to a court
having jurisdiction for a determination of the fair value of your Common Shares
by no later than February 9, 1998. If you do not apply to a court by that date,
you will be deemed to have elected to transfer your Common Shares to DTA on the
same terms as the Offer and to receive $14.50 (Cdn.) cash per share. In that
event, upon receipt of the certificate(s) for your Common Shares, Montreal Trust
will send you a cheque for the amount to which you are entitled.
If you fail to notify DTA (either directly or c/o Montreal Trust) of your
election under either clause (i) or (ii) above within the time specified, you
will be deemed to have elected to transfer your Common Shares to DTA on the
terms of the Offer and to receive $14.50 (Cdn.) cash per share. Upon receipt of
your certificate(s), Montreal Trust will send you a cheque for the amount to
which you are entitled.
No matter which election you make, you are required by the Act to send the
certificate(s) representing your Common Shares to Dominion Textile c/o Montreal
Trust by no later than January 26, 1998. The certificate(s) may be sent "as is"
and do not need to be endorsed. A return envelope is enclosed for your
convenience.
<PAGE>
-3-
Montreal Trust is acting as agent on behalf of DTA for purposes of
receiving your election and is acting as agent on behalf of Dominion Textile in
receiving the certificates for your Common Shares and in making the payments
referred to above.
DATED this 30th day of December, 1997.
DT ACQUISITION INC.
By: /s/ Jerry Zucker
------------------------------
Jerry Zucker
Chairman, President and
Chief Executive Officer
<PAGE>
THIS DOCUMENT IS IMPORTANT AND REQUIRES
YOUR IMMEDIATE ATTENTION
You are required under the Canada Business Corporations Act to send the
certificates for your First Preferred Shares of Dominion Textile Inc. to
Dominion Textile c/o Montreal Trust Company of Canada by no later than
January 26, 1998. If you require further information about this notice,
please call Montreal Trust Company of Canada at 1-800-639-0802 or
(514) 982-7535 in the Montreal area.
DT ACQUISITION INC.
OFFER TO PURCHASE THE FIRST PREFERRED SHARES OF
DOMINION TEXTILE INC.
NOTICE PURSUANT TO THE PROVISIONS OF SECTION 206
OF THE CANADA BUSINESS CORPORATIONS ACT
TO: HOLDERS OF FIRST PREFERRED SHARES OF DOMINION TEXTILE INC.
Pursuant to an offer dated October 29, 1997 (the "Offer"), DT Acquisition
Inc. ("DTA") offered to purchase all of the First Preferred Shares (the "First
Preferred Shares") of Dominion Textile Inc. ("Dominion Textile") at a price of
$109.50 (Cdn.) cash per First Preferred Share. DTA subsequently increased the
consideration payable for each First Preferred Share tendered to the Offer to
$150.00 (Cdn.) cash per First Preferred Share and extended the time during which
the Offer was open for acceptance to 4:00 p.m. (Toronto time) on December 29,
1997 (the "Expiry Time").
As of the Expiry Time, the holders of more than 90% of the First Preferred
Shares to which the Offer relates have accepted the Offer and DTA has taken up
and paid for the First Preferred Shares tendered to the Offer.
In accordance with the Canada Business Corporations Act (the "Act"), you
are hereby given notice that you are required under the Act to elect by no later
than January 26, 1998, either:
(i) to transfer your First Preferred Shares to DTA on the terms on which
it acquired the First Preferred Shares of the holders who accepted the
Offer (i.e. for $150.00 (Cdn.) cash per First Preferred Share), or
(ii) to demand payment of the fair value of your First Preferred Shares by
notifying DTA of your election.
<PAGE>
-2-
If you elect to transfer your First Preferred Shares to DTA as contemplated
under clause (i) above, you should deliver the certificate(s) representing your
First Preferred Shares and a letter advising DTA of your election to:
By Mail
Montreal Trust Company of Canada
Stock Transfer Services
151 Front Street West
8th Floor
Toronto, Ontario
Attn: Re-Org Department
M5J 2N1
By Hand
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Montreal Trust Montreal Trust Montreal Trust Montreal Trust
Company of Canada Company of Canada Company of Canada Company of Canada
Stock Transfer Services Stock Transfer Services Stock Transfer Services Stock Transfer Services
Western Gas Tower Place Montreal Trust 151 Front Street West 4th Floor
530-8th Avenue S.W. 1800 McGill College Ave. 8th Floor 510 Burrard Street
Calgary, Alberta Montreal, Quebec Toronto, Ontario Vancouver, B.C.
T2P 3S8 H3A 3K9 M5J 2N1 V6C 3B9
Attn: Re-Org Department Attn: Re-Org Department Attn: Re-Org Dept.
</TABLE>
Upon receipt of your election and certificates(s), Montreal Trust Company of
Canada ("Montreal Trust") will send you a cheque for the amount to which you are
entitled.
If you elect to demand payment of the fair value of your First Preferred
Shares as contemplated under clause (ii) above, you should deliver the
certificate(s) representing your First Preferred Shares and a letter advising
DTA of your election to Montreal Trust at one of the above addresses. You must
notify DTA of such election by no later than January 26, 1998. You must then
apply to a court having jurisdiction for a determination of the fair value of
your First Preferred Shares by no later than February 9, 1998. If you do not
apply to a court by that date, you will be deemed to have elected to transfer
your First Preferred Shares to DTA on the same terms as the Offer and to receive
$150.00 (Cdn.) cash per share. In that event, upon receipt of the certificate(s)
for your First Preferred Shares, Montreal Trust will send you a cheque for the
amount to which you are entitled.
If you fail to notify DTA (either directly or c/o Montreal Trust) of your
election under either clause (i) or (ii) above within the time specified, you
will be deemed to have elected to transfer your First Preferred Shares to DTA on
the terms of the Offer and to receive $150.00 (Cdn.) cash per share. Upon
receipt of your certificate(s), Montreal Trust will send you a cheque for the
amount to which you are entitled.
No matter which election you make, you are required by the Act to send the
certificate(s) representing your First Preferred Shares to Dominion Textile c/o
Montreal Trust by no later than January 26, 1998. The certificate(s) may be sent
"as is" and does not need to be endorsed. A return envelope is enclosed for your
convenience.
<PAGE>
-3-
Montreal Trust is acting as agent on behalf of DTA for purposes of
receiving your election and is acting as agent on behalf of Dominion Textile in
receiving the certificates for your First Preferred Shares and in making the
payments referred to above.
DATED this 30th day of December, 1997.
DT ACQUISITION INC.
By: /s/ Jerry Zucker
------------------------------
Jerry Zucker
Chairman, President and
Chief Executive Officer
<PAGE>
EXHIBIT 2.12
DOMINION TEXTILE INC.
NOTICE OF REDEMPTION
TO: HOLDERS OF SECOND PREFERRED SHARES, SERIES D OF DOMINION TEXTILE INC.
RE: REDEMPTION OF ALL SECOND PREFERRED SHARES, SERIES D
NOTICE IS HEREBY GIVEN THAT:
1. In accordance with the rights, privileges, restrictions and conditions
attaching to the Second Preferred Shares, Series D (the "Series D
Preferred Shares") of Dominion Textile Inc. (the "Company"), the Company
intends to redeem, on January 29, 1998 (the "Redemption Date"), all of your
Series D Preferred Shares at a price of $25.00 per share together with an
amount equal to all accrued and unpaid dividends thereon up to but
excluding the Redemption Date (the "Redemption Price").
2. Montreal Trust Company of Canada ("Montreal Trust") is acting as agent for
the Company in connection with this redemption.
THE SHARE CERTIFICATE(S) REPRESENTING YOUR SERIES D PREFERRED SHARES,
TOGETHER WITH A SIGNED COPY OF THE ENCLOSED LETTER OF TRANSMITTAL, SHOULD
BE RECEIVED BY MONTREAL TRUST ON OR BEFORE JANUARY 29, 1998.
3. Payment of the Redemption Price (less any tax required to be deducted and
withheld by the Company) will be made on the Redemption Date provided that
you present and surrender, at the registered office of the Company, or at
one of the offices of Montreal Trust listed on the reverse side of the
enclosed Letter of Transmittal, the certificate(s) representing your Series
D Preferred Shares on or before the Redemption Date. Such payment will be
made by cheque issued by Montreal Trust in the name specified by you in the
enclosed Letter of Transmittal or, if no such name or address is specified,
then in the name and to the address of the registered holder as they appear
on the books of the Company. The mailing by Montreal Trust, or availability
at one of its offices, of a cheque in the amount of the Redemption Price
shall constitute payment of the Redemption Price by the Company.
From and after the Redemption Date, all Series D Preferred Shares shall be
deemed to be redeemed and shall cease to be entitled to dividends or to any
other participation in the assets of the Company, and you shall not be
entitled to exercise any other rights as a shareholder in respect thereof,
unless payment of the Redemption Price shall not be duly made by the
Company.
4. At any time after this notice of redemption is given, the Company shall
have the right to deposit the Redemption Price of any or all Series D
Preferred Shares called for redemption with Montreal Trust to the credit of
a special account or accounts in trust for the respective holders of such
shares, to be paid to them respectively upon surrender to Montreal Trust of
the certificate or certificates representing the same. Upon such deposit or
deposits being made, such shares shall be deemed to be redeemed on the
Redemption Date.
After the Company has made a deposit as aforesaid with respect to any
shares, the holders thereof shall not be entitled to exercise any of the
rights of shareholders in respect thereof and the rights of the holders
thereof shall be limited to receiving the proportion of the amounts so
deposited applicable to such shares, without interest; any interest allowed
on such deposits shall belong to the Company.
DATED at Toronto, Ontario this 23rd day of December, 1997.
DOMINION TEXTILE INC.
/s/ Jerry Zucker
Jerry Zucker
Chairman
<PAGE>
EXHIBIT 2.13
DOMINION TEXTILE INC.
NOTICE OF REDEMPTION
TO: HOLDERS OF SECOND PREFERRED SHARES, SERIES E OF DOMINION TEXTILE INC.
RE: REDEMPTION OF SECOND PREFERRED SHARES, SERIES E
NOTICE IS HEREBY GIVEN THAT:
1. In accordance with the rights, privileges, restrictions and conditions
attaching to the Second Preferred Shares, Series E (the "Series E
Preferred Shares") of Dominion Textile Inc. (the "Company"), the Company
intends to redeem, on January 29, 1998 (the "Redemption Date"), all of your
Series E Preferred Shares at a price of $25.00 per share together with an
amount equal to all accrued and unpaid dividends thereon up to but
excluding the Redemption Date (the "Redemption Price").
2. Montreal Trust Company of Canada ("Montreal Trust") is acting as agent for
the Company in connection with this redemption.
THE SHARE CERTIFICATE(S) REPRESENTING YOUR SERIES E PREFERRED SHARES,
TOGETHER WITH A SIGNED COPY OF THE ENCLOSED LETTER OF TRANSMITTAL, SHOULD
BE RECEIVED BY MONTREAL TRUST ON OR BEFORE JANUARY 29, 1998.
3. Payment of the Redemption Price (less any tax required to be deducted and
withheld by the Company) will be made on the Redemption Date provided that
you present and surrender, at the registered office of the Company, or at
one of the offices of Montreal Trust listed on the reverse side of the
enclosed Letter of Transmittal, the certificate(s) representing your Series
E Preferred Shares on or before the Redemption Date. Such payment will be
made by cheque issued by Montreal Trust in the name specified by you in the
enclosed Letter of Transmittal or, if no such name or address is specified,
then in the name and to the address of the registered holder as they appear
on the books of the Company. The mailing by Montreal Trust, or availability
at one of its offices, of a cheque in the amount of the Redemption Price
shall constitute payment of the Redemption Price by the Company.
From and after the Redemption Date, all Series E Preferred Shares shall be
deemed to be redeemed and shall cease to be entitled to dividends or to any
other participation in the assets of the Company, and you shall not be
entitled to exercise any other rights as a shareholder in respect thereof,
unless payment of the Redemption Price shall not be made upon presentation
and surrender of the share certificate(s), in which case your rights shall
remain unaffected.
4. At any time after this notice of redemption is given, the Company shall
have the right to deposit the Redemption Price of any or all Series E
Preferred Shares called for redemption with Montreal Trust to the credit of
a special account or accounts in trust for the respective holders of such
shares, to be paid to them respectively upon surrender to Montreal Trust of
the certificate or certificates representing the same. Upon such deposit or
deposits being made, such shares shall be deemed to be redeemed on the
Redemption Date.
After the Company has made a deposit as aforesaid with respect to any
shares, the holders thereof shall not be entitled to exercise any of the
rights of shareholders in respect thereof and the rights of the holders
thereof shall be limited to receiving the proportion of the amounts so
deposited applicable to such shares, without interest; any interest allowed
on such deposits shall belong to the Company.
DATED at Toronto, Ontario this 23rd day of December, 1997.
DOMINION TEXTILE INC.
/s/ Jerry Zucker
Jerry Zucker
Chairman
<PAGE>
THIS INDENTURE made this 29th day of January, 1998
BETWEEN:
DOMINION TEXTILE INC., a corporation continued under
the laws of Canada
(hereinafter referred to as the "Corporation")
OF THE FIRST PART
-and-
DT ACQUISITION INC., a corporation incorporated under the
laws of Canada
(hereinafter referred to as the "Shareholder")
OF THE SECOND PART
A. The Corporation wishes to be dissolved by way of voluntary dissolution
under the provisions of the Canada Business Corporations Act, and the
Shareholder wishes to assume and perform as and from the date hereof all of
the liabilities of the Corporation;
B. The Shareholder is the owner of all of the issued and outstanding shares in
the capital of the Corporation and on the distribution of the assets of the
Corporation on dissolution is entitled to all such assets; and
C. Dissolution of the Corporation has been authorized by a special resolution
signed by the Shareholder.
NOW THEREFORE THIS INDENTURE WITNESSES THAT:
1. As part of the dissolution of the Corporation, and in connection with the
distribution of the assets of the Corporation on dissolution as provided herein,
the Shareholder hereby assumes and agrees to pay, discharge and perform as of
and from the date hereof, all liabilities and obligations of the Corporation.
<PAGE>
-2-
2. The Corporation hereby transfers and assigns to the Shareholder on the date
hereof, as part of the dissolution of the Corporation, all of the Corporation's
right, title, benefit and interest in and to all of its property, assets and
rights of any kind whatsoever, except such property, the assignment of which
would be contrary to law or which requires the consent of another person which
consent has not been obtained (the "Assets").
3. This Indenture is intended to and shall operate as a transfer and
assignment to the Shareholder of the Assets as and from the date hereof and the
Shareholder shall from the date hereof be the owner of the Assets.
The Corporation hereby declares that, as to any of the Assets hereby conveyed,
the title to which may not have fully passed to the Shareholder by virtue of
this Indenture or by virtue of any transfer or assignment which may from time to
time be executed and delivered pursuant to the provisions hereof, the
Corporation holds such Assets in trust for the Shareholder to transfer and
assign the same as the Shareholder may from time to time direct. With respect to
any property, assets or rights of the Corporation not included in the Assets (an
"Excluded Asset"), the Corporation shall assign such Excluded Asset to the
Shareholder at the earliest time such an assignment is permitted in law or
consent therefor has been obtained or is no longer required to be obtained, as
the case may be, and until such time, to the maximum extent permitted by law,
shall hold such Excluded Asset for the benefit of the Shareholder and shall take
any and all action with respect thereto as the Shareholder may reasonably direct
for the Shareholder's account and benefit. The Corporation shall use its best
efforts to obtain all consents required for the assignment to the Shareholder of
an Excluded Asset.
4. The Corporation hereby constitutes and appoints the Shareholder, its
successors and assigns, the true and lawful attorney of the Corporation for and
in the name of or otherwise on behalf of the Corporation with full power of
substitution to do and execute from time to time, all deeds, matters and things
whatsoever necessary or desirable for or in connection with the performance by
the Corporation of its obligations hereunder or for or in connection with the
assignment, transfer and/or conveyance of any interest in the Assets to the
Shareholder, its successors and assigns. This appointment, coupled with an
interest, is irrevocable by the
<PAGE>
-3-
Corporation and shall not be revoked by the insolvency or bankruptcy of the
Corporation or by the dissolution, liquidation or other termination of the
existence of the Corporation for any reason.
5. This Indenture shall be construed in accordance with the laws of the
Province of Ontario, which jurisdiction shall be the exclusive forum with
respect to any and all actions or suits brought with respect hereto.
6. This Indenture shall enure to the benefit of and be binding upon the
successors and assigns of the parties hereto.
DOMINION TEXTILE INC.
By: /s/ Jerry Zucker
-------------------------------
By: /s/ James G. Boyd
-------------------------------
DT ACQUISITION INC.
By: /s/ Jerry Zucker
-------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE (the "Supplemental Indenture"), dated as of
October __, 1997, between Polymer Group, Inc., a Delaware corporation (the
"Company"), Harris Trust and Savings Bank, an Illinois banking corporation, as
Trustee (the "Trustee") and Loretex Corporation, a New York Corporation
("Loretex").
W I T N E S S E T H :
WHEREAS, the Company, the Trustee and the Guarantors (as defined therein)
are parties to that certain Indenture, dated as of July 1, 1997 (the
"Indenture"), relating to the 9% Senior Subordinated Notes due 2007 of the
Company;
WHEREAS, pursuant to the Stock Purchase Agreement, dated as of September
19, 1997, PGI Polymer, Inc., a wholly owned subsidiary of the Company, agreed to
acquire the capital stock of Loretex;
WHEREAS, the Company, the Trustee and Loretex desire, pursuant to Section
4.19 of the Indenture, to execute this Supplemental Indenture to add Loretex as
a Guarantor of the Indenture; and
WHEREAS, the Company,and Loretex have duly authorized the execution and
delivery of this Supplemental Indenture in order for Loretex to assume all the
obligations of a Guarantor under the Securities and the Indenture.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree for the equal and proportionate benefit
of all Holders of the Securities as follows:
SECTION 1. All capitalized terms used herein without definition herein
shall have the meanings ascribed thereto in the Indenture.
SECTION 2. Loretex hereby assumes all of the obligations of a Guarantor
under the Securities and the Indenture. Loretex may exercise every right and
power of a Guarantor under the Indenture with the same effect as if it had been
named as a Guarantor therein.
SECTION 3. This Supplemental Indenture shall be governed by and construed
in accordance with the laws of the state of New York applicable to contracts to
be performed entirely in that State.
SECTION 4. This Supplemental Indenture may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 5. In case any provision in this Supplemental Indenture shall be
invalid,
<PAGE>
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 6. Except as expressly supplemented hereby, each provision of the
Indenture shall remain in full force and effect and, as supplemented hereby, the
Indenture is in all respects agreed to, ratified and confirmed by each of the
Company and the Trustee.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
POLYMER GROUP, INC.
By: James G. Boyd
------------------------------
Title: Ex VP, Treasurer and CFO
Attest: Charlotte Crosby
----------------------------
Title: Assistant Secretary
LORETEX CORPORATION
as Guarantor
By: James G. Boyd
------------------------------
Title: Ex VP, Treasurer and CFO
Attest: Charlotte Crosby
----------------------------
Title: Assistant Secretary
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By: J. Bartolini
------------------------------
Title: Vice President
Attest: C. Potte
----------------------------
Title: Assistant Secretary
-3-
<PAGE>
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE (the "Supplemental Indenture"), dated as of
January 29, 1998, between Polymer Group Inc., a Delaware corporation ("PGI"),
Harris Trust and Savings Bank, an Illinois banking corporation, as Trustee (the
"Trustee"), DomTex Industries Inc., a New York Corporation, Dominion Textile
(USA) Inc., a Delaware corporation, and Poly-Bond Inc., a Delaware corporation
(each a "Corporation" and, collectively, the "Corporations").
W I T N E S S E T H :
WHEREAS, PGI, the Trustee and the Guarantors (as defined therein) are
parties to that certain Indenture, dated as of July 1, 1997 (the "Indenture"),
relating to the 9% Senior Subordinated Notes due 2007 of the Company;
WHEREAS, each of the Corporations is a wholly-owned subsidiary of PGI;
WHEREAS, PGI, the Trustee and each of the Corporations desire, pursuant to
Section 4.19 of the Indenture, to execute this Supplemental Indenture in order
to add each of the Corporations as Guarantors of the Indenture; and
WHEREAS, PGI, and each of the Corporations have duly authorized the
execution and delivery of this Supplemental Indenture in order for each of the
Corporations to assume all the obligations of a Guarantor under the Securities
and the Indenture.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree for the equal and proportionate benefit
of all Holders of the Securities as follows:
SECTION 1. All capitalized terms used herein without definition herein
shall have the meanings ascribed thereto in the Indenture.
SECTION 2. Each of the Corporations hereby assumes all of the obligations
of a Guarantor under the Securities and the Indenture. Each of the Corporations
may exercise every right and power of a Guarantor under the Indenture with the
same effect as if it had been named as a Guarantor therein.
SECTION 3. This Supplemental Indenture shall be governed by and construed
in accordance with the laws of the state of New York applicable to contracts to
be performed entirely in that State.
SECTION 4. This Supplemental Indenture may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 5. In case any provision in this Supplemental Indenture shall be
invalid,
<PAGE>
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 6. Except as expressly supplemented hereby, each provision of the
Indenture shall remain in full force and effect and, as supplemented hereby, the
Indenture is in all respects agreed to, ratified and confirmed by each of PGI
and the Trustee.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
POLYMER GROUP, INC.
By: James G. Boyd
------------------------------
Title: Ex VP, Treasurer and CFO
Attest: Charlotte Crosby
----------------------------
Title: Assistant Secretary
DOMTEX INDUSTRIES, INC.
as Guarantor
By: James G. Boyd
------------------------------
Title: Ex VP, Treasurer and CFO
Attest: Charlotte Crosby
----------------------------
Title: Assistant Secretary
DOMINION TEXTILE (USA) INC.
as Guarantor
By: James G. Boyd
------------------------------
Title: Ex VP, Treasurer and CFO
Attest: Charlotte Crosby
----------------------------
Title: Assistant Secretary
POLY-BOND INC.
as Guarantor
By: James G. Boyd
------------------------------
Title: Ex VP, Treasurer and CFO
Attest: Charlotte Crosby
----------------------------
Title: Assistant Secretary
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By: J. Bartolini
------------------------------
Title: Vice President
Attest:
----------------------------
Title:
-3-
<PAGE>
EXHIBIT 11
POLYMER GROUP, INC.
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------
1997 1996 1995
------- ------- --------
<S> <C> <C> <C>
BASIC:
Net income (loss) applicable to common stock (A)... $15,428 $(2,130) $(28,446)
Weighted average shares outstanding................ 32,000 27,688 20,500
Net income (loss) per common share--basic.......... $ .48 $ (.08) $ (1.39)
DILUTED:
Net income (loss) applicable to common stock (A)... $15,428 $(2,130) $(28,446)
Weighted average shares outstanding................ 32,000 27,688 20,500
Net income (loss) per common share--diluted........ $ .48 $ (.08) $ (1.39)
</TABLE>
- --------
(A) Includes cumulative dividends on redeemable preferred stock of
approximately $3.0 million and $4.8 million in 1996 and 1995,
respectively.
<PAGE>
[LOGO OF DELOITTE & TOUCHE]
Deloitte & Touche, S.E.N.C.
Chartered Accountants
1 Place Ville-Marie Telephone: (514) 393-7115
Suite 3000 Facsimile: (514) 393-7140
Montreal QC H3B 4T9
United States Securities & Exchange Commission
Dear Sirs:
We have been provided with a copy of the disclosures under item 9. "Charges In
and Disagreements with Accountants on Accounting and Financial Disclosure" as
contained in Polymer Group, Inc.'s Annual Report on Form 10-K for the fiscal
year ended January 3, 1998. Accordingly, we agree with such statements contained
therein.
/s/ Deloitte & Touche
Chartered Accountants
Montreal, Quebec
April 2, 1998
<PAGE>
EXHIBIT 21
Polymer Group, Inc.
Subsidiaries of Polymer Group, Inc., as of 1/29/98
Subsidiary Jurisdiction of Incorporation
- ---------- -----------------------------
PGI Polymer, Inc. Delaware
Chicopee Holdings, Inc. Delaware
Chicopee, Inc. Delaware
Chicopee Holdings B.V. The Netherlands, Delaware*
Chicopee, B.V. The Netherlands
FiberTech Group, Inc. Delaware
Technetics Group, Inc. Delaware
Fibergol Corporation Delaware
Bonlam S.A. de C.V. Mexico
Fabrene Group, Inc. Canada
Fabrene Inc. Canada
Fabrene Corp. Delaware
Fabrene L.L.C. Delaware
PNA Corp. Delaware
FNA Polymer Corp. Delaware
DT Acquisition Inc. Canada
Loretex Corporation New York
Dominion Textile (USA) Inc. Delaware
Dominion Textile Mauritius Mauritius
Dominion Textile France S.a.r.l. France
Nordlys S.A. France
Nordlys UK Ltd. United Kingdom
Geca Tapes B.V. The Netherlands
Albuma S.A. France
DomTex Industries Inc. New York
Poly-Bond Inc. Delaware
3427790 Canada Limited Canada
* Pursuant to a certificate of domestication filed with the Secretary of State
of Delaware on September 19, 1996, this subsidiary was incorporated in the State
of Delaware under the name Chicopee Holdings (Netherlands) B.V. Corporation.
<PAGE>
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-04969) pertaining to the 1996 Key Employee Stock Option Plan of
Polymer Group, Inc. of our report dated March 25, 1998, with respect to the
consolidated financial statements and schedule of Polymer Group, Inc. included
in the Annual Report (Form 10-K) for the year ended January 3, 1998.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
April 3, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Polymer Group, Inc.'s 1997 Annual Report on Form 10-K and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> JAN-03-1998
<CASH> 50,190
<SECURITIES> 7,754
<RECEIVABLES> 112,831
<ALLOWANCES> 5,503
<INVENTORY> 94,128
<CURRENT-ASSETS> 755,070
<PP&E> 697,804
<DEPRECIATION> 91,544
<TOTAL-ASSETS> 1,627,753
<CURRENT-LIABILITIES> 535,045
<BONDS> 675,107
0
0
<COMMON> 320
<OTHER-SE> 198,770
<TOTAL-LIABILITY-AND-EQUITY> 1,627,753
<SALES> 535,267
<TOTAL-REVENUES> 535,267
<CGS> 402,058
<TOTAL-COSTS> 402,058
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,499
<INCOME-PRETAX> 40,442
<INCOME-TAX> 13,009
<INCOME-CONTINUING> 27,433
<DISCONTINUED> 0
<EXTRAORDINARY> (12,005)
<CHANGES> 0
<NET-INCOME> 15,428
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
<PAGE>
Offer To Purchase
and Consent Solicitation Statement
DOMINION TEXTILE (USA) INC.
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING
8 7/8% GUARANTEED SENIOR NOTES DUE NOVEMBER 1, 2003
AND SOLICITATION OF CONSENTS FOR
AMENDMENT OF THE RELATED INDENTURE
----------------
Dominion Textile (USA) Inc., a Delaware corporation (the "Company"), hereby
offers to purchase for cash, upon the terms and subject to the conditions set
forth in this Offer to Purchase and Consent Solicitation Statement (as it may
be amended or supplemented from time to time, the "Statement") and in the
accompanying Consent and Letter of Transmittal (the "Consent and Letter of
Transmittal" and, together with this Statement, the "Offer"), any and all of
its outstanding 8 7/8% Guaranteed Senior Notes due November 1, 2003 (the
"Notes") from each registered holder thereof (each a "Holder" and,
collectively, the "Holders").
The consideration for each $1,000 principal amount of Notes tendered
pursuant to the Offer shall be the price (calculated as described in Schedule
I to this Statement) equal to (i) the present value on the Payment Date (as
defined herein) of $1,043.75 per $1,000 principal amount of Notes (the amount
payable on November 1, 1998, which is the first date on which the Notes are
redeemable (the "Earliest Redemption Date")), determined on the basis of the
yield (the "Tender Offer Yield") to the Earliest Redemption Date equal to the
sum of (x) the yield on the 5 7/8% U.S. Treasury Note due October 31, 1998
(the "Reference Security"), as calculated by the Dealer Manager in accordance
with standard market practice, based on the bid price for such Reference
Security as of 2:00 p.m., New York City time on January 9, 1998, the tenth
business day immediately preceding the scheduled Tender Offer Expiration Date
(the "Price Determination Date"), as displayed on the Bloomberg Government
Pricing Monitor on "Page PX3" (the "Bloomberg Page") (or, if any relevant
price is not
(Continued on following page)
THE SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
JANUARY 9, 1998 IF ON SUCH DATE THE COMPANY HAS RECEIVED THE REQUISITE
CONSENTS (AS DEFINED HEREIN) OR THE FIRST DATE THEREAFTER THAT THE COMPANY
RECEIVES THE REQUISITE CONSENTS FROM HOLDERS OF THE NOTES (THE "CONSENT
EXPIRATION DATE"). THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON JANUARY 26, 1998 UNLESS EXTENDED (SUCH DATE, AS THE SAME MAY BE EXTENDED,
THE "TENDER OFFER EXPIRATION DATE"). HOLDERS WHO DESIRE TO RECEIVE THE
CONSENT PAYMENT AND THE TENDER OFFER CONSIDERATION MUST VALIDLY CONSENT TO
THE PROPOSED AMENDMENTS ON OR PRIOR TO THE CONSENT EXPIRATION DATE. HOLDERS
WHO TENDER AFTER THE CONSENT EXPIRATION DATE WILL RECEIVE ONLY THE TENDER
OFFER CONSIDERATION. CONSENTS MAY ONLY BE REVOKED ON OR PRIOR TO THE CONSENT
EXPIRATION DATE. TENDERS OF NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
TENDER OFFER EXPIRATION DATE.
----------------
The Dealer Manager for the Offer and the Solicitation Agent for the
Solicitation is:
CHASE SECURITIES INC.
December 23, 1997
<PAGE>
(Cover page continued)
available on a timely basis on the Bloomberg Page or is manifestly erroneous,
such other recognized quotation source as the Dealer Manager shall select in
its sole discretion) plus (y) 35 basis points, the fixed spread (the "Fixed
Spread") (such price being rounded to the nearest cent per $1,000 principal
amount of Notes), minus (ii) $10.00 per $1,000 principal amount of Notes,
which is equal to the Consent Payment referred to below (such amount, the
"Tender Offer Consideration"), plus accrued and unpaid interest to, but not
including, the Payment Date (as defined herein).
In conjunction with the Offer, the Company hereby solicits (the
"Solicitation") consents (the "Consents") of registered Holders of the Notes
to certain proposed amendments (the "Proposed Amendments") to the Indenture
dated as of November 1, 1993 (the "Indenture"), between the Company, Dominion
Textile Inc., a corporation duly organized and existing under the laws of
Canada ("Dominion" or the "Parent Guarantor") and First Union National Bank,
as trustee (the "Trustee"), pursuant to which the Notes were issued, which
amendments would, among other things, eliminate substantially all of the
covenants contained in the Indenture. Subject to the terms and conditions set
forth in this Statement and the Consent and Letter of Transmittal, the Company
hereby offers to pay to each registered Holder who validly consents to the
Proposed Amendments on or prior to the Consent Expiration Date an amount in
cash (the "Consent Payment") equal to 1% of the principal amount ($10.00 for
each $1,000 principal amount) of Notes for which Consents have been validly
delivered and not validly revoked as of the Consent Expiration Date, with such
payment to be made on the Payment Date if, but only if, such Holder's Notes
are accepted for payment pursuant to the terms of the Offer. The Consent
Payment plus the Tender Offer Consideration is referred to herein as the
"Total Consideration."
If the Proposed Amendments are adopted and the Offer is consummated, Notes
that are not tendered, or that are not accepted for purchase pursuant to the
Offer, will remain outstanding, but will be subject to the terms of the
Indenture as modified by the Supplemental Indenture (as defined below)
described under Item 5, "Proposed Amendments." If a Holder does not properly
tender Notes pursuant to the Offer on or prior to the Consent Expiration Date,
or Consents either are not properly delivered, or are revoked and not properly
redelivered, on or prior to the Consent Expiration Date, such Holder will not
receive the Consent Payment, even though the Proposed Amendments will be
effective as to all Notes that are not purchased pursuant to the Offer.
Adoption of the Proposed Amendments may have adverse consequences for Holders
of Notes who do not validly tender Notes pursuant to the Offer. As a result of
the adoption of the Proposed Amendments, Holders of such outstanding Notes
will not be entitled to the benefit of substantially all of the covenants
presently contained in the Indenture. In addition, the consummation of certain
transactions upon which the offer is conditioned will result in the sale of
substantially all of the assets of the Company and the Parent Guarantor. In
connection with the Business Unit Sales, PGI or GLI (each as defined below)
may determine that it is in their respective interest to acquire certain
portions of the Company with the remaining limited obligations of the Company
under the Indenture. Further, the trading market for any Notes not properly
tendered pursuant to the Offer is likely to be significantly more limited in
the future if the Offer is consummated. See Item 5, "Proposed Amendments,"
Item 2, "Certain Significant Considerations" and Item 9, "Conditions to the
Offer."
Holders who tender Notes pursuant to the Offer on or prior to the Consent
Expiration Date are obligated to Consent to the Proposed Amendments. The
completion, execution and delivery of a Consent and Letter of Transmittal in
connection with a tender of Notes pursuant to the Offer on or prior to the
Consent Expiration Date will be deemed to constitute the delivery of Consents
with respect to the Notes tendered. Holders may not deliver Consents in the
Solicitation without tendering their Notes in the Offer.
The Company and the Trustee intend to execute a supplemental indenture (the
"Supplemental Indenture") to the Indenture providing for the Proposed
Amendments promptly after the Consent Expiration Date. Although the
Supplemental Indenture containing the Proposed Amendments will have been
executed by the Company and the Trustee promptly after the Consent Expiration
Date, the Proposed Amendments will not become effective unless and until the
Notes are accepted for purchase by the Company pursuant to the Offer, which is
expected to occur promptly after the Tender Offer Expiration Date.
-ii-
<PAGE>
(Cover page continued)
If the Notes are accepted for payment pursuant to the Offer, Holders who
validly tender Notes pursuant to the Offer on or prior to the Consent
Expiration Date and do not withdraw such tender or revoke such Consent will
receive the Total Consideration, which is equal to the Tender Offer
Consideration plus the Consent Payment. Holders who validly tender Notes and
deliver Consents pursuant to the Offer on or prior to the Consent Expiration
Date may not thereafter revoke such Consent after the Consent Expiration Date.
Holders who validly tender their Notes after the Consent Expiration Date will
receive only the Tender Offer Consideration and not the Consent Payment.
Upon the terms and subject to the conditions of the Offer and the
Solicitation (including, if the Offer or Solicitation is extended or amended,
the terms and conditions of any such extension or amendment) and
applicable law, the Company will (i) purchase all Notes validly tendered on or
prior to the Tender Offer Expiration Date (and not withdrawn) pursuant to the
Offer, and (ii) pay for all Consents validly delivered on or prior to the
Consent Expiration Date (and not revoked) pursuant to the Solicitation,
promptly following the Tender Offer Expiration Date.
Notwithstanding any other provision of the Offer or the Solicitation, the
Company's obligation to accept for purchase, and to pay for, Notes validly
tendered pursuant to the Offer and the Company's obligation to make Consent
Payments is conditioned upon (a) the Supplemental Indenture Condition, (b) the
Business Unit Sales Condition, (c) the 2006 Tender Condition and (d) the
General Conditions (each as defined herein). See Item 9, "Conditions to the
Offer."
In the event that the Offer and the Solicitation are withdrawn or otherwise
not completed, the Tender Offer Consideration and Consent Payment will not be
paid or become payable to Holders of the Notes who have validly tendered their
Notes and delivered Consents in connection with the Offer and the
Solicitation. In any such event, the Notes previously tendered pursuant to the
Offer will be promptly returned to the tendering Holder and the Supplemental
Indenture will not become operative.
See Item 2, "Certain Significant Considerations," and Item 10, "Certain
U.S. Federal Income Tax Considerations," for discussions of certain factors
that should be considered in evaluating the Offer and the Solicitation. See
Item 9, "Conditions to the Offer," for certain factors upon which the
Company's obligations under the Offer are conditioned. See Item 5, "Proposed
Amendments," for a description of the Proposed Amendments.
-iii-
<PAGE>
(Cover page continued)
IMPORTANT
Any Holder desiring to tender Notes and deliver Consents should either (a)
in the case of a Holder who holds physical certificates evidencing such Notes,
complete and sign the Consent and Letter of Transmittal (or a manually signed
facsimile thereof) in accordance with the instructions therein, have the
signature thereon guaranteed (if required by Instruction 1 of the Consent and
the Letter of Transmittal) and send or deliver such manually signed Consent
and Letter of Transmittal (or a manually signed facsimile thereof), together
with certificates evidencing such Notes being tendered and any other required
documents to Harris Trust Company of New York, as Depositary (the
"Depositary"), at its address set forth on the back cover of this Statement,
or (b) in the case of a beneficial owner who holds Notes in book-entry form,
request such beneficial owner's broker, dealer, commercial bank, trust company
or other nominee to effect the transaction on behalf of such beneficial owner.
See Item 7, "Procedures for Tendering Notes and Delivering Consents."
Any Holder who desires to tender Notes but who cannot comply with the
procedures set forth herein for tender on a timely basis or whose certificates
for Notes are not immediately available, may nevertheless tender the Notes by
following the procedures for guaranteed delivery set forth under Item 7,
"Procedures for Tendering Notes and Delivering Consents--Guaranteed Delivery."
The procedures for guaranteed delivery of Notes will not operate to effect the
timely delivery of the related Consent for purposes of determining eligibility
to receive a Consent Payment.
The Depository Trust Company ("DTC") has authorized DTC participants that
hold Notes on behalf of beneficial owners of Notes through DTC to tender their
Notes and consent to the Proposed Amendments as if they were Holders. To
effect a tender and deliver a Consent, DTC participants should transmit their
acceptance to DTC through the DTC Automated Tender Offer Program ("ATOP"), for
which the transaction will be eligible, and follow the procedure for book-
entry transfer set forth in Item 7, "Procedures for Tendering Notes and
Delivering Consents." A beneficial owner of Notes that are held of record by a
broker, dealer, commercial bank, trust company or other nominee must instruct
such broker, dealer, commercial bank, trust company or other nominee to tender
the Notes and deliver the related Consents on the beneficial owner's behalf.
See Item 7, "Procedures for Tendering Notes and Delivering Consents."
Tendering Holders will not be obligated to pay brokerage fees or commissions
or the fees and expenses of the Dealer Manager, the Information Agent or the
Depositary. See Item 11, "The Dealer Manager, the Information Agent and the
Depositary."
Questions and requests for assistance may be directed to MacKenzie Partners,
Inc., the Information Agent, or Chase Securities Inc., the Dealer Manager, at
their respective addresses and telephone numbers set forth on the back cover
of this Statement. Additional copies of this Statement, the Consent and Letter
of Transmittal, the Notice of Guaranteed Delivery and other related materials
may be obtained from the Information Agent. Beneficial owners may also contact
their brokers, dealers, commercial banks or trust companies through which they
hold the Notes with questions and requests for assistance.
THIS STATEMENT CONSTITUTES NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION
OF CONSENTS IN ANY JURISDICTION IN WHICH, OR TO OR FROM ANY PERSON TO OR FROM
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION UNDER APPLICABLE
SECURITIES OR BLUE SKY LAWS. THE DELIVERY OF THIS STATEMENT SHALL NOT UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN
NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN ANY ATTACHMENTS HERETO OR
IN THE AFFAIRS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR AFFILIATES SINCE
THE DATE HEREOF.
NEITHER THE COMPANY NOR THE DEALER MANAGER MAKE ANY RECOMMENDATION AS TO
WHETHER HOLDERS SHOULD TENDER NOTES PURSUANT TO THE OFFER OR PROVIDE CONSENTS
TO THE PROPOSED AMENDMENTS.
-iv-
<PAGE>
(Cover page continued)
AVAILABLE INFORMATION
The Company and its parent, Dominion, have filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form F-10
and Form F-1 (Reg. Nos. 33-68586 and 33-68586-01) relating to the Notes and
their underlying guarantees by Dominion (such registration statements,
together with all amendments and exhibits, the "Registration Statement").
Dominion is also subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Commission. The
Indenture also provides that the Holders of the Notes are entitled to receive
annual and quarterly consolidated financial statements with respect to
Dominion (including certain summarized historical information with respect to
the Company), even if Dominion were no longer subject to the informational
requirements of the Exchange Act, provided that greater than 10% of the
initial principal amount of the Notes are outstanding.
The Registration Statements and the reports filed by Dominion pursuant to
the Exchange Act as well as other information can be inspected and copied at
prescribed rates at the Public Reference Section of the Commission located at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 and
at regional public reference facilities maintained by the Commission located
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and Seven World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of
the Commission at prescribed rates. As a foreign issuer, Dominion does not
file reports or other information using the Commission's Electronic Data
Gathering, Analysis and Retrieval ("EDGAR") filing system.
Dominion is a Canadian issuer that is permitted, under a multi-
jurisdictional disclosure system adopted in the United States, to prepare
certain informational filings in accordance with the disclosure requirements
of its home jurisdiction. Holders of the Notes should be aware that such
requirements may vary from those of the United States. In addition, Dominion's
financial statements incorporated herein by reference have been prepared in
accordance with Canadian generally accepted accounting principles and are
subject to Canadian accounting and auditor independence standards, and thus
may not be comparable to financial statements of United States companies.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents listed hereafter and filed with the Quebec
Securities Commission are incorporated herein by reference and shall be deemed
to be a part hereof:
(a) The Consolidated Financial Statements of Dominion for the fiscal year
ended June 30, 1997 and the Auditors' Report thereon.
(b) The Annual Information Form of Dominion dated October 9, 1997.
(c) The interim unaudited comparative consolidated financial statements for
the period ended September 30, 1997 included in the quarterly report of
Dominion for the first quarter of fiscal 1998.
(d) The Management Proxy Circular of Dominion dated August 29, 1997, in
connection with the annual meeting of shareholders held on October 29,
1997.
In addition, Dominion's Annual Report on Form 40-F for the year ended June
30, 1997 filed with the Commission pursuant to the Exchange Act shall be
incorporated herein by reference and shall be deemed to be a part hereof.
All documents and reports filed with either the Commission or the Quebec
Securities Commission after the date of this Statement and on or prior to the
earlier of the Payment Date or termination of the Offer and Solicitation shall
be deemed incorporated herein by reference and shall be deemed to be a part
hereof from the
-v-
<PAGE>
(Cover page continued)
date of filing of such documents and reports. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Statement to the
extent that a statement contained herein or in any subsequently filed document
or report that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Statement.
The Company will provide without charge to each person to whom this
Statement is delivered, upon the written request of such person, a copy of any
or all of the documents which are incorporated by reference herein, other than
exhibits to such documents which are not specifically incorporated by
reference herein. Requests should be directed to the Information Agent or the
Dealer Manager at their respective addresses set forth on the back cover page
hereof or to the Acting Secretary and General Counsel of Dominion, 1950
Sherbrooke Street West, Montreal, Quebec, Canada H3H 1E7, telephone number
(514) 989-6000. The information relating to the Company contained in this
Statement does not purport to be complete and should be read together with the
information contained in the incorporated documents.
No person has been authorized to give any information or to make any
representation not contained in this Statement and, if given or made, such
information or representation may not be relied upon as having been authorized
by the Company, the Dealer Manager, the Depositary, or the Information Agent.
Neither the delivery of this Statement nor any purchase hereunder shall, under
any circumstances, create any implication that the information herein is
correct as of any time subsequent to the date hereof, or that there has been
no change in the affairs of the Company as of such date.
-vi-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
SUMMARY.................................................................. 1
1. Terms of the Offer and the Solicitation............................. 7
2. Certain Significant Considerations.................................. 9
3. Purpose of the Offer and the Solicitation........................... 11
Certain Information Concerning the Company, Dominion, DT Acquisition
4. and the Notes....................................................... 11
5. Proposed Amendments................................................. 12
Acceptance for Payment and Payment for Notes; Acceptance of
6. Consents............................................................ 14
7. Procedures for Tendering Notes and Delivering Consents.............. 15
8. Withdrawal of Tenders and Revocation of Consents.................... 18
9. Conditions to the Offer............................................. 19
10. Certain U.S. Federal Income Tax Consequences........................ 21
11. The Dealer Manager, the Information Agent and the Depositary........ 23
12. Fees and Expenses................................................... 23
13. Source and Amount of Funds.......................................... 23
14. Miscellaneous....................................................... 24
Schedule I: Formula for calculation of Tender Offer Consideration and
Total Consideration.......................................... 25
Schedule II: Hypothetical illustration of the calculation of Tender Offer
Consideration and Total Consideration....................... 26
</TABLE>
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere or incorporated by reference in this Statement
and the Consent and Letter of Transmittal. Capitalized terms have the meanings
assigned to them elsewhere in this Statement.
The Company..................... Dominion Textile (USA) Inc., a Delaware
corporation, is a wholly-owned subsidiary of
Dominion. The Company is a holding company
for the United States operations of Dominion.
Dominion........................ Dominion Textile Inc., a corporation
organized under the laws of Canada, is a
manufacturer and supplier of textile and
textile related products with leading
positions in selected markets and global
manufacturing capabilities. Dominion is one
of the world's largest manufacturers of high-
end denim fabrics. It is also a supplier to
the U.S. disposable diaper market and has
significant non-woven, spunbond multidenier
production capacity. Dominion operates
manufacturing plants in five countries,
including the United States, Canada and three
European countries. On December 19, 1997, DT
Acquisition acquired control of Dominion in
the Dominion Tender Offer (as defined). See
Item 4, "Certain Information Concerning the
Company, Dominion, DT Acquisition and the
Notes."
DT Acquisition.................. DT Acquisition Inc., a corporation organized
under the laws of Canada, is an affiliate of
Polymer Group, Inc., a Delaware corporation.
DT Acquisition acquired approximately 96% of
the outstanding first preferred shares and
approximately 98% of the outstanding common
shares of Dominion in the Dominion Tender
Offer. See Item 4, "Certain Information
Concerning the Company, Dominion, DT
Acquisition and the Notes."
The Notes....................... The Offer and the Solicitation are being made
with respect to the Company's 8 7/8%
Guaranteed Senior Notes due November 1, 2003.
See Item 4, "Certain Information Concerning
the Company, Dominion, DT Acquisition and the
Notes."
The Offer....................... The Company is offering to purchase for cash
from each Holder, upon the terms and subject
to the conditions described herein, any and
all outstanding Notes. The consideration for
each $1,000 principal amount of Notes
tendered pursuant to the Offer shall be equal
to (i) the present value on the Payment Date
of $1,043.75 per Note, determined on the
basis of the Tender Offer Yield to the
Earliest Redemption Date of November 1, 1998
equal to the sum of (x) the yield on the 5
7/8% U.S. Treasury Note due October 31, 1998
as of 2:00 p.m., New York City time, on
January 9, 1998, the tenth business day
immediately preceding the scheduled Tender
Offer Expiration Date plus (y) 35 basis
points, minus (ii) $10.00 per $1,000
principal amount of Notes. Each tendering
1
<PAGE>
Holder will also receive unpaid interest up
to, but not including, the Payment Date.
Holders who tender Notes pursuant to the
Offer prior to the Consent Expiration Date
are obligated to consent to the Proposed
Amendments. The completion, execution and
delivery of a Consent and Letter of
Transmittal in connection with the tender of
Notes pursuant to the Offer prior to the
Consent Expiration Date will be deemed to
constitute the delivery of Consents with
respect to the Notes tendered. Holders may
not deliver Consents in the Solicitation
without tendering their Notes in the Offer.
See Item 1, "Terms of the Offer and the
Solicitation."
The Solicitation................ Upon the terms and subject to the conditions
described herein, the Company is soliciting
the Consents of Holders of Notes to the
Proposed Amendments to the Indenture. Each
Holder who consents to the Proposed
Amendments prior to the Consent Expiration
Date shall be entitled to a Consent Payment
in the amount of 1% of the principal amount
($10.00 per $1,000 principal amount) of Notes
with respect to which Consents are delivered.
Each Holder who tenders Notes pursuant to the
Offer on or prior to the Consent Expiration
Date is obligated to consent to the Proposed
Amendments, and the completion, execution and
delivery of a Consent and Letter of
Transmittal in connection with such a
Holder's tender of Notes on or prior to the
Consent Expiration Date will be deemed to
constitute the delivery of Consents with
respect to the Notes tendered. Holders may
not deliver Consents in the Solicitation
without tendering their Notes in the Offer.
The Company intends to effect the Proposed
Amendments by executing a Supplemental
Indenture immediately following the Consent
Expiration Date, assuming that the Requisite
Consents (as defined herein) have been
received. Although the Supplemental Indenture
reflecting the Proposed Amendments will
become effective upon execution by the
Company, the Parent Guarantor and the Trustee
immediately following the Consent Expiration
Date (assuming the Requisite Consents have
been received), the Proposed Amendments will
not become operative until Notes are accepted
for purchase by the Company pursuant to the
Offer, and the Consent Payment will not be
due and payable to those Holders who deliver
Consents on or prior to the Consent
Expiration Date until the Payment Date. See
Item 1, "Terms of the Offer and the
Solicitation," Item 5, "Proposed Amendments"
and Item 6, "Acceptance for Payment and
Payment of Notes; Acceptance of Consents."
Expiration...................... The Solicitation will expire at 5:00 p.m.,
New York City time, on January 9, 1998,
unless extended. The Offer will expire at
5:00 p.m., New York City time, on January 26,
1998, unless extended. See Item 1, "Terms of
the Offer and the Solicitation."
2
<PAGE>
Purpose of the Offer and the On December 19, 1997, DT Acquisition acquired
Solicitation.................... approximately 96% of the outstanding first
preferred shares and approximately 98% of the
outstanding common shares of Dominion in the
Dominion Tender Offer. In connection
therewith, DT Acquisition entered into
agreements to dispose of the two primary
business units of Dominion in the Business
Unit Sales (as defined herein). The Offer is
being made for the purpose of repurchasing
and retiring certain of the outstanding
indebtedness of Dominion and its subsidiaries
(including the Company) in order to
effectuate the Business Unit Sales. See Item
3, "Purpose of the Offer and the
Solicitation."
Conditions to the Offer......... The Offer is conditioned upon (a) the
Supplemental Indenture Condition, (b) the
Business Unit Sales Condition, (c) the 2006
Tender Condition and (d) the General
Conditions. See Item 9, "Conditions to the
Offer."
Requisite Consents.............. The aggregate outstanding principal amount of
the Notes is $150.0 million. The Proposed
Amendments require the Consent of Holders of
at least a majority of the aggregate
principal amount of Notes outstanding.
Accordingly, the Proposed Amendments require
the Consent of Holders of Notes in an
aggregate principal amount in excess of $75.0
million. See Item 5, "Proposed Amendments."
The Proposed Amendments......... The covenants in the Indenture set forth
under the headings "Parent Guarantor and
Issuer May Consolidate, Etc. and Purchases of
Assets Only on Certain Terms," "Successor
Substituted," "Existence," "Maintenance of
Properties," "Payment of Taxes and Other
Claims," "Maintenance of Insurance,"
"Limitation on Consolidated Debt,"
"Limitation on Subsidiary Debt and Preferred
Stock," "Limitation on Restricted Payments,"
"Limitations Concerning Distributions By
Subsidiaries, etc.," "Limitation on Liens,"
"Limitation on Sale and Leaseback
Transactions," "Limitation on Transactions
with Affiliates and Related Persons,"
"Limitation on Certain Sales of Capital Stock
of Subsidiaries and Certain Assets,"
"Limitation on Issuances and Sales of Capital
Stock of Wholly Owned Subsidiaries,"
"Ownership of Issuer," "Payment of Additional
Amounts," and "Provision of Financial
Information," would be eliminated from the
Indenture. Such covenants, among other
things, generally limit the Parent
Guarantor's ability to (i) consolidate or
merge with another entity, sell or lease
substantially all of its assets, or acquire
ownership interests in other entities, (ii)
cause a successor to the Parent Guarantor or
the Company (following a consolidation or
merger) to assume the obligations under the
Indenture, (iii) fail to maintain its
corporate existence, (iv) fail to maintain
its properties, (v) fail to pay taxes, (vi)
underinsure property against loss or damage,
or allow the Company to do the same, (vii)
incur debt, (viii) permit the Company to
incur debt or issue preferred stock, (ix)
permit certain restrictions on the ability of
the Company to
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pay dividends on capital stock, make loans to
the Parent Guarantor or other Wholly Owned
Subsidiaries or transfer property to the
Parent Guarantor or other Wholly Owned
Subsidiaries, declare or pay certain
dividends, or permit the Company to do the
same, (x) create liens on assets of the
Parent Guarantor or permit the Company to do
the same, (xi) enter into any sale or
leaseback transactions or permit the Company
to do the same, (xii) enter into certain
transactions with affiliates, or permit the
Company to do the same, (xiii) make asset
dispositions, (xiv) issue, transfer, convey,
sell or otherwise dispose of any Shares of
Capital Stock of any Wholly Owned Subsidiary,
or permit the Company to do the same, (xv)
divest any of its interest in the Company,
(xvi) fail to pay taxes and other amounts due
to Canadian governmental authorities in
respect of the Notes, and (xvii) fail to
provide certain financial information to the
Holders," or to permit the Company to do the
same. See Item 5, "The Proposed Amendments."
Withdrawal Rights............... Tenders of Notes pursuant to the Offer may be
withdrawn after tender at any time on or
prior to the Tender Offer Expiration Date,
upon compliance with the procedures described
herein. Tenders of Notes may also be
withdrawn if the Offer is terminated without
any Notes being purchased thereunder. A
withdrawal of tendered Notes on or prior to
the Consent Expiration Date shall be deemed a
revocation of the related Consent. Consents
may be revoked at any time on or prior to the
Consent Expiration Date, but are thereafter
irrevocable. Valid revocation of Consents
will render a tender of Notes prior to the
Consent Expiration Date defective, and,
unless the Company waives such defect (or
unless the Notes are withdrawn and re-
tendered), the tendering Holder will not be
eligible to receive the Tender Offer
Consideration with respect to such Notes. See
Item 8, "Withdrawal of Tenders and Revocation
of Consents."
Source of Funds................. Assuming 100% of the outstanding principal
amount of Notes is tendered and accepted for
payment, approximately $159.4 million is
required to pay the Total Consideration in
connection with the Offer and the
Solicitation. Such funds will be obtained by
the Company from proceeds of the Business
Unit Sales and/or borrowings under the DT
Credit Agreement (as defined). Each of PGI
and GLI (each as defined) has obtained the
financing necessary to complete its part of
the Business Unit Sales. It is currently
anticipated that the proceeds from the
Business Unit Sales will provide all of the
funds necessary to pay for the Notes
purchased pursuant to the Offer.
Untendered Notes................ Notes not tendered and purchased pursuant to
the Offer will remain outstanding. If the
Requisite Consents are received and the
Proposed Amendments become operative pursuant
to the Supplemental Indenture, such Notes
will not have the benefits of the restrictive
covenants that will be eliminated from the
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<PAGE>
Indenture by the Proposed Amendments. In
addition, the consummation of the Business
Unit Sales will result in the sale of
substantially all of the assets of the
Company and the Parent Guarantor. In
connection with the Business Unit Sales, PGI
or GLI may determine that it is in their
respective interest to acquire certain
portions of the Company with the remaining
limited obligations of the Company under the
Indenture. Further, as a result of the
consummation of the Offer, the aggregate
principal amount of the Notes that are
outstanding will be significantly reduced,
which may adversely affect the liquidity and,
consequently, the market price for the Notes,
if any, that remain outstanding after
consummation of the Offer. See Item 2,
"Certain Significant Considerations."
Holders who tender only a portion of their
Notes pursuant to the Offer will be issued
Notes equal in principal amount to the
unpurchased portion of the Notes surrendered.
Procedures for Tendering Notes
and Delivering Consents.........
Any Holder desiring to tender Notes pursuant
to the Offer and/or deliver Consents pursuant
to the Solicitation should either (a) in the
case of a Holder who holds physical
certificates evidencing such Notes, complete
and sign the enclosed Consent and Letter of
Transmittal (or a manually signed facsimile
thereof) in accordance with the instructions
set forth therein, have the signature thereon
guaranteed if required by Instruction 1 of
the Consent and Letter of Transmittal, and
send or deliver such manually signed Consent
and Letter of Transmittal (or such manually
signed facsimile), together with the
certificates evidencing the Notes being
tendered and any other required documents to
the Depositary, or (b) in the case of Holders
who hold Notes in book-entry form, request
his or her broker, dealer, commercial bank,
trust company or other nominee to effect the
transaction for him or her. Beneficial owners
of Notes that are registered in the name of a
broker, dealer, commercial bank, trust
company or other nominee must contact such
broker dealer, commercial bank, trust company
or other nominee if they desire to tender
their Notes and deliver Consents. Holders of
Notes who are tendering by book-entry
transfer to the Depositary's account at DTC
can execute the tender to DTC through ATOP,
after which DTC will verify the acceptance
and execute a book-entry delivery to the
Depositary's account at DTC. Delivery of the
Agent's Message by DTC will satisfy the terms
of the Offer as to the tender of Notes;
however, any Holder tendering on or prior to
the Consent Expiration Date must also execute
and deliver a Consent and Letter of
Transmittal. To receive the Consent Payment,
each Holder (including any Holder tendering
Notes through ATOP) must deliver or cause to
be delivered a completed and properly
executed Consent and Letter of Transmittal
and any other required documents to the
Depositary on or prior to the Consent
Expiration Date.
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<PAGE>
A Holder who desires to tender Notes pursuant
to the Offer and who cannot comply with the
procedures set forth herein for tender or
delivery on a timely basis or whose Notes are
not immediately available may tender such
Notes pursuant to the procedures for
guaranteed delivery set forth herein. See
Item 7, "Procedures for Tendering Notes and
Delivering Consents."
Acceptance of Tendered Notes Upon the terms of the Offer and the
and Payment..................... Solicitation and upon satisfaction or waiver
of the conditions thereto, the Company will
accept for purchase Notes validly tendered
(and not withdrawn) prior to the Tender Offer
Expiration Date. Only Holders who validly
tender Notes on or prior to the Consent
Expiration Date (and do not withdraw such
tender and revoke such Consent) will receive
the Total Consideration, which includes the
Consent Payment. Payment of the Total
Consideration or the Tender Offer
Consideration, as applicable, for Notes
validly tendered and accepted for payment,
will be made by deposit of such amounts, as
applicable, with the Depositary who, in each
case, will act as agent for the tendering and
consenting Holders for the purpose of
receiving payments from the Company and
transmitting such payments to the tendering
and consenting Holders. Such payments are
expected to be made on the Payment Date,
promptly following the acceptance of the
Notes by the Company pursuant to the Offer.
See Item 6, "Acceptance for Payment and
Payment for Notes; Acceptance of Consents."
Certain Tax Considerations...... For a discussion of certain U.S. federal
income tax consequences of the Offer and the
Solicitation applicable to Holders of the
Notes, see Item 10, "Certain U.S. Federal
Income Tax Consequences."
Certain Significant For a discussion of certain considerations
Considerations.................. relevant to the Offer and the Solicitation,
see Item 2, "Certain Significant
Considerations."
The Dealer Manager, the
Information Agent and the
Depositary......................
Chase Securities Inc. has been retained as
Dealer Manager in connection with the Offer
and the Solicitation. In such capacities, the
Dealer Manager may contact Holders regarding
the Offer and the Solicitation and may
request brokers, dealers, commercial banks,
trust companies and other nominees to forward
this Statement and related materials to
beneficial owners of Notes. The Depositary is
Harris Trust Company of New York. MacKenzie
Partners, Inc. has been retained as the
Information Agent in connection with the
Offer and the Solicitation. The respective
addresses and telephone numbers of the Dealer
Manager, the Depositary and the Information
Agent are set forth on the back cover of this
Statement. See Item 11, "The Dealer Manager,
the Information Agent, and the Depositary."
6
<PAGE>
TO HOLDERS OF THE 8 7/8% GUARANTEED SENIOR NOTES DUE NOVEMBER 1, 2003
OF DOMINION TEXTILE (USA) INC.:
THIS STATEMENT AND THE RELATED CONSENT AND LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER AND THE SOLICITATION.
1.TERMS OF THE OFFER AND THE SOLICITATION.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment) set forth herein and in the accompanying Consent and Letter of
Transmittal, the Company is offering to purchase for cash all of its
outstanding Notes at a price equal to (i) the present value on the Payment
Date (as defined herein) of $1,043.75 per $1,000 principal amount of Notes
(the amount payable on November 1, 1998, which is the first date on which the
Notes are redeemable (the "Earliest Redemption Date")), determined on the
basis of the yield (the "Tender Offer Yield") to the Earliest Redemption Date
equal to the sum of (x) the yield on the 5 7/8% U.S. Treasury Note due October
31, 1998 (the "Reference Security"), as calculated by the Dealer Manager in
accordance with standard market practice, based on the bid price for such
Reference Security as of 2:00 p.m., New York City time, on January 9, 1998,
the tenth (10th) business day immediately preceding the scheduled Tender Offer
Expiration Date (the "Price Determination Date"), as displayed on the
Bloomberg Government Pricing Monitor on "Page PX3" (the "Bloomberg Page") (or,
if any relevant price is not available on a timely basis on the Bloomberg Page
or is manifestly erroneous, such other recognized quotation source as the
Dealer Manager shall select in its sole discretion) plus (y) 35 basis points,
the fixed spread (the "Fixed Spread") (such price being rounded to the nearest
cent per $1,000 principal amount of Notes), minus (ii) $10.00 per $1,000
principal amount of Notes, which is equal to the Consent Payment referred to
below (such amount, the "Tender Offer Consideration"), plus accrued and unpaid
interest to, but not including, the Payment Date. Payment of the Total
Consideration (the Tender Offer Consideration plus the Consent Payment) or the
Tender Offer Consideration, as applicable, for Notes validly tendered and
accepted for payment shall be made promptly following the Tender Offer
Expiration Date (the "Payment Date").
Although the Tender Offer Yield on the applicable Reference Treasury
Security on the Price Determination Date will be determined only from the
source noted above, information regarding the closing yield for the Reference
Treasury Security may also be found in The Wall Street Journal. The yield on
the Reference Treasury Security for the Notes as of 2:00 p.m., New York City
time, on December 22, 1997 was 5.69%. Accordingly, if such yield was
determined to be the yield on the Reference Treasury Security at the Price
Determination Date, and January 27, 1998 was the Payment Date for the Notes,
the Tender Offer Yield, the Tender Offer Consideration and the Total
Consideration per $1,000 principal amount of Notes would be 6.04%, $1,052.43
and $1,062.43, respectively. A hypothetical illustration of the calculation of
the Tender Offer Consideration and the Total Consideration for the Notes
demonstrating the application of the assumptions and methodologies to be used
in pricing the Offer is set forth in Schedule II hereto.
Promptly after 2:00 p.m. on the Price Determination Date, and in any event
before 9:00 a.m., New York City time, on the following business day, the
Company will publicly announce the pricing information referred to above by
press release to the Dow Jones News Service.
Prior to 2:00 p.m., New York City time, on the Price Determination Date,
holders may obtain hypothetical quotes of the yield on the Reference Treasury
Security (calculated as of a then recent time) and the resulting hypothetical
Tender Offer Consideration and the Total Consideration by contacting the
Dealer Manager at its telephone numbers set forth on the back cover of this
Statement. After such time on the Price Determination Date, holders may
ascertain the actual yield on the Reference Treasury Security as of the Price
Determination Date and the resulting actual Tender Offer Consideration and
Total Consideration by contacting the Dealer Manager at its telephone numbers
set forth on the back cover of this Statement.
Because the Tender Offer Consideration and the Total Consideration prior to
the Price Determination Date are based on a fixed spread pricing formula that
is linked to the yield on the Reference Treasury Security, the actual amount
of cash that will be received by a tendering Holder pursuant to the Offer will
be affected by
7
<PAGE>
changes in such yield during the term of the Offer prior to such Price
Determination Date. After the Price Determination Date when the Tender Offer
Consideration and the Total Consideration are fixed, the actual amount of cash
that will be received by a tendering Holder pursuant to the Offer will be
known and holders will be able to ascertain the Tender Offer Consideration and
the Total Consideration in the manner described above.
Upon the terms and subject to the conditions of the Solicitation (including,
if the Solicitation is extended or amended, the terms and conditions of any
such extension or amendment), the Company also is soliciting Consents to the
Proposed Amendments to the Indenture from Holders, and is offering to pay to
each Holder who consents to the Proposed Amendments on or prior to the Consent
Expiration Date, a Consent Payment in cash in respect of Notes for which
Consents have been validly delivered and not validly revoked on or prior to
the Consent Expiration Date, with such payment to be made promptly following
the Tender Offer Expiration Date if, but only if, the Notes are accepted for
payment pursuant to the terms of the Offer. Holders who desire to tender their
Notes pursuant to the Offer and to receive the Total Consideration are
required to validly tender such Notes and consent to the Proposed Amendments
on or prior to the Consent Expiration Date. The completion, execution and
delivery of the Consent and Letter of Transmittal by a Holder in connection
with the tender of Notes will constitute the Consent of the tendering Holder
to the Proposed Amendments with respect to such Notes. If a Holder's Notes are
not properly tendered pursuant to the Offer on or prior to the Consent
Expiration Date, such Holder will not receive the Consent Payment, even though
the Proposed Amendments will be effective as to all Notes that are not
purchased in the Offer. The Company is not soliciting and will not accept
Consents to the Proposed Amendments from Holders who are not also tendering
their Notes pursuant to the Offer.
If the Notes are accepted for payment pursuant to the Offer, Holders who
validly tender Notes pursuant to the Offer on or prior to the Consent
Expiration Date and do not withdraw such tender or revoke such Consent on or
prior to the Consent Expiration Date will receive the Total Consideration,
which is equal to the Tender Offer Consideration plus the Consent Payment.
Holders who validly tender Notes and deliver Consents pursuant to the Offer on
or prior to the Consent Expiration Date may not thereafter revoke such Consent
after the Consent Expiration Date. Holders who validly tender their Notes
after the Consent Expiration Date will receive only the Tender Offer
Consideration and not the Consent Payment.
Holders may not deliver Consents without tendering their Notes in the Offer,
and may not revoke Consents on or prior to the Consent Expiration Date without
withdrawing the previously tendered Notes to which such Consent relates.
Holders may not withdraw previously tendered Notes on or prior to the Consent
Expiration Date without revoking the previously delivered Consents to which
such tender relates. Consents may not be revoked after the Consent Expiration
Date. Tenders of Notes may be withdrawn at any time prior to the Tender Offer
Expiration Date.
All Notes validly tendered in accordance with the procedures set forth under
Item 7, "Procedures for Tendering Notes and Delivering Consents," and not
withdrawn in accordance with the procedures set forth under Item 8,
"Withdrawal of Tenders and Revocation of Consents," on or prior to the Consent
Expiration Date or the Tender Offer Expiration Date, as the case may be, will,
upon the terms and subject to the conditions hereof, including satisfaction of
the Supplemental Indenture Condition, the Business Unit Sales Condition, the
2006 Tender Condition and the General Conditions, be accepted for payment by
the Company, and payments will be made therefor, promptly after the Tender
Offer Expiration Date on the Payment Date.
The Company, the Parent Guarantor and the Trustee intend to execute the
Supplemental Indenture promptly after the Consent Expiration Date, but the
elimination of the covenants set forth in the Supplemental Indenture will not
become operative unless and until the Notes are accepted for purchase by the
Company pursuant to the Offer, which is expected to occur promptly after the
later of (a) the Tender Offer Expiration Date or (b) subject to Rule 14e-1
under the Exchange Act, the satisfaction or waiver of the conditions to the
Offer described herein. If the Offer is terminated or withdrawn, or the Notes
are not accepted for payment, the Supplemental Indenture will not become
operative, and no Tender Offer Consideration or Consent Payment will be paid
or payable. If any tendered Notes are not purchased pursuant to the Offer for
any reason, or certificates are submitted
8
<PAGE>
evidencing more Notes than are tendered, such Notes not purchased will be
returned, without expense, to the tendering Holder (or, in the case of Notes
tendered by book-entry transfer, such Notes will be credited to the account
maintained at DTC from which such Notes were delivered) promptly following the
Tender Offer Expiration Date or termination of the Offer.
IF THE REQUISITE CONSENTS ARE RECEIVED AND THE SUPPLEMENTAL INDENTURE HAS
BECOME OPERATIVE, THE PROPOSED AMENDMENTS WILL BE BINDING ON ALL NON-TENDERING
HOLDERS OF NOTES. ACCORDINGLY, CONSUMMATION OF THE OFFER AND THE ADOPTION OF
THE PROPOSED AMENDMENTS MAY HAVE ADVERSE CONSEQUENCES FOR HOLDERS WHO ELECT
NOT TO TENDER IN THE OFFER. SEE ITEM 2, "CERTAIN SIGNIFICANT CONSIDERATIONS."
The Company's obligation to accept and pay for Notes validly tendered
pursuant to the Offer is conditioned upon satisfaction of (a) the Supplemental
Indenture Condition, (b) the Business Unit Sales Condition, (c) the 2006
Tender Condition and (d) the General Conditions. Consent Payments to Holders
who have validly consented to (and not revoked) the Proposed Amendments on or
prior to the Consent Expiration Date are conditioned upon the Company's
acceptance of Notes for purchase pursuant to the Offer. Subject to applicable
securities laws and the terms and conditions set forth in this Statement, the
Company reserves the right, on or prior to the Tender Offer Expiration Date,
to (i) waive any and all conditions to the Offer or the Solicitation, (ii)
extend or terminate the Offer or the Solicitation or (iii) otherwise amend the
Offer or the Solicitation in any respect. See Item 9, "Conditions to the
Offer." The rights reserved by the Company in this paragraph are in addition
to the Company's rights to terminate the Offer described under Item 9,
"Conditions to the Offer." Any extension, amendment or termination will be
followed promptly by public announcement thereof, the announcement in the case
of an extension of the Offer to be issued no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled Tender
Offer Expiration Date. Without limiting the manner in which any public
announcement may be made, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to the Dow Jones News Service.
If the Company extends the Offer, or if, for any reason, the acceptance for
payment of, or the payment for, Notes is delayed or if the Company is unable
to accept for payment or pay for Notes pursuant to the Offer, then, without
prejudice to the Company's rights under the Offer, the Depositary may retain
tendered Notes on behalf of the Company, and such Notes may not be withdrawn
except to the extent tendering Holders are entitled to withdrawal rights as
described in Item 8, "Withdrawal of Tenders and Revocation of Consents."
However, the ability of the Company to delay the payment for Notes which the
Company has accepted for payment is limited by Rule 14e-l(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of a tender offer.
If the Company makes a material change in the terms of the Offer or the
Solicitation or the information concerning the Offer or the Solicitation, the
Company will disseminate additional offering materials and extend such Offer
or, if applicable, the Solicitation, to the extent required by law. If the
Solicitation is amended on or prior to the Consent Expiration Date in a manner
determined by the Company to constitute a material adverse change to the
Holders of the Notes, the Company promptly will disclose such amendment and,
if necessary, extend the Solicitation for such Notes for a period deemed by
the Company to be adequate to permit Holders of the Notes to withdraw their
Notes and revoke their Consents. In addition, if the consideration to be paid
in the Offer is increased or decreased or the principal amount of Notes
subject to the Offer is decreased, the Offer will remain open at least 10
business days from the date the Company first gives notice to Holders, by
public announcement or otherwise, of such increase or decrease. See Item 8,
"Withdrawal of Tenders and Revocation of Consents."
2.CERTAIN SIGNIFICANT CONSIDERATIONS.
The following considerations, in addition to the other information described
elsewhere in this Statement, should be carefully considered by each Holder
before deciding whether to participate in the Offer and the Solicitation.
9
<PAGE>
Effects of the Proposed Amendments. If the Proposed Amendments become
effective, Holders of Notes that are not tendered and purchased pursuant to
the Offer will no longer be entitled to the benefits of substantially all of
the covenants contained in the Indenture, which will be eliminated by the
Proposed Amendments. The Indenture, as amended with respect to the Notes, will
continue to govern the terms of all Notes that remain outstanding after the
consummation of the Offer. The elimination of these covenants and other
provisions would permit the Company and the Parent Guarantor to take certain
actions previously prohibited that could increase the credit risks with
respect to the Company and the Parent Guarantor, adversely affect the market
price and credit rating of the remaining Notes or otherwise be materially
adverse to the interests of Holders, which would otherwise not have been
permitted pursuant to the Indenture. In addition, in connection with the
Business Unit Sales, PGI or GLI may determine that it is in their respective
interest to acquire certain portions of the Company with the remaining limited
obligations of the Company under the Indenture. See Item 5, "Proposed
Amendments."
Limited Trading Market. The Notes were issued in 1993 and are not listed on
any national or regional securities exchange. To the Company's knowledge, the
Notes are traded infrequently in transactions arranged through brokers.
Quotations for securities that are not widely traded, such as the Notes, may
differ from actual trading prices and should be viewed as approximations.
Holders are urged to contact their brokers with respect to current information
regarding the Notes. To the extent that Notes are tendered and accepted in the
Offer, any existing trading market for the remaining Notes may become more
limited. A debt security with a smaller outstanding principal amount available
for trading (a smaller "float") may command a lower price than would a
comparable debt security with a greater float. The reduced float may also make
the trading price of the Notes that are not tendered and accepted for payment
more volatile. Consequently, the liquidity, market value and price volatility
of Notes which remain outstanding may be adversely affected. Holders of
unpurchased Notes may attempt to obtain quotations for the Notes from their
brokers; however, there can be no assurance that any trading market will exist
for the Notes following consummation of the Offer. The extent of the public
market for the Notes following consummation of the Offer will depend upon the
number of Holders remaining at such time, the interest in maintaining a market
in such Notes on the part of securities firms and other factors.
Change of Control Purchase Offer. Pursuant to Section 1017 of the Indenture,
within 30 days following a "Change of Control" (as defined in the Indenture),
the Company is required to commence an offer to purchase the Notes from the
Holders at 101% of the principal amount of each Note. This Offer is not being
made pursuant to, or in accordance with, the provisions of Section 1017 of the
Indenture. The acquisition of Dominion by DT Acquisition constitutes a "Change
of Control" under the Indenture. Therefore, the Company intends to commence an
offer to purchase the Notes pursuant to Section 1017 of the Indenture within
30 days following the date of the "Change of Control." The Company believes
the amount a Holder will receive in this Offer will exceed the amount payable
in the subsequent offer to purchase the Notes pursuant to Section 1017 of the
Indenture. The offer to purchase the Notes pursuant to Section 1017 of the
Indenture will be made pursuant to a separate offer to purchase and related
letter of transmittal.
Recent Acquisition and Proposed Sales. Pursuant to the Offer to Purchase
dated October 29, 1997, as supplemented by the Notices of Extension and
Variation dated November 18, 1997, November 28, 1997, December 2, 1997 and
December 15, 1997, approximately 98% of the outstanding common shares and
approximately 96% of the outstanding first preferred shares of the Company's
parent, Dominion, were acquired by DT Acquisition on December 19, 1997 (the
"Dominion Tender Offer"). DT Acquisition intends to acquire the remaining
outstanding first preferred and common shares on the same terms as such shares
were acquired in the Dominion Tender Offer pursuant to Section 206 of the
Canadian Business Corporation Act. In connection with the Dominion Tender
Offer, DT Acquisition entered into agreements to dispose of the two primary
business units of Dominion in the Business Unit Sales. The Offer is being made
for the purpose of repurchasing and retiring certain of the outstanding
indebtedness of Dominion and its subsidiaries (including the Company) in order
to effectuate the Business Unit Sales. There can be no assurances that the
Company or Dominion will be successful in repurchasing and retiring other
issuances of notes or sources of indebtedness, including without limitation
the 2006 Notes (as defined), the repurchase of which is conditioned upon,
among other things, the Offer and Solicitation.
10
<PAGE>
The ability of the Company and Dominion to effectuate the Business Unit
Sales will depend on multiple factors, many of which are not within the
control of the Company or Dominion. In addition, if the Business Unit Sales
are consummated, substantially all of the assets of the Company and Dominion
will be sold. As a result, the ability of the Company and Dominion to sustain
operations and thereby generate sufficient cash flow to meet interest
obligations to Holders will be substantially reduced or eliminated.
3.PURPOSE OF THE OFFER AND THE SOLICITATION.
On December 19, 1997, DT Acquisition acquired approximately 96% of the
outstanding first preferred shares and approximately 98% of the outstanding
common shares of Dominion in the Dominion Tender Offer. In connection
therewith, DT Acquisition entered into agreements to dispose of the two
primary business units of Dominion in the Business Unit Sales. The principal
purpose of the Offer, which is conditioned upon the satisfaction of the
Supplemental Indenture Condition, the Business Unit Sales Condition, the 2006
Tender Condition and the General Conditions, is to acquire all of the
outstanding Notes in order to effectuate the Business Unit Sales. See Item 9,
"Conditions to the Offer."
The purpose of the Solicitation and the Proposed Amendments is to eliminate
substantially all of the covenants contained in the Indenture, and, together
with the Offer, to permit the Company to effectuate the Business Unit Sales.
If the Requisite Consents are not obtained with respect to the Notes, the
covenants currently contained in the Indenture will continue to bind the
Company. In such event, the Company may, among other things, elect to exercise
its rights under Article Thirteen of the Indenture to defease the Notes, or
may engage in asset sales and comply with Section 1015 of the Indenture
governing sales of assets in order to carry out the Business Unit Sales.
The Company expressly reserves the absolute right, in its sole discretion,
from time to time to purchase any Notes after the Tender Offer Expiration
Date, through open market or privately negotiated transactions, one or more
additional tender or exchange offers or otherwise on terms that may differ
materially from the terms of the Offer.
4.CERTAIN INFORMATION CONCERNING THE COMPANY, DOMINION, DT ACQUISITION AND THE
NOTES.
The Company. The Company, a wholly-owned subsidiary of Dominion, is the
holding company for the United States operations of Dominion. The Company was
organized under the laws of the State of Delaware on June 17, 1976. In order
to effectuate the Business Unit Sales, the Company is offering to repurchase
all of the outstanding Notes and 2006 Notes (as defined). The principal
executive offices of the Company are located at 120 West 45th Street, 23rd
floor, New York, New York 10036-4003; the Company's telephone number is (212)
704-7600. For discussion of the Business Unit Sales and the 2006 Notes, see
Item 9, "Conditions to the Offer."
Dominion. Dominion is a manufacturer and supplier of textile and textile
related products with leading positions in selected markets and global
manufacturing capabilities. Dominion is one of the world's largest
manufacturer of high-end denim fabrics. It is also a supplier to the U.S.
disposable diaper market and has significant non-woven, spunbond multidenier
production capacity. The Company operates manufacturing plants in five
countries, including the United States, Canada and three European countries.
Dominion was incorporated under the law of Canada by letters of patent dated
December 9, 1922 for the purpose of acquiring the entire undertaking of its
predecessor company. The predecessor company had been incorporated in 1905 to
amalgamate the businesses of four cotton manufacturing companies. The
principal executive offices of Dominion are located at 1950 Sherbrooke Street
West, Montreal, Quebec, Canada H3H 1E7; Dominion's telephone number is (514)
969-6000.
Dominion's operations consist of two distinct lines of business: the Apparel
Fabric Business and the Nonwovens Business. The "Apparel Fabric Business"
consists of the apparel fabrics textile group businesses of Dominion conducted
primarily through the Swift Textiles Canada division of Dominion, six direct
or indirect wholly-owned subsidiaries of Dominion (being the Company, Swift
Textiles, Inc., a Delaware corporation, Dominion Textile (Asia) Pte. Ltd., a
company organized under the laws of Singapore, Swift Textiles (Far East)
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Ltd., a company organized under the laws of Hong Kong, Dominion Textile
International B.V., a company organized under the laws of the Netherlands, and
Klopman International S.r.L., a company organized under the laws of Italy) and
Swift Textiles Europe Ltd., a company organized under the laws of the Republic
of Ireland. The "Nonwovens Business" consists of the nonwovens group
businesses of Dominion conducted primarily through the Dominion Industrial
Fabrics Company division ("DIFCO") of Dominion, two indirect, wholly-owned
subsidiaries of Dominion (being Poly-Bond Inc., a Delaware corporation, and
Nordlys S.A., a company organized under the laws of the Republic of France)
and the Dominion Nonwoven (South America) Argentinean joint venture.
DT Acquisition. DT Acquisition Inc. is an affiliate of Polymer Group, Inc.,
a Delaware corporation. DT Acquisition was organized under the laws of Canada
on October 21, 1997 for the purpose of acquiring control of Dominion. DT
Acquisition acquired control of Dominion in the Dominion Tender Offer on
December 19, 1997. The principal executive offices of DT Acquisition are
located at Suite 3000, Aetna Tower, P.O. Box 270, Toronto-Dominion Centre,
Toronto, Canada M5K IN2.
The Notes. The Notes were issued by the Company on November 1, 1993 in the
aggregate principal amount of $150,000,000. The Notes, which are unsecured
senior obligations of the Company and mature on November 1, 2003, were issued
under the Indenture. Pursuant to the Indenture, the Notes may be redeemed on
or after November 1, 1998 at a price equal to 104.625% of the principal amount
outstanding. A form of the Indenture was filed as an exhibit to the Company's
registration statements on Form F-10 (Reg. No. 33-68586) and Form F-1 (Reg.
No. 33-68586-01).
5.PROPOSED AMENDMENTS.
This section sets forth a brief description of the Proposed Amendments to
the Indenture for which Consents are being sought pursuant to the
Solicitation. The summaries of provisions of the Indenture set forth below are
qualified in their entirety by reference to the full and complete terms
contained in the Indenture. Capitalized terms appearing below but not defined
in this Statement have the meanings assigned to such terms in the Indenture.
Deletion of Covenants in the Indenture. The Proposed Amendments would delete
in their entirety the following covenants and references thereto from the
Indenture as well as the events of default related to such covenants:
SECTION801 . Parent Guarantor and Issuer May Consolidate, Etc. and Purchases
of Assets Only on Certain Terms. This provision limits the
terms under which the Parent Guarantor or the Company may
consolidate or merge with or into another entity, sell or
lease substantially all of its assets, or acquire capital
stock or other ownership interests in other entities.
SECTION802 . Successor Substituted. This provision requires the successor
parent or successor issuer following any consolidation with or
merger into the Parent Guarantor or the Company to be
substituted for the Parent Guarantor or the Company, as the
case may be, under the Indenture with the same effect as if
such person had been named as the Parent Guarantor or the
Company therein.
SECTION1004 . Existence. This provision currently requires the Company and the
Parent Guarantor to preserve and keep in effect its existence,
rights (charter and statutory) and franchises.
SECTION1005 . Maintenance of Properties. This provision currently requires the
Parent Guarantor to maintain all material properties used in
its business or the business of any Subsidiary.
SECTION1006 . Payment of Taxes and Other Claims. This provision currently
requires the Parent Guarantor to pay all taxes, assessments
and governmental charges levied against it or any Subsidiary.
SECTION1007 . Maintenance of Insurance. This provision currently requires the
Parent Guarantor and each Subsidiary to keep all properties
insured at commercial standards and to reinvest insurance
proceeds from such policies.
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SECTION1008 . Limitation on Consolidated Debt. This provision currently
restricts the ability of the Parent Guarantor and its
Subsidiaries to incur certain Indebtedness.
SECTION1009 . Limitation on Subsidiary Debt and Preferred Stock. This
provision currently restricts the ability of the Parent
Guarantor and its Subsidiaries to issue Preferred Stock or to
incur certain other Indebtedness.
SECTION1010 . Limitation on Restricted Payments. This provision currently
restricts the ability of the Parent Guarantor and its
Subsidiaries to make certain Restricted Payments, including
(i) dividends or distributions in respect of any shares of
Capital Stock of the Parent Guarantor or of any Subsidiary,
(ii) purchases, redemptions, other acquisitions or retirements
of Capital Stock of the Parent Guarantor, any Subsidiary or
any Related Person, including options, warrants or other
rights to acquire such Capital Stock, held by persons other
than the Company or any Wholly-Owned Subsidiary, (iii)
Investments in or payments on guarantees of any obligations of
Affiliates or Related Persons of the Parent Guarantor, and
(iv) voluntary or optional principal payments, repurchases,
redemptions, defeasances, retirements or other acquisitions of
any subordinated indebtedness of the Parent Guarantor or the
Company.
SECTION1011 . Limitations Concerning Distributions by Subsidiaries, etc. This
provision currently restricts the Parent Guarantor and its
Significant Subsidiaries from permitting to exist certain
encumbrances or restrictions on the ability of any Significant
Subsidiary to (i) pay dividends or make any other
distributions on its Capital Stock or pay any Debt owed to the
Parent Guarantor or any Subsidiary of the Parent Guarantor,
(ii) make loans or advances to the Parent Guarantor or any
Subsidiary of the Parent Guarantor, and (iii) transfer any
property or assets to the Parent Guarantor or any Subsidiary
of the Parent Guarantor, except in certain circumstances.
SECTION1012 . Limitation on Liens. This provision currently restricts the
ability of the Parent Guarantor and its Subsidiaries to
create, incur, affirm or suffer to exist any Lien upon any of
its property or assets, except in certain circumstances.
SECTION1013 . Limitation on Sale and Leaseback Transactions. This provision
currently restricts the ability of the Parent Guarantor and
its Subsidiaries to enter into Sale and Leaseback
transactions, except in certain circumstances.
SECTION1014 . Limitation on Transactions with Affiliates and Related Persons.
This provision currently restricts the ability of the Parent
Guarantor and its Subsidiaries to engage in certain
transactions with Affiliates or Related Persons of the Parent
Guarantor.
SECTION1015 . Limitation on Certain Sales of Capital Stock of Subsidiaries and
Certain Assets. This provision currently restricts the ability
of the Parent Guarantor and its Subsidiaries to make Asset
Dispositions, except in certain circumstances.
SECTION1016 . Limitation on Issuances and Sales of Capital Stock of Wholly
Owned Subsidiaries. This provision currently restricts the
ability of the Parent Guarantor and its Subsidiaries to issue,
transfer, convey, sell or otherwise dispose of any Shares of
Capital Stock of any Subsidiary (except to the Parent
Guarantor or a Wholly-Owned Subsidiary of the Parent
Guarantor), except in certain circumstances.
SECTION1018 . Ownership of Issuer. This provision currently requires the
Company to remain a wholly-owned subsidiary of the Parent
Guarantor.
SECTION1019 . Payment of Additional Amounts. This provision currently requires
the Parent Guarantor to make all payments under or with
respect to the Notes free and clear of any present or future
tax, duty, levy, impost, assessment or other governmental
charge imposed or levied by the Government of Canada or of any
province or territory thereof. Further, if the Parent
Guarantor is required to withhold or deduct any Canadian taxes
from any payment made under or with respect to the Notes, it
must pay such amount as may be necessary so that the net
amount received by each Holder will not be less than the
amount received if such Canadian taxes had not been withheld
or deducted.
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SECTION1020 . Provision of Financial Information. This provision currently
requires the Parent Guarantor to timely file with the
Securities and Exchange Commission and to provide to Holders
and the Trustee the periodic and annual reports required to be
filed under the Exchange Act, whether or not the Parent
Guarantor is actually subject to those reporting requirements.
Deletion of Definitions. The Proposed Amendments would delete definitions
from the Indenture when all references to such definitions would be eliminated
as a result of the foregoing.
The Proposed Amendments with respect to the Indenture constitute a single
proposal and a consenting Holder must consent to the Proposed Amendments as an
entirety and may not consent selectively with respect to certain of the
Proposed Amendments.
The Supplemental Indenture relating to the Indenture will be executed by the
Company, the Parent Guarantor and the Trustee on or promptly after the Consent
Expiration Date, but the modification or elimination of the covenants set
forth in the Supplemental Indenture will not become operative unless and until
the Notes are accepted for purchase by the Company pursuant to the Offer,
which is expected to occur promptly after the Tender Offer Expiration Date. If
the Requisite Consents are not obtained with respect to the Notes on or prior
to the Consent Expiration Date, no Supplemental Indenture relating to the
Indenture will be executed or become operative.
IF THE PROPOSED AMENDMENTS ARE ADOPTED AND THE OFFER IS CONSUMMATED, NOTES
THAT ARE NOT TENDERED, OR THAT ARE NOT ACCEPTED FOR PURCHASE PURSUANT TO THE
OFFER, WILL REMAIN OUTSTANDING, BUT WILL BE SUBJECT TO THE TERMS OF THE
INDENTURE AS MODIFIED BY THE SUPPLEMENTAL INDENTURE.
Pursuant to the terms of the Indenture, the Proposed Amendments require the
written consent of the Holders of not less than a majority in aggregate
principal amount of the then outstanding Notes issued pursuant to the
Indenture, excluding for such purposes any Notes owned at the time by the
Company, any obligor of the Notes and any of their affiliates (the "Requisite
Consents").
The valid tender by a Holder of Notes pursuant to the Offer on or prior to
the Consent Expiration Date will be deemed to constitute the giving of a
Consent by such Holder to the Proposed Amendments with respect to such Notes.
The Company is not soliciting and will not accept Consents from Holders who
are not tendering their Notes pursuant to the Offer.
6.ACCEPTANCE FOR PAYMENT AND PAYMENT FOR NOTES; ACCEPTANCE OF CONSENTS.
Upon the terms and subject to the conditions of the Offer (including if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment) and applicable law, the Company will purchase, by accepting for
payment, and will pay for, all Notes validly tendered (and not withdrawn)
pursuant to the Offer on or prior to the Tender Offer Expiration Date, such
payment to be made by the deposit of the Tender Offer Consideration and
Consent Payment, as applicable, in immediately available funds by the Company
on the Payment Date with the Depositary. The Depositary will act as agent for
tendering Holders for the purpose of receiving payment from the Company and
transmitting such payment to tendering Holders. Under no circumstances will
interest on the Tender Offer Consideration and the Consent Payment, as
applicable, be paid by the Company by reason of any delay on behalf of the
Depositary in making such payment.
The Company expressly reserves the right, in its sole discretion and subject
to Rule 14e-l(c) under the Exchange Act, to delay acceptance for payment of or
payment for Notes in order to comply, in whole or in part, with any applicable
law. See Item 9, "Conditions to the Offer." In all cases, payment by the
Depositary to Holders of the Tender Offer Consideration for Notes accepted for
purchase pursuant to the Offer or Consent Payments for Consents delivered on
or prior to the Consent Expiration Date will be made only after timely receipt
by the Depositary of (i) certificates representing such Notes or timely
confirmation of a book-entry transfer of such Notes into the Depositary's
account at DTC pursuant to the procedures set forth under Item 7,
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"Procedures for Tendering Notes and Delivering Consents," (ii) a properly
completed and duly executed Consent and Letter of Transmittal (or manually
signed facsimile thereof) and (iii) any other documents required by the
Consent and Letter of Transmittal, as applicable.
For purposes of the Offer, validly tendered Notes (or defectively tendered
Notes for which the Company has waived such defect) will be deemed to have
been accepted for payment by the Company if, as and when the Company gives
oral or written notice thereof to the Depositary. For purposes of the
Solicitation, Consents delivered to the Depositary will be deemed to have been
accepted by the Company if, as and when (a) the Company and the Trustee
execute the Supplemental Indenture promptly after the Consent Expiration Date,
and (b) the Company has accepted the Notes for purchase pursuant to the Offer.
If any tendered Notes are not purchased pursuant to the Offer for any
reason, or certificates are submitted evidencing more Notes than are tendered,
such Notes not purchased will be returned, without expense, to the tendering
Holder (or, in the case of Notes tendered by book-entry transfer, such Notes
will be credited to the account maintained at DTC from which such Notes were
delivered) promptly following the Tender Offer Expiration Date or termination
of the Offer.
The Company reserves the right to transfer or assign, in whole at any time
or in part from time to time, to one or more of its affiliates, the right to
purchase Notes tendered pursuant to the Offer, but any such transfer or
assignment will not relieve the Company of its obligations under the Offer or
prejudice the rights of tendering Holders to receive the Tender Offer
Consideration or Consent Payment, as applicable, pursuant to the Offer and
Solicitation.
It is a condition precedent to the Company's obligation to purchase Notes
pursuant to the Offer that, among other conditions, the Supplemental Indenture
relating to the Indenture will have been executed. It is a condition
subsequent to the effectiveness of the Proposed Amendments contained in the
Supplemental Indenture that the Company accept for payment all Notes validly
tendered (and not withdrawn) pursuant to the Offer (in which event, the
Company will be obligated to promptly pay the Tender Offer Consideration and
the Consent Payment, as applicable, for the Notes so accepted). See Item 9,
"Conditions to the Offer."
7.PROCEDURES FOR TENDERING NOTES AND DELIVERING CONSENTS.
Holders will not be entitled to receive the Total Consideration unless they
BOTH tender their Notes pursuant to the Offer AND deliver Consents to the
Proposed Amendments with respect to such Notes on or prior to the Consent
Expiration Date. The tender of Notes pursuant to the Offer and in accordance
with the procedures described below will constitute (i) a tender of the Notes
and (ii) the delivery of a Consent by such Holder with respect to such Notes
(if such tender is on or prior to the Consent Expiration Date). On or prior to
the Consent Expiration Date, the Company is not soliciting and will not accept
Consents to the Proposed Amendments from Holders who are not tendering their
Notes pursuant to the Offer. Holders who tender after the Consent Expiration
Date will receive only the Tender Offer Consideration.
The method of delivery of Notes and Consents and Letters of Transmittal, any
required signature guarantees and all other required documents, including
delivery through DTC and any acceptance of an Agent's Message transmitted
through ATOP, is at the election and risk of the person tendering Notes and
delivering the Consent and Letter of Transmittal and, except as otherwise
provided in the Consent and Letter of Transmittal, delivery will be deemed
made only when actually received by the Depositary. If delivery is by mail, it
is suggested that the Holder use properly insured, registered mail with return
receipt requested, and that the mailing be made sufficiently in advance of the
Consent Expiration Date or Tender Offer Expiration Date, as applicable, to
permit delivery to the Depositary on or prior to such date.
Tender of and Consent for Notes. The tender by a Holder of Notes and
delivery of Consents (and subsequent acceptance of such tender by the Company)
pursuant to one of the procedures set forth below will constitute a binding
agreement between such Holder and the Company in accordance with the terms and
subject to the conditions set forth herein and in the Consent and Letter of
Transmittal.
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Only registered Holders are authorized to tender their Notes and deliver
their Consent to the Proposed Amendments. The procedures by which Notes may be
tendered and Consents given by beneficial owners who are not registered
Holders will depend upon the manner in which the Notes are held.
Tender of Notes Held in Physical Form. To effectively tender Notes held in
physical form (and deliver the related Consents), a properly completed Consent
and Letter of Transmittal (or a manually signed facsimile thereof) duly
executed by the Holder thereof, and any other documents required by the
Consent and Letter of Transmittal, must be received by the Depositary at its
address set forth on the back cover of this Statement on or prior to the
Consent Expiration Date or the Tender Offer Expiration Date, as applicable. A
tender of Notes may also be effected through the deposit of Notes with DTC
combined with book-entry delivery as described below; however, a completed and
executed Consent and Letter of Transmittal is still required to effectuate the
valid delivery of related Consents with respect to such Notes. After the
Consent Expiration Date, a tendering Holder may comply with the guaranteed
delivery procedure set forth below if such Holder is unable to tender Notes on
or prior to the Tender Offer Expiration Date. The guaranteed delivery
procedure may not be used to tender Notes or deliver Consents on or prior to
the Consent Expiration Date. In order to receive both the Consent Payment and
the Tender Offer Consideration, the Notes and the Consent and Letter of
Transmittal must be received by the Depositary on or prior to the Consent
Expiration Date. Consents and Letters of Transmittal and Notes should be sent
only to the Depositary and should not be sent to the Company, the Information
Agent, the Dealer Manager or the Trustee.
Tender of Notes Held Through DTC. To effectively tender Notes (and deliver
the related Consents) that are held through DTC, DTC participants should
either (i) properly complete and duly execute the Consent and Letter of
Transmittal (or a manually signed facsimile thereof), together with any other
documents required by the Consent and Letter of Transmittal, and mail or
deliver the Consent and Letter of Transmittal and such other documents to the
Depositary, or (ii) electronically transmit their acceptance through ATOP (and
thereby tender Notes), for which the transaction will be eligible, followed by
a properly completed and duly executed Consent and Letter of Transmittal
delivered to the Depositary to effectuate the delivery of the related Consent.
Upon receipt of such Holder's acceptance through ATOP, DTC will then edit and
verify the acceptance and send an Agent's Message (as defined below) to the
Depositary for its acceptance. Delivery of tendered Notes must be made to the
Depositary pursuant to the book-entry delivery procedures or the tendering DTC
participant must comply with the guaranteed delivery procedures, in each case
as set forth below, but such guaranteed delivery procedures may only be used
for tenders of Notes after the Consent Expiration Date.
Except as provided below, unless the Notes being tendered are deposited with
the Depositary on or prior to the Consent Expiration Date or on or prior to
the Tender Offer Expiration Date, as the case may be (accompanied by a
properly completed and duly executed Consent and Letter of Transmittal, as
applicable) the Company may, at its option, treat such tender as defective for
purposes of the right to receive the Total Consideration or Tender Offer
Consideration, as applicable. Payment for the Notes will be made only against
deposit of the tendered Notes and delivery of any other required documents.
Book-Entry Delivery Procedures. The Depositary will establish accounts with
respect to the Notes at DTC for purposes of the Offer within two business days
after the date of this Statement, and any financial institution that is a
participant in DTC may make book-entry delivery of the Notes and Consents by
causing DTC to transfer such Notes into the Depositary's account in accordance
with DTC's procedures for such transfer. However, although delivery of Notes
and Consents may be effected through book-entry transfer into the Depository's
account at DTC, the Consent and Letter of Transmittal (or a manually signed
facsimile thereof), with any required signature guarantees or an Agent's
Message (as defined below) in connection with a book-entry transfer, and any
other required documents, must, in any case, be transmitted to and received by
the Depositary at one or more of its addresses set forth on the back cover of
this Statement on or prior to the Consent Expiration Date or the Tender Offer
Expiration Date, as the case may be, or, to be validly tendered after the
Consent Expiration Date but on or prior to the Tender Offer Expiration Date,
the guaranteed delivery procedure described below must be complied with.
Holders who tender Notes after the Consent Expiration Date will only receive
the Tender Offer Consideration and will not be entitled to the Consent
Payment. Delivery of documents to DTC does not constitute delivery to the
Depositary. The confirmation of a book-entry transfer into the Depositary's
account at DTC as described above is referred to herein as a "Book-Entry
Confirmation."
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The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Depositary and forming a part of the Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from each
participant in DTC tendering the Notes and delivering the Consents and that
such participants have received the Consent and Letter of Transmittal and
agree to be bound by the terms of the Consent and Letter of Transmittal and
the Company may enforce such agreement against such participants.
In order to validly deliver a Consent with respect to Notes transferred
pursuant to ATOP, a DTC participant using ATOP must also properly complete and
duly execute the Consent and Letter of Transmittal and deliver it to the
Depositary. Pursuant to authority granted by DTC, any DTC participant which
has Notes credited to its DTC account at any time (and thereby held of record
by DTC's nominee) may directly provide a Consent to the Proposed Amendments as
though it were the registered Holder by so completing, executing and
delivering the Consent and Letter of Transmittal.
Signature Guarantees. Signatures on all Consents and Letters of Transmittal
must be guaranteed by a recognized participant in the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Program or the Stock Exchange Medallion Program (each a "Medallion Signature
Guarantor"), unless the Notes tendered and Consents delivered thereby are
tendered and delivered (i) by a registered Holder of Notes (or by a
participant in DTC whose name appears on a security position listing as the
owner of such Notes) who has not completed any of the boxes entitled "Special
Payment Instructions" or "Special Delivery Instructions" on the Consent and
Letter of Transmittal, or (ii) for the account of a member firm of a
registered national securities exchange, a member of the National Association
of Securities Dealers, Inc. ("NASD") or a commercial bank or trust company
having an office or correspondent in the United States (each of the foregoing
being referred to as an "Eligible Institution"). See Instruction 1 of the
Consent and Letter of Transmittal. If the Notes are registered in the name of
a person other than the signer of the Consent and Letter of Transmittal or if
Notes not accepted for payment or not tendered are to be returned to a person
other than the registered Holder, then the signature on the Consent and Letter
of Transmittal accompanying the tendered Notes must be Guaranteed by a
Medallion Signature Guarantor as described above. See Instructions 1, 5 and 6
of the Consent and Letter of Transmittal.
Guaranteed Delivery. If a registered Holder desires to tender Notes pursuant
to the Offer after the Consent Expiration Date and (a) certificates
representing such Notes are not immediately available, (b) time will not
permit such Holder's Consent and Letter of Transmittal, certificates
representing such Notes and all other required documents to reach the
Depositary on or prior to the Tender Offer Expiration Date, or (c) the
procedures for book-entry transfer (including delivery of an Agent's Message)
cannot be completed on or prior to the Tender Offer Expiration Date, such
Holder may nevertheless tender such Notes with the effect that such tender
will be deemed to have been received on or prior to the Tender Offer
Expiration Date if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company herewith, or an
Agent's Message with respect to guaranteed delivery that is accepted by the
Company, is received by the Depositary on or prior to the Tender Offer
Expiration Date as provided below; and
(iii) the certificates for the tendered Notes, in proper form for
transfer (or a Book-Entry Confirmation of the transfer of such Notes into
the Depositary's account at DTC as described above), together with a
Consent and Letter of Transmittal (or manually signed facsimile thereof)
properly completed and duly executed, with any signature guarantees and any
other documents required by the Consent and Letter of Transmittal or a
properly transmitted Agent's Message, are received by the Depositary within
three business days after the date of execution of the Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be sent by hand delivery, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE COMPANY BY REASON OF ANY
DELAY IN MAKING PAYMENT TO ANY PERSON USING THE GUARANTEED DELIVERY
PROCEDURES. THE TENDER OFFER CONSIDERATION FOR
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NOTES TENDERED PURSUANT TO THE GUARANTEED DELIVERY PROCEDURES WILL BE THE SAME
AS FOR NOTES DELIVERED TO THE DEPOSITARY AFTER THE CONSENT EXPIRATION DATE AND
ON OR PRIOR TO THE TENDER OFFER EXPIRATION DATE, EVEN IF THE NOTES TO BE
DELIVERED PURSUANT TO THE GUARANTEED DELIVERY PROCEDURES ARE NOT SO DELIVERED
TO THE DEPOSITARY, AND THEREFORE PAYMENT BY THE DEPOSITARY ON ACCOUNT OF SUCH
NOTES IS NOT MADE, UNTIL AFTER THE PAYMENT DATE. HOLDERS SHOULD BE AWARE THAT,
ON OR PRIOR TO THE CONSENT EXPIRATION DATE, TENDERS OF NOTES AND THE RELATED
CONSENTS CANNOT BE DELIVERED USING THE GUARANTEED DELIVERY PROCESS AND THAT
USE OF THE GUARANTEED DELIVERY PROCESS COULD RESULT IN A TENDER OF NOTES AND
THE RELATED CONSENT BEING DEFECTIVE.
Holders who tender Notes after the Consent Expiration Date will only receive
the Tender Offer Consideration and will not be entitled to the Consent
Payment. Notwithstanding any other provision hereof, payment of the Tender
Offer Consideration for Notes tendered and accepted for payment pursuant to
the Offer will, in all cases, be made only after receipt by the Depositary of
the tendered Notes (or Book-Entry Confirmation of the transfer of such Notes
into the Depositary's account at DTC as described above), and a Consent and
Letter of Transmittal (or manually signed facsimile thereof) with respect to
such Notes, properly completed and duly executed, with any signature
guarantees and any other documents required by the Consent and Letter of
Transmittal, or a properly transmitted Agent's Message.
Backup U.S. Federal Income Tax Withholding. To prevent backup U.S. federal
income tax withholding, each tendering Holder of Notes must provide the
Depositary with such Holder's correct taxpayer identification number and
certify that such Holder is not subject to backup U.S. federal income tax
withholding by completing the Substitute Form W-9 included in the Consent and
Letter of Transmittal. See Item 10, "Certain U.S. Federal Income Tax
Consequences."
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tendered Notes
or delivery of Consents pursuant to any of the procedures described above will
be determined by the Company in the Company's sole discretion (whose
determination shall be final and binding). The Company expressly reserves the
absolute right, in its sole discretion, subject to applicable law, to reject
any or all tenders of any Notes or delivery of Consents determined by it not
to be in proper form or, in the case of Notes, if the acceptance for payment
of, or payment for, such Notes may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right, in its sole
discretion, subject to applicable law, to waive or amend any of the conditions
of the Offer or the Solicitation or to waive any defect or irregularity in any
tender with respect to Notes or delivery of Consents of any particular Holder,
whether or not similar defects or irregularities are waived in the case of
other Holders. The Company's interpretation of the terms and conditions of the
Offer and Solicitation (including the Consent and Letter of Transmittal and
the Instructions thereto) will be final and binding. Neither the Company, the
Depositary, the Dealer Manager, the Information Agent, the Trustee or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification. If the Company waives its right to reject a defective
tender of Notes, the Holder will be entitled to the Tender Offer Consideration
and, if applicable, the Consent Payment.
8.WITHDRAWAL OF TENDERS AND REVOCATION OF CONSENTS.
Tenders of Notes may be withdrawn at any time prior to the Tender Offer
Expiration Date. Consents may be revoked at any time on or prior to the
Consent Expiration Date. A valid withdrawal of tendered Notes effected on or
prior to the Consent Expiration Date will constitute the concurrent valid
revocation of such Holder's related Consent. Consents may not be revoked after
the Consent Expiration Date except in the limited circumstances described
below. In order for a Holder to revoke a Consent, such Holder must withdraw
the related tendered Notes. Tenders of Notes may be validly withdrawn if the
Offer is terminated without any Notes being purchased thereunder. In the event
of a termination of the Offer, the Notes tendered pursuant to the Offer will
be promptly returned to the tendering Holder and the Supplemental Indenture
will not become operative. If the Solicitation is amended on or prior to the
Consent Expiration Date in a manner determined by the Company to constitute a
material adverse change to the Holders of the Notes, the Company promptly will
disclose such amendment and, if necessary, extend the Solicitation for such
Notes for a period deemed by the Company to be adequate to permit
18
<PAGE>
Holders of the Notes to withdraw their Notes and revoke their Consents. In
addition, if the consideration to be paid in the Offer is increased or
decreased or the principal amount of Notes subject to the Offer is decreased,
the Offer will remain open at least 10 business days from the date the Company
first gives notice to Holders, by public announcement or otherwise, of such
increase or decrease.
On or prior to the Consent Expiration Date, and in the limited circumstances
described above for a withdrawal of a tender of Notes (and the concurrent
revocation of Consents, as the case may be) to be effective, a written or
facsimile transmission notice of withdrawal must be received by the Depositary
on or prior to the Consent Expiration Date at its address set forth on the
back cover of this Statement. Any such notice of withdrawal must (i) specify
the name of the person who tendered the Notes to be withdrawn, (ii) contain
the description of the Notes to be withdrawn and identify the certificate
number or numbers shown on the particular certificates evidencing such Notes
(unless such Notes were tendered by book-entry transfer) and the aggregate
principal amount represented by such Notes, and (iii) be signed by the Holder
of such Notes in the same manner as the original signature on the Consent and
Letter of Transmittal by which such Notes were tendered (including any
required signature Guarantees), or be accompanied by (x) documents of transfer
sufficient to have the Trustee register the transfer of the Notes into the
name of the person withdrawing such Notes and (y) a properly completed
irrevocable proxy authorizing such person to effect such withdrawal on behalf
of such Holder. If the Notes to be withdrawn have been delivered or otherwise
identified to the Depositary, a signed notice of withdrawal is effective
immediately upon written or facsimile notice of such withdrawal even if
physical release is not yet effected.
Any valid revocation of Consents will automatically render the prior tender
of the Notes to which such Consents relate defective and the Company will have
the right, which it may waive, to reject such tender as invalid. Any permitted
withdrawal of Notes and revocation of Consents may not be rescinded, and any
Notes properly withdrawn will thereafter be deemed not validly tendered and
any Consents revoked will be deemed not validly delivered for purposes of the
Offer; provided, however, that withdrawn Notes may be re-tendered and revoked
Consents may be re-delivered by again following one of the appropriate
procedures described herein at any time on or prior to the Consent Expiration
Date. After the Consent Expiration Date, Consents may not be revoked, except
in the limited circumstances described above.
If the Company extends the Offer or is delayed in its acceptance for
purchase of Notes or is unable to purchase Notes pursuant to the Offer for any
reason, then, without prejudice to the Company's rights hereunder, tendered
Notes may be retained by the Depositary on behalf of the Company and may not
be withdrawn (subject to Rule 14e-1(c) under the Exchange Act, which requires
that an offeror pay the consideration offered or return the securities
deposited by or on behalf of the investor promptly after the termination or
withdrawal of a tender offer), except as otherwise provided in this section.
ALL QUESTIONS AS TO THE VALIDITY, FORM AND ELIGIBILITY (INCLUDING TIME OF
RECEIPT) OF NOTICES OF WITHDRAWAL AND REVOCATION OF CONSENTS WILL BE
DETERMINED BY THE COMPANY, IN THE COMPANY'S SOLE DISCRETION (WHOSE
DETERMINATION SHALL BE FINAL AND BINDING). NEITHER THE COMPANY, THE
DEPOSITARY, THE DEALER MANAGER, THE INFORMATION AGENT, THE TRUSTEE OR ANY
OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECTS OR
IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL OR REVOCATION OF CONSENTS, OR INCUR
ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION.
9.CONDITIONS TO THE OFFER.
Notwithstanding any other provisions of the Offer and the Solicitation and
in addition to (and not in limitation of) the Company's rights to extend
and/or amend the Offer and the Solicitation, the Company shall not be required
to accept for payment, purchase or pay for, and may delay the acceptance for
payment of, or payment for, any tendered Notes, in each event subject to Rule
14e-1(c) under the Exchange Act, and may terminate the Offer and the
Solicitation, if the Supplemental Indenture Condition, the Business Unit Sales
Condition, the 2006 Tender Condition or the General Conditions shall not have
been satisfied.
19
<PAGE>
The "Supplemental Indenture Condition" shall mean receipt of the Requisite
Consents with respect to the Proposed Amendments and the execution of the
Supplemental Indenture providing for the Proposed Amendments.
The "Business Unit Sales Condition" shall mean the consummation of (A) the
acquisition of the Apparel Fabric Business of Dominion (including certain
associated liabilities) by Galey & Lord, Incorporated, a Delaware corporation
("GLI"), and (B) the acquisition of the Nonwovens Business of Dominion
(including certain associated liabilities) by Polymer Group, Inc., a Delaware
corporation ("PGI"), in each case as contemplated in the Purchase Agreement
dated October 27, 1997 among PGI, DT Acquisition and GLI (together, the
"Business Unit Sales"). PGI owns approximately 68% of DT Acquisition. The
InterTech Group, Inc., an affiliate of PGI, owns approximately 32% of DT
Acquisition.
The "2006 Tender Condition" shall mean the successful completion of both the
tender offer and the consent solicitation with respect to the Company's 9 1/4%
Guaranteed Senior Notes due April 1, 2006 (the "2006 Notes"), which are
guaranteed by the Parent Guarantor and issued under the Indenture, dated as of
April 1, 1996, among the Company, the Parent Guarantor and First Union
National Bank, as Trustee. In order to consummate the Business Unit Sales, the
Company is offering to repurchase all of the outstanding 2006 Notes in
addition to the Offer with respect to the Notes set forth herein.
Consequently, the Offer is conditioned on the concurrent completion of the
tender offer and consent solicitation with respect to the 2006 Notes.
The "General Conditions" shall mean the conditions set forth below in
paragraphs (i) through (v). The General Conditions shall be deemed to have
been satisfied or waived unless any of the following conditions shall occur on
or prior to the Tender Offer Expiration Date.
(i) There shall have been instituted, threatened or be pending any action
or proceeding (or there shall have been any material adverse development in
any action or proceeding currently instituted, threatened or pending)
before or by any court, governmental, regulatory or administrative agency
or instrumentality, or by any other person, in connection with the Offer or
the Solicitation that is, or is reasonably likely to be, in the sole
judgment of the Company, materially adverse to the business, operations,
properties, condition (financial or otherwise), assets, liabilities or
prospects of the Company and its subsidiaries, taken as a whole, or which
would or might, in the sole judgment of the Company, prohibit, prevent,
restrict or delay consummation of the Offer or the Solicitation;
(ii) An order, statute, rule, regulation, executive order, stay, decree,
judgment or injunction shall have been proposed, enacted, entered, issued,
promulgated, enforced or deemed applicable by any court or governmental,
regulatory or administrative agency or instrumentality that, in the sole
judgment of the Company, would or might prohibit, prevent, restrict or
delay consummation of the Offer or the Solicitation or that is, or is
reasonably likely to be, in the sole judgment of the Company, materially
adverse to the business, operations, properties, condition (financial or
otherwise), assets, liabilities or prospects of the Company and its
subsidiaries, taken as a whole, or Dominion;
(iii) There shall have occurred or be likely to occur any event affecting
the business or financial affairs of the Company that, in the sole judgment
of the Company, would or might prohibit, prevent, restrict or delay
consummation of the Offer or the Solicitation;
(iv) The Trustee under the Indenture shall have objected in any respect
to, or taken action that could, in the sole judgment of the Company,
adversely affect the consummation of the Offer or the Solicitation or the
Company's ability to cause the Proposed Amendments to become operative or
shall have taken any action that challenges the validity or effectiveness
of the Supplemental Indenture or the procedures used by the Company in
soliciting the Consents (including the form thereof) or in the making of
the Offer or the Solicitation or the acceptance of, or payment for, the
Notes or the Consents; or
(v) There shall have occurred (1) any general suspension of, shortening
of hours for, or limitation on prices for, trading in securities in the
United States, Canadian, European or other major securities or financial
markets, (2) any significant adverse change in the price of the Notes or
any publicly traded securities of the Company or any of its affiliates in
the United States, Canadian, European or other major securities or
financial markets, (3) a material impairment in the trading market for debt
securities, (4) a
20
<PAGE>
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, Canada, Europe or other major
financial markets, (5) any limitation (whether or not mandatory) by any
government or governmental, administrative or regulatory authority or
agency, domestic or foreign, or other event that, in the reasonable
judgment of the Company, might affect the extension of credit by banks or
other lending institutions, (6) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or Canada, or (7) in the case of any
of the foregoing existing on the date hereof, a material acceleration or
worsening thereof.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company, in its sole discretion, regardless of the
circumstances giving rise to any such condition (including any action or
inaction by the Company) and may be waived by the Company, in whole or in
part, at any time and from time to time, in the sole discretion of the
Company, whether any other condition of the Offer and the Solicitation is also
waived. The failure by the Company at any time to exercise any of the
foregoing rights will not be deemed a waiver of any other right and each right
will be deemed an ongoing right which may be asserted at any time and from
time to time.
10.CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of the principal United States federal
income tax consequences to a Holder of (i) the Offer and the Solicitation to
Holders of Notes and (ii) the retention of Notes and the adoption of the
Proposed Amendments. This summary is based upon current provisions of the
United States Internal Revenue Code of 1986, as amended (the "Code"),
applicable United States Treasury regulations promulgated thereunder, judicial
authority and current Internal Revenue Service ("IRS") rulings and practice,
all of which are subject to change, possibly on a retroactive basis. The tax
treatment of a Holder of Notes may vary depending upon such Holder's
particular situation, and certain Holders (including insurance companies, tax
exempt organizations, financial institutions, brokers, dealers, nonresident
aliens, foreign corporations, foreign partnerships or foreign estates or
trusts) might be subject to special rules not discussed below. This discussion
assumes that Notes are held as capital assets and is directed to Holders who
are United States persons. As used herein, a "Holder" means a beneficial owner
of a Note that is for United States federal income tax purposes (i) a citizen
or resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or of
any political subdivision thereof, (iii) an estate whose income is subject to
United States federal income tax regardless of its source, (iv) a trust if a
court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust, or (v) any other
person whose income or gain in respect of a Note is effectively connected with
the conduct of a United States trade or business. No information is provided
herein with respect to foreign, state or local tax laws or estate and gift tax
considerations. Each Holder is urged to consult its own tax advisor regarding
federal, state, local, foreign and any other tax consequences of tendering the
Notes pursuant to the Offer or retaining the Notes, especially in light of the
Holder's particular circumstances.
This summary is based in part on certain recently finalized United States
Treasury regulations addressing the United States federal income tax treatment
of modifications of debt instruments (the "Regulations"). The Regulations are
effective for modifications occurring on or after September 24, 1996 and may
be relied upon for modifications occurring after December 2, 1992. Therefore,
the Regulations will apply to the Offer and the Solicitation. No assurances
can be given that the treatment described herein of the Proposed Amendments or
the cash payments pursuant to the Offer will be accepted by the IRS or, if
challenged, by a court.
Sale of Notes Pursuant to the Offer. In general, a Holder who receives cash
in exchange for Notes pursuant to the Offer will recognize gain or loss for
United States federal income tax purposes equal to the difference between (i)
the amount of cash received (other than cash attributable to accrued interest,
which will be taxable as ordinary income) in exchange for such Notes, and (ii)
such Holder's adjusted tax basis in such Notes at the time of the sale. A
Holder's adjusted tax basis for Notes generally will be the price such Holder
paid for the Notes increased by original issue discount which was previously
included in income by the Holder (including
21
<PAGE>
any original issue discount includible in the taxable year of the sale prior
to the sale) and by market discount to the extent such market discount was
previously included in income by the Holder (including any market discount
included in the taxable year of the sale prior to the sale) and reduced (but
not below zero) by amortized premium and any payments received by the Holder
other than interest payments.
If the Consent Payment is treated as a separate fee for consenting to the
Proposed Amendments, it is possible that such amount would be taxable as
ordinary income to the Holder (rather than as sales proceeds, discussed
above).
Any gain or loss recognized on a sale of a Note pursuant to the Offer should
be capital gain or loss and will be long-term capital gain or loss if the
Holder has held the Note for more than eighteen months at the time of sale or
mid-term capital gain or loss if the Holder has held the Note for more than
twelve months, but less than eighteen months, at the time of sale. A Holder
who has acquired a Note with market discount generally will be required to
treat a portion of any gain on a sale of the Note as ordinary income to the
extent of the market discount accrued to the date of the disposition, less any
accrued market discount previously reported as ordinary income.
Retention of Notes; Adoption of Proposed Amendments. In the case of a Holder
who does not tender its Notes pursuant to the Offer, the adoption of the
Proposed Amendments should not cause a deemed exchange of the Notes under the
Regulations because the Proposed Amendments should not constitute a
significant modification to the terms of the Notes for federal income tax
purposes. Alternatively, even if the Proposed Amendments were to cause a
deemed exchange of the Notes for federal income tax purposes, a Holder who
does not tender its Notes pursuant to the Offer should not recognize gain or
loss on such deemed exchange since such deemed exchange should qualify as a
tax-free recapitalization; provided, however, that to the extent that such
Holder were deemed to receive new Notes with a principal amount in excess of
the principal amount of the Notes surrendered, gain would be recognized to the
extent of such excess. There can be no assurance, however, that the IRS will
not take a contrary view. If an exchange were deemed to have occurred and such
exchange did not qualify as a recapitalization, a Holder would recognize gain
or loss on such exchange and would have a new holding period for the Notes.
In the event that the adoption of the Proposed Amendments causes a deemed
exchange (whether or not the deemed exchange qualifies as a tax-free
recapitalization) and the issue price of the new Notes is less than their
principal amount, the new Notes would generally have original issue discount
and a Holder of such new Note would generally be required to include such
original issue discount in income as it accrues (regardless of whether such
Holder is a cash or accrual basis taxpayer).
Backup Withholding and Information Reporting. In general, information
reporting requirements will apply to the payment of the gross proceeds of the
Offer to the Holders of Notes. Federal income tax law requires that a Holder
whose tendered Notes are accepted for payment must provide the Depositary (as
payor) with such Holder's correct taxpayer identification number ("TIN")
which, in the case of a Holder who is an individual, is his or her social
security number, and certain other information, or otherwise establish a basis
for exemption from backup withholding. Exempt Holders (including, among
others, all corporations and certain foreign individuals) are not subject to
these backup withholding and information reporting requirements.
If the Depositary is not provided with the correct TIN or an adequate basis
for exemption, the Holder may be subject to a penalty imposed by the IRS and
the gross proceeds of the Offer paid to the Holder may be subject to a 31%
backup withholding tax. If withholding results in an overpayment of taxes, a
refund or credit may be obtained, provided that the required information is
provided to the IRS.
To prevent backup withholding, each tendering Holder must complete the
Substitute Form W-9 provided in the Consent and Letter of Transmittal and
either (i) provide the Holder's correct TIN and certain other information
under penalties of perjury or (ii) provide an adequate basis for exemption.
22
<PAGE>
11.THE DEALER MANAGER, THE INFORMATION AGENT AND THE DEPOSITARY.
Chase Securities Inc. has been engaged to act as Dealer Manager and
Solicitation Agent in connection with the Offer and the Solicitation (the
"Dealer Manager"). In such capacity, the Dealer Manager may contact Holders of
Notes regarding the Offer and the Solicitation and may request brokers,
dealers, commercial banks, trust companies and other nominees to forward this
Statement and related materials to beneficial owners of Notes.
The Company has agreed to indemnify the Dealer Manager against certain
liabilities, including certain liabilities under the federal securities laws.
The Dealer Manager and its affiliates have provided in the past, and are
currently providing other investment banking, commercial banking and financial
advisory services to PGI and its affiliates, including DT Acquisition. At any
given time, the Dealer Manager may trade the Notes of the Company for their
own accounts or for the accounts of customers and, accordingly, may hold a
long or short position in the Notes. Any Holder that has questions concerning
the terms of the Offer or the Solicitation may contact the Dealer Manager at
its address and telephone number set forth on the back cover of this
Statement.
MacKenzie Partners, Inc. has been appointed Information Agent (the
"Information Agent") for the Offer and the Solicitation. Questions and
requests for assistance or additional copies of this Statement, the Consent
and Letter of Transmittal or the Notice of Guaranteed Delivery may be directed
to the Information Agent at the address and telephone numbers set forth on the
back cover of this Statement. Holders of Notes may also contact their broker,
dealer, commercial bank or trust company for assistance concerning the Offer
and Solicitation.
Harris Trust Company of New York has been appointed as Depositary (the
"Depositary") for the Offer and the Solicitation. Consents and Letters of
Transmittal and all correspondence in connection with the Offer and the
Solicitation should be sent or delivered by each Holder or a beneficial
owner's broker, dealer, commercial bank, trust company or other nominee to the
Depositary at the addresses and telephone number set forth on the back cover
of this Statement. Any Holder or beneficial owner that has questions
concerning the procedures for tendering Notes or whose Notes have been
mutilated, lost, stolen or destroyed should contact the Depositary at the
addresses and telephone number set forth on the back cover of this Statement.
12.FEES AND EXPENSES.
The Company will pay the Dealer Manager, the Information Agent and the
Depositary reasonable and customary fees for their services and will reimburse
them for their reasonable out-of-pocket expenses in connection therewith. The
Company will pay brokerage firms and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this Statement and related materials to the beneficial
owners of Notes.
13.SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Company to pay the Total
Consideration in connection with the Offer and the Solicitation is estimated
to be approximately $159.4 million (assuming 100% of the outstanding principal
amount of Notes is tendered and accepted for payment). Such funds will be
obtained by the Company from the proceeds of the Business Unit Sales and/or
permitted borrowing through term and revolving commitments under the U.S. $600
million Credit Agreement, dated December 17, 1997, among DT Acquisition,
various financial institutions, The Chase Manhattan Bank, as Administrative
Agent, and First Union National Bank, as Documentation Agent (the "DT Credit
Agreement"). In connection with the acquisition of the common shares and first
preferred shares of Dominion, DT Acquisition entered into the DT Credit
Agreement. Pursuant to the terms of the DT Credit Agreement, DT Acquisition is
permitted to borrow money for the purpose of defeasing the Notes under the
Indenture. In addition, following the amalgamation of DT Acquisition with
Dominion, DT Acquisition may borrow under the DT Credit Agreement for the
purpose of purchasing the Notes and the 2006 Notes. Each of PGI and GLI has
obtained the financing necessary to complete the Business Unit Sales. It is
currently anticipated that the proceeds from the Business Unit Sales will
provide all of the funds
23
<PAGE>
necessary to pay for the Notes purchased pursuant to the Offer. Consummation
of the Offer and the Solicitation is subject to satisfaction of the
Supplemental Indenture Condition, the Business Unit Sales Condition, the 2006
Tender Condition and the General Conditions.
14.MISCELLANEOUS.
The Offer and the Solicitation are being made to all Holders of the Notes.
The Company is not aware of any jurisdiction in which the making of the Offer
and the Solicitation is not in compliance with applicable law. If the Company
becomes aware of any jurisdiction in which the making of the Offer and the
Solicitation would not be in compliance with applicable law, the Company will
make a good faith effort to comply with any such law. If, after such good
faith effort, the Company cannot comply with any such law, the Offer and the
Solicitation will not be made to (nor will tenders of Notes and Consents be
accepted from or on behalf of) the owners of Notes residing in such
jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Company not contained in this Statement or in
the Consent and Letter of Transmittal and, if given or made, such information
or representation must not be relied upon as having been authorized.
DOMINION TEXTILE (USA) INC.
December 23, 1997
24
<PAGE>
SCHEDULE I
<TABLE>
<C> <S>
YLD =The Tender Offer Yield equals the sum of the yield on the 5
7/8% U.S. Treasury Note due October 31, 1998 (the "Reference
Security"), as calculated by the Dealer Manager in accordance
with standard market practice, based on the bid price for such
Reference Security as of 2:00 p.m., New York City time, on the
Price Determination Date, as displayed on the Bloomberg
Government Pricing Monitor on "Page PX3" (the "Bloomberg
Page") (or, if any relevant price is not available on a timely
basis on the Bloomberg Page or is manifestly erroneous, such
other recognized quotation source as the Dealer Manager shall
select in its sole discretion), plus 35 basis points,
expressed as a decimal number.
CPN =the contractual rate of interest payable on a Note expressed as
a decimal number.
N =the number of semi-annual interest payments, based on the
Earliest Redemption Date, from (but not including) the
expected Payment Date to (and including) the Earliest
Redemption Date.
S =the number of days from and including the semi-annual interest
payment date immediately preceding the expected Payment Date
up to, but not including, the expected Payment Date. The
number of days is computed using the 30/360 day-count method.
exp =Exponentiate. The term to the left of "exp" is raised to the
power indicated by the term to the right of "exp."
CP =$10.00 per $1,000 principal amount of Notes, which is equal to
the Consent Payment.
RV =the assumed redemption amount, based on the Earliest Redemption
Date, for each note per $1,000 principal amount of a Note (as
rounded to the nearest one hundredth of one percent).
Total =the Tender Offer Consideration plus the Consent Payment of a
Consideration Note per $1,000 principal amount of a Note if tender is made
on or prior to 5:00 p.m., New York City time, on the Consent
Expiration Date. The Total Consideration is rounded to the
nearest cent.
Tender Offer =the applicable purchase price of a Note per $1,000 principal
Consideration amount of a Note if tender is made after 5:00 p.m., New York
City time, on the Consent Expiration Date. The Tender Offer
Consideration is rounded to the nearest cent.
</TABLE>
N
Total Consideration RV + S $1,000 (CPN/2) - $1,000
= ------------------ ------------------ (CPN/2)(S/180)
(1+YLD/2) exp (N-S/180) (1+YLD/2) exp (k-S/180)
k=1
Tender Offer Consideration N
= RV + S $1,000 (CPN/2) - $1,000
------------------ ------------------ (CPN/2)(S/180)-CP
(1+YLD/2) exp (N-S/180) (1+YLD/2) exp (k-S/180)
k=1
25
<PAGE>
SCHEDULE II
This Schedule provides a hypothetical illustration of the Total
Consideration (i.e., Tender Offer Consideration plus Consent Payment) of the
8 7/8% Guaranteed Senior Notes due 2003 based on hypothetical data, and should,
therefore, be used solely for the purpose of obtaining an understanding of the
calculation of the Total Consideration, as quoted at hypothetical rates and
times, and should not be used or relied upon for any other purpose:
8 7/8% GUARANTEED SENIOR NOTES DUE 2003
<TABLE>
<C> <S>
Earliest Redemption Date =November 1, 1998
Reference Security =5 7/8% U.S. Treasury Note due October 31, 1998
as displayed on the Bloomberg Government
Pricing Monitor on "Page PX3"
Fixed Spread = 0.35% (35 basis points)
EXAMPLE
Assumed Pricing Determination =2:00 p.m., New York City time, on January 9,
Date and Time 1998
Assumed Payment Date =January 27, 1998
Assumed Reference Security
Yield as of Assumed Price
Determination Date and Time =5.69%
Fixed Spread =0.35%
YLD =0.0604
CPN =0.08875
N =2
S =86
RV =$1,043.75
CP =$10.00
Total Consideration =$1,062.43
</TABLE>
N
$1,043.75 +S $1,000 (0.08875/2) - $1,000 (0.08875/2)(86/180)
--------------------- --------------------
(1 + 0.0604/2) exp (2 - 86/180)
k=1(1 + 0.0604/2) exp (k - 86/180)
Tender Offer Consideration
= $1,052.43
N
$1,043.75 +S $1,000 (0.08875/2) - $1,000 (0.08875/2)(86/180) -
--------------------- -------------------- $10.00
(1 + 0.0604/2) exp (2 - 86/180)
k=1(1 + 0.0604/2) exp (k - 86/180)
26
<PAGE>
The Depositary for the Offer and the Solicitation is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
Any questions or requests for assistance or additional copies of this
Statement, the Consent and Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone numbers and
address listed below. A Holder may also contact the Dealer Manager at the
telephone number set forth below or such Holder's broker, dealer, commercial
bank or trust company or nominee for assistance concerning the Offer and the
Solicitation.
The Information Agent for the Offer and the Solicitation is:
LOGO
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (collect)
Toll Free: (800) 322-2885
The Dealer Manager for the Offer and the Solicitation Agent for the
Solicitation is:
CHASE SECURITIES INC.
270 Park Avenue, 4th Floor
New York, New York 10017-2070
Attention: Robert Berk
Call: (212) 270-1100 (collect)
<PAGE>
CONSENT AND LETTER OF TRANSMITTAL
TO TENDER AND TO GIVE CONSENT IN RESPECT OF
8 7/8% GUARANTEED SENIOR NOTES DUE NOVEMBER 1, 2003
(CUSIP: 25754HAB3)
OF
DOMINION TEXTILE (USA) INC.
PURSUANT TO THE OFFER TO PURCHASE AND CONSENT SOLICITATION STATEMENT DATED
DECEMBER 23, 1997
THE SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JANUARY
9, 1998, IF ON SUCH DATE THE COMPANY HAS RECEIVED THE REQUISITE CONSENTS
(AS DEFINED HEREIN) OR THE FIRST DATE THEREAFTER THAT THE COMPANY RECEIVES
THE REQUISITE CONSENTS FROM HOLDERS OF THE NOTES (THE "CONSENT EXPIRATION
DATE"). THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JANUARY
26, 1998, UNLESS EXTENDED (SUCH DATE, AS THE SAME MAY BE EXTENDED, THE
"TENDER OFFER EXPIRATION DATE"). HOLDERS WHO DESIRE TO RECEIVE THE CONSENT
PAYMENT AND THE TENDER OFFER CONSIDERATION MUST VALIDLY CONSENT TO THE
PROPOSED AMENDMENTS ON OR PRIOR TO THE CONSENT EXPIRATION DATE. HOLDERS WHO
TENDER AFTER THE CONSENT EXPIRATION DATE WILL RECEIVE ONLY THE TENDER OFFER
CONSIDERATION. CONSENTS MAY ONLY BE REVOKED ON OR PRIOR TO THE CONSENT
EXPIRATION DATE. TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE TENDER
OFFER EXPIRATION DATE.
The Depositary for the Offer and the Solicitation is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
Wall Street Station P.O. Box 1023 Receive Window
New York, NY 10268-1023 Wall Street Plaza
88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
DELIVERY OF THIS CONSENT AND LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
HOLDERS WHO WISH TO CONSENT TO THE PROPOSED AMENDMENTS AND TO RECEIVE THE
CONSENT PAYMENT PURSUANT TO THE SOLICITATION MUST VALIDLY TENDER (AND NOT
WITHDRAW) THEIR NOTES TO THE DEPOSITARY ON OR PRIOR TO THE CONSENT EXPIRATION
DATE.
<PAGE>
THE INSTRUCTIONS CONTAINED HEREIN AND IN THE OFFER (AS DEFINED BELOW) SHOULD
BE READ CAREFULLY BEFORE THIS CONSENT AND LETTER OF TRANSMITTAL IS COMPLETED.
List below the Notes to which this Consent and Letter of Transmittal
relates. If the space provided below is inadequate, list the certificate
numbers and principal amounts on a separately executed schedule and affix the
schedule to this Consent and Letter of Transmittal. Tenders of Notes will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof.
DESCRIPTION OF NOTES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES)
OF PRINCIPAL AMOUNT
HOLDER(S) AGGREGATE TENDERED AND
(PLEASE PRINCIPAL AS TO WHICH
FILL IN, IF CERTIFICATE AMOUNT CONSENTS ARE
BLANK) NUMBER(S)* REPRESENTED** GIVEN
- -------------------------------------------------------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL PRINCIPAL AMOUNT OF
NOTES
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer (see
below).
** Unless otherwise indicated in the column labeled "Principal Amount Tendered
And As To Which Consents Are Given" and subject to the terms and conditions
of the Statement, a Holder will be deemed to have tendered the entire
aggregate principal amount represented by the Notes indicated in the column
labeled "Aggregate Principal Amount Represented." See Instruction 5.
THE COMPLETION, EXECUTION AND DELIVERY OF THIS CONSENT AND LETTER OF
TRANSMITTAL IN CONNECTION WITH THE TENDER OF NOTES AND DELIVERY OF CONSENTS ON
OR PRIOR TO THE CONSENT EXPIRATION DATE WILL CONSTITUTE A CONSENT TO THE
PROPOSED AMENDMENTS WITH RESPECT TO SUCH NOTES TENDERED. HOLDERS WHO TENDER
THEIR NOTES AFTER THE CONSENT EXPIRATION DATE WILL NOT RECEIVE THE CONSENT
PAYMENT.
2
<PAGE>
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution: ______________________________________________
Account Number with DTC: ____________________________________________________
Transaction Code Number: ____________________________________________________
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED AND COMPLETE THE
FOLLOWING:
Name of Registered Holder(s): _______________________________________________
Window Ticket No. (if any): _________________________________________________
Date of Execution of Notice of Guaranteed Delivery: _________________________
Name of Eligible Institution that Guaranteed Delivery: ______________________
If Delivered by Book-Entry Transfer:
Account Number with DTC: _________________________________________________
Transaction Code Number: _________________________________________________
3
<PAGE>
By execution hereof, the undersigned acknowledges receipt of the Offer to
Purchase and Consent Solicitation Statement, dated December 23, 1997 (as the
same may be amended from time to time, the "Statement") of Dominion Textile
(USA) Inc., a Delaware corporation (the "Company"), and this Consent and
Letter of Transmittal and instructions hereto (the "Consent and Letter of
Transmittal" and together with the Statement, the "Offer"), which together
constitute (i) the Company's offer to purchase any and all of its outstanding
Notes, upon the terms and subject to the conditions set forth in the
Statement, and (ii) the Company's solicitation (the "Solicitation") of
consents (the "Consents") from each registered holder (each a "Holder" and,
collectively, the "Holders") to certain proposed amendments (the "Proposed
Amendments") to the Indenture dated as of November 1, 1993 (the "Indenture"),
between the Company, Dominion Textile Inc., a corporation duly organized and
existing under the laws of Canada ("Dominion" or the "Parent Guarantor") and
First Union National Bank, as trustee (the "Trustee"), pursuant to which the
Notes were issued. Holders who tender Notes under this Consent and Letter of
Transmittal on or prior to the Consent Expiration Date will be deemed to
consent with respect to the Proposed Amendments.
This Consent and Letter of Transmittal is to be used by Holders if (i)
certificates representing Notes are to be physically delivered to the
Depositary herewith by Holders, (ii) tender of Notes is to be made by book-
entry transfer to the Depositary's account at The Depository Trust Company
("DTC") pursuant to the procedures set forth in the Statement under Item 7,
"Procedures for Tendering Notes and Delivering Consents--Tender of Notes Held
Through DTC," by any financial institution that is a participant in DTC and
whose name appears on a security position listing as the owner of Notes,
unless an Agent's Message is delivered in connection with such book-entry
transfer, or (iii) tender of Notes after the Consent Expiration Date is to be
made according to the guaranteed delivery procedures set forth in the
Statement under Item 7, "Procedures for Tendering Notes and Delivering
Consents--Guaranteed Delivery." Delivery of documents to DTC does not
constitute delivery to the Depositary.
THE UNDERSIGNED HAS COMPLETED, EXECUTED AND DELIVERED THIS CONSENT AND
LETTER OF TRANSMITTAL TO INDICATE THE ACTION THE UNDERSIGNED DESIRES TO TAKE
WITH RESPECT TO THE OFFER AND THE SOLICITATION.
All capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Statement.
The instructions included with this Consent and Letter of Transmittal must
be followed. Questions and requests for assistance or for additional copies of
the Statement, this Consent and Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to Chase Securities Inc., the Dealer
Manager for the Offer and Solicitation, or MacKenzie Partners, Inc., the
Information Agent, in each case at the address and telephone number set forth
on the back cover page of this Consent and Letter of Transmittal. See
Instruction 13 below.
Holders of Notes that are tendering by book-entry transfer to the
Depositary's account at DTC can execute the tender through the DTC Automated
Tender Offer Program ("ATOP") for which the transaction will be eligible. DTC
participants that are accepting the Offer must transmit their acceptance to
DTC, which will verify the acceptance and execute a book-entry delivery to the
Depositary's DTC account. DTC will then send an Agent's Message to the
Depositary for its acceptance. Delivery of the Agent's Message by DTC will
satisfy the terms of the Offer as to the tender of Notes; however, any such
Holders tendering on or prior to the Consent Expiration Date must also execute
and deliver a Consent and Letter of Transmittal. TO RECEIVE THE CONSENT
PAYMENT, EACH HOLDER (INCLUDING ANY HOLDER TENDERING NOTES THROUGH ATOP) MUST
DELIVER OR CAUSE TO BE DELIVERED A COMPLETED AND PROPERLY EXECUTED CONSENT AND
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE DEPOSITARY ON OR
PRIOR TO THE CONSENT EXPIRATION DATE.
If a registered Holder desires to tender Notes pursuant to the Offer after
the Consent Expiration Date and (a) certificates representing such Notes are
not immediately available, (b) time will not permit such Holder's Consent and
Letter of Transmittal, certificates representing such Notes and all other
required documents to reach the Depositary on or prior to the Tender Offer
Expiration Date, or (c) the procedures for book-entry transfer (including
delivery of an Agent's Message) cannot be completed on or prior to the Tender
Offer Expiration Date, such Holder may nevertheless tender such Notes with the
effect that such tender will be deemed to have been received on or prior to
the Tender Offer Expiration Date. Holders may effect such a tender of Notes in
accordance with the guaranteed delivery procedures set forth in the Statement
under Item 7, "Procedures for Tendering Notes and Delivering Consents--
Guaranteed Delivery." See Instruction 2 below.
4
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Offer and Solicitation,
the undersigned hereby tenders to the Company the principal amount of Notes
indicated above and consents to the Proposed Amendments.
Subject to, and effective upon, the acceptance for purchase of, and payment
for, the principal amount of Notes tendered with this Consent and Letter of
Transmittal, the undersigned hereby sells, assigns and transfers to, or upon
the order of, the Company, all right, title and interest in and to the Notes
that are being tendered hereby, waives any and all other rights with respect
to the Notes (including without limitation any existing or past defaults and
their consequences in respect of the Notes and the Indenture under which the
Notes were issued) and releases and discharges the Company from any and all
claims such Holder may have now, or may have in the future, arising out of, or
related to, the Notes, including without limitation any claims that such
Holder is entitled to receive additional principal or interest payments with
respect to the Notes or to participate in any redemption or defeasance of the
Notes, and also consents to the Proposed Amendments (as defined in the
Statement). The undersigned hereby irrevocably constitutes and appoints the
Depositary the true and lawful agent and attorney-in-fact of the undersigned
(with full knowledge that the Depositary also acts as the agent of the
Company) with respect to such Notes, with full power of substitution and
resubstitution (such power-of-attorney being deemed to be an irrevocable power
coupled with an interest) to (i) present such Notes and all evidences of
transfer and authenticity to, or transfer ownership of, such Notes on the
account books maintained by DTC to, or upon the order of, the Company, (ii)
present such Notes for transfer of ownership on the books of the Company,
(iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Notes and (iv) deliver to the Company and the Trustee this
Consent and Letter of Transmittal on or prior to the Consent Expiration Date
as evidence of the undersigned's Consent to the Proposed Amendments and as
certification that validly tendered and not revoked Consents from Holders of a
majority of the aggregate principal amount of outstanding Notes not owned by
the Company or its affiliates (the "Requisite Consents") to the Proposed
Amendments duly executed by Holders of such Notes have been received, all in
accordance with the terms and conditions of the Offer and Solicitation.
Execution and delivery of this Consent and Letter of Transmittal on or prior
to the Consent Expiration Date will also be deemed to constitute a Consent to
the Proposed Amendments.
The undersigned agrees and acknowledges that, by the execution and delivery
hereof, the undersigned makes and provides the written Consent, with respect
to the Notes tendered hereby, to the Proposed Amendments as permitted by
Article Nine of the Indenture if this Consent and Letter of Transmittal is
executed and delivered on or prior to the Consent Expiration Date. The
undersigned understands that the Consent provided hereby shall remain in full
force and effect until such Consent is revoked in accordance with the
procedures set forth in the Statement and this Consent and Letter of
Transmittal, which procedures are hereby agreed to be applicable in lieu of
any and all other procedures for revocation set forth in the Indenture, which
are hereby waived.
The undersigned understands that Consents may not be revoked after the
Consent Expiration Date. The Company intends to execute the supplemental
indenture to the Indenture providing for the Proposed Amendments (the
"Supplemental Indenture") on or promptly after the Consent Expiration Date.
The Proposed Amendments will become effective upon certification that the
Requisite Consents have been received, but will not become operative until the
Company accepts for purchase the Notes tendered in the Offer.
The undersigned understands that tenders of Notes may be withdrawn by
written notice of withdrawal received by the Depositary at any time on or
prior to the Tender Offer Expiration Date. Holders may not deliver Consents
without tendering their Notes in the Offer, and may not revoke Consents on or
prior to the Consent Expiration Date without withdrawing the previously
tendered Notes to which such Consent relates. Holders may not withdraw
previously tendered Notes on or prior to the Consent Expiration Date without
revoking the previously delivered Consents to which such tender relates.
Consents may not be revoked after the Consent Expiration Date, except under
certain limited circumstances.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Notes tendered
hereby and to give the Consent contained herein, and that when such Notes are
accepted for
5
<PAGE>
purchase and payment by the Company, the Company will acquire good title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claim or right. The undersigned will, upon
request, execute and deliver any additional documents deemed by the Depositary
or the Company to be necessary or desirable to complete the sale, assignment
and transfer of the Notes tendered hereby, to perfect the undersigned's
Consent to the Proposed Amendments and to complete the execution of the
Supplemental Indenture reflecting such Proposed Amendments.
The undersigned understands that tenders of Notes pursuant to any of the
procedures described in the Statement and in the instructions hereto and
acceptance thereof by the Company will constitute a binding agreement between
the undersigned and the Company, upon the terms and subject to the conditions
of the Offer and Solicitation.
For purposes of the Offer, the undersigned understands that the Company will
be deemed to have accepted for purchase validly tendered Notes if, as and when
the Company gives oral or written notice thereof to the Depositary.
The undersigned understands that the Company's obligation to accept for
payment, and to pay for, Notes validly tendered pursuant to the Offer is
conditioned upon the satisfaction of (a) the Supplemental Indenture Condition,
(b) the Business Unit Sales Condition, (c) the 2006 Tender Condition and (d)
the General Conditions. See Item 9, "Conditions to the Offer," in the
Statement. Any Notes not accepted for purchase will be returned promptly to
the undersigned at the address set forth above unless otherwise indicated
herein under "Special Delivery Instructions" below.
All authority conferred or agreed to be conferred by this Consent and Letter
of Transmittal shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Consent and Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, executors, administrators, successors, assigns, trustees in
bankruptcy and other legal representatives.
The undersigned understands that the delivery and surrender of the Notes is
not effective, and the risk of loss of the Notes does not pass to the
Depositary, until receipt by the Depositary of this Consent and Letter of
Transmittal (or a manually signed facsimile hereof), properly completed and
duly executed, together with all accompanying evidences of authority and any
other required documents in form satisfactory to the Company, or receipt of an
Agent's Message. All questions as to the form of all documents and the
validity (including time of receipt) and acceptance of tenders and withdrawals
of Notes and deliveries and revocations of Consents will be determined by the
Company, in its sole discretion, which determination shall be final and
binding.
Unless otherwise indicated under "Special Payment Instructions" below,
please issue a check from the Depositary for the Total Consideration or Tender
Offer Consideration, as the case may be, for any Notes tendered hereby that
are purchased, and/or return any certificates representing Notes not tendered
or not accepted for purchase in the name(s) of the Holder(s) appearing under
"Description of Notes." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the Total Consideration or
Tender Offer Consideration, as the case may be, and/or return any certificates
representing Notes not tendered or not accepted for purchase (and accompanying
documents, as appropriate) to the address(es) of the Holder(s) appearing under
"Description of Notes." In the event that both the Special Payment
Instructions and the Special Delivery Instructions are completed, please issue
the check for the Total Consideration or Tender Offer Consideration, as the
case may be, and/or return any certificates representing Notes not tendered or
not accepted for purchase (and any accompanying documents, as appropriate) to,
the person or persons so indicated. In the case of a book-entry delivery of
Notes, please credit the same account maintained at DTC with any Notes not
tendered or not accepted for purchase. The undersigned recognizes that the
Company does not have any obligation pursuant to the Special Payment
Instructions to transfer any Notes from the name of the Holder thereof if the
Company does not accept for purchase any of the Notes so tendered.
6
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL CONSENTING HOLDERS)
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF NOTES REGARDLESS OF WHETHER NOTES
ARE BEING PHYSICALLY DELIVERED HEREWITH, UNLESS AN AGENT'S MESSAGE IS DELIVERED
IN CONNECTION WITH A BOOK-ENTRY TRANSFER OF SUCH NOTES)
The completion, execution and delivery of this Consent and Letter of
Transmittal on or prior to the Consent Expiration Date will be deemed to
constitute a Consent to the Proposed Amendments.
This Consent and Letter of Transmittal must be signed by the registered
holder(s) of Notes exactly as their name(s) appear(s) on certificate(s) for
Notes or, if tendered by a participant in DTC, exactly as such participant's
name appears on a security position listing as the owner of Notes, or by
person(s) authorized to become registered holder(s) by endorsements and
documents transmitted with this Consent and Letter of Transmittal. If the
signature is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer or other person acting in a fiduciary or representative capacity, such
person must set forth his or her full title below under "Capacity" and submit
evidence satisfactory to the Company of such person's authority to so act. See
Instruction 6 below.
If the signature appearing below is not of the registered holder(s) of the
Notes, then the registered holder(s) must sign a valid proxy.
X ______________________________________________________________________________
X ______________________________________________________________________________
(Signature(s) of Holder(s) or Authorized Signatory)
Date: ______, 19 .
Name(s): _______________________________________________________________________
________________________________________________________________________________
(Please Print)
Capacity: ______________________________________________________________________
Address: _______________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(including Zip Code)
Area Code and Telephone No.: ___________________________________________________
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (SEE INSTRUCTIONS 1 AND 6 BELOW)
Certain Signatures Must be Guaranteed by a Medallion Signature Guarantor
________________________________________________________________________________
(Name of Medallion Signature Guarantor Guaranteeing Signatures)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Address (including zip code) and Telephone Number (including area code) of
Firm)
________________________________________________________________________________
(Authorized Signature)
________________________________________________________________________________
(Printed Name)
________________________________________________________________________________
(Title)
Date: ______, 19 .
7
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6, 7 AND 8)
To be completed ONLY if
certificates for Notes in a
principal amount not tendered or
not accepted for purchase are to be
issued in the name of, or checks
constituting payments for Notes to
be purchased or Consent Payments to
be made in connection with the
Offer and Solicitation are to be
issued to the order of, someone
other than the person or persons
whose signature(s) appear(s) within
this Consent and Letter of
Transmittal or issued to an address
different from that shown in the
box entitled "Description of Notes"
within this Consent and Letter of
Transmittal, or if Notes tendered
by book-entry transfer that are not
accepted for purchase are to be
credited to an account maintained
at DTC other than the one designed
above.
Issue: r Notes
r Checks
(check as applicable)
Name: ______________________________
(Please Print)
Address: ___________________________
(Please Print)
------------------------------------
Zip Code
------------------------------------
Taxpayer Identification or Security Number
(See Substitute Form W-9 herein)
SIGNATURE GUARANTEE (See
Instruction 1 below)
Certain Signatures Must be Guaranteed by a Medallion Signature Guarantor
------------------------------------
(Name of Medallion Signature Guarantor Guaranteeing Signatures)
------------------------------------
------------------------------------
------------------------------------
(Address (including zip code) and Telephone Number) (including area code of
Firm)
------------------------------------
(Authorized Signature)
------------------------------------
(Printed Name)
------------------------------------
(Title)
Date: , 19 .
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6, 7 AND 8)
To be completed ONLY if
certificates for Notes in a
principal amount not tendered or
not accepted for purchase or checks
constituting payments for Notes to
be purchased or Consent Payments to
be made in connection with the
Offer and the Solicitation are to
be sent to someone other than the
person or persons whose
signature(s) appear(s) within this
Consent and Letter of Transmittal
or to an address different from
that shown in the box entitled
"Description of Notes" within this
Consent and Letter of Transmittal.
Deliver: r Notes
r Checks
(check as applicable)
Name: ______________________________
(Please Print)
Address: ___________________________
(Please Print)
------------------------------------
Zip Code
------------------------------------
Taxpayer Identification or Security Number
(See Substitute Form W-9 herein)
8
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER AND SOLICITATION
1. GUARANTEE OF SIGNATURES. Signatures on this Consent and Letter of
Transmittal must be guaranteed by a recognized participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchange Medallion Program (each a "Medallion
Signature Guarantor"), unless the Notes tendered thereby are tendered (i) by a
registered Holder of Notes (or by a participant in DTC whose name appears on a
security position listing as the owner of such Notes) who has not completed
any of the boxes entitled "Special Payment Instructions" or "Special Delivery
Instructions" on the Consent and Letter of Transmittal, or (ii) for the
account of a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc. ("NASD") or a
commercial bank or trust company having an office or correspondent in the
United States (each of the foregoing being referred to as an "Eligible
Institution"). If the Notes are registered in the name of a person other than
the signer of the Consent and Letter of Transmittal or if Notes not accepted
for payment or not tendered are to be returned to a person other than the
registered Holder, then the signature on this Consent and Letter of
Transmittal accompanying the tendered Notes must be guaranteed by a Medallion
Signature Guarantor as described above. Beneficial owners whose Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if they desire to tender Notes and deliver Consents with
respect to Notes so registered. See Item 7, "Procedures for Tendering Notes
and Delivering Consents," in the Statement.
2. REQUIREMENTS OF TENDER. This Consent and Letter of Transmittal is to be
completed by registered Holders of Notes if certificates representing such
Notes are to be forwarded herewith or if delivery of such certificates is to
be made by book-entry transfer to the account maintained by DTC, pursuant to
the procedures set forth in the Statement under Item 7, "Procedures for
Tendering Notes and Delivering Consents," unless such Notes are being
transmitted through ATOP in connection with a tender after the Consent
Expiration Date. For a holder to properly tender Notes and deliver Consents
pursuant to the Offer and the Solicitation, a properly completed and duly
executed Consent and Letter of Transmittal (or a manually signed facsimile
thereof), together with any signature guarantees and any other documents
required by these Instructions, must be received by the Depositary at its
address set forth herein on or prior to the Consent Expiration Date or Tender
Offer Expiration Date, as applicable, and either (i) certificates representing
such Notes must be received by the Depositary at its address or (ii) such
Notes must be transferred pursuant to the procedures for book-entry transfer
described in the Statement under Item 7, "Procedures for Tendering Notes and
Delivering Consents," and a Book-Entry Confirmation must be received by the
Depositary, in each case, on or prior to the Consent Expiration Date or Tender
Offer Expiration Date, as applicable; provided, however, that no Consent
Payment will be paid to Holders who tender Notes and deliver their Consents
after the Consent Expiration Date. A Holder who desires to tender Notes and
who cannot comply with procedures set forth herein for tender on a timely
basis or whose Notes are not immediately available must comply with the
guaranteed delivery procedures discussed below, but only if such Notice of
Guaranteed Delivery is transmitted after the Consent Expiration Date.
If a registered Holder desires to tender Notes pursuant to the Offer after
the Consent Expiration Date and (a) certificates representing such Notes are
not immediately available, (b) time will not permit such Holder's Consent and
Letter of Transmittal, certificates representing such Notes and all other
required documents to reach the Depositary on or prior to the Tender Offer
Expiration Date, or (c) the procedures for book-entry transfer cannot be
completed on or prior to the Tender Offer Expiration Date, such Holder may
nevertheless tender such Notes with the effect that such tender will be deemed
to have been received on or prior to the Tender Offer Expiration Date if the
procedures set forth in the Statement under Item 7, "Procedures for Tendering
Notes and Delivering Consents--Guaranteed Delivery," are followed. Pursuant to
such procedures, (i) the tender must be made by or through an Eligible
Institution, (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company herewith, or an
Agent's Message with respect to a guaranteed delivery that is accepted by the
Company, must be received by the Depositary on or prior to the Tender Offer
Expiration Date, and (iii) the certificates for the tendered Notes, in proper
form for transfer (or a Book-Entry Confirmation of the transfer of such Notes
into the Depositary's account at DTC as described in the Statement), together
with a Consent and Letter of Transmittal (or manually signed facsimile
thereof) properly completed and duly executed, with any required signature
guarantees and any other documents required by the Consent and Letter of
Transmittal or a properly transmitted Agent's Message, must be received by the
Depositary within three business days after the date of execution of the
Notice of Guaranteed Delivery.
9
<PAGE>
3. CONSENTS TO PROPOSED AMENDMENTS. A valid Consent to the Proposed
Amendments may be given only by the Holder or their attorney-in-fact. A
beneficial owner who is not a Holder must arrange with the Holder to execute
and deliver a Consent on their behalf, obtain a properly completed irrevocable
proxy that authorizes such beneficial owner to consent to the Proposed
Amendments on behalf of such Holder or become a Holder. Notwithstanding the
foregoing, any DTC participant which has Notes credited to its DTC account at
any time (and thereby held of record by DTC's nominee) may directly provide a
Consent to the Proposed Amendments as though it were the registered Holder by
so completing, executing and delivering the Consent and Letter of Transmittal.
TO VALIDLY DELIVER A CONSENT WITH RESPECT TO NOTES TRANSFERRED PURSUANT TO
ATOP ON OR PRIOR TO THE CONSENT EXPIRATION DATE, A DTC PARTICIPANT USING ATOP
MUST ALSO PROPERLY COMPLETE AND DULY EXECUTE A CONSENT AND LETTER OF
TRANSMITTAL AND DELIVER IT TO THE DEPOSITARY ON OR PRIOR TO THE CONSENT
EXPIRATION DATE.
4. WITHDRAWAL OF TENDERS AND REVOCATION OF CONSENTS. Tenders of Notes may be
withdrawn at any time prior to the Tender Offer Expiration Date. Consents may
be revoked at any time on or prior to the Consent Expiration Date. A valid
withdrawal of tendered Notes effected on or prior to the Consent Expiration
Date will constitute the concurrent valid revocation of such Holder's related
Consent. Consents may not be revoked after the Consent Expiration Date except
in the limited circumstances described below. In order for a Holder to revoke
a Consent, such Holder must withdraw the related tendered Notes. Tenders of
Notes may be validly withdrawn if the Offer is terminated without any Notes
being purchased thereunder. In the event of a termination of the Offer, the
Notes tendered pursuant to the Offer will be promptly returned to the
tendering Holder and the Supplemental Indenture will not become operative. If
the Solicitation is amended on or prior to the Consent Expiration Date in a
manner determined by the Company to constitute a material adverse change to
the Holders of the Notes, the Company promptly will disclose such amendment
and, if necessary, extend the Solicitation for such Notes for a period deemed
by the Company to be adequate to permit Holders of the Notes to withdraw their
Notes and revoke their Consents. In addition, if the consideration to be paid
in the Offer is increased or decreased or the principal amount of Notes
subject to the Offer is decreased, the Offer will remain open at least 10
business days from the date the Company first gives notice to Holders, by
public announcement or otherwise, of such increase or decrease.
For a withdrawal of a tender of Notes (and the concurrent revocation of
Consents) to be effective, a written or facsimile transmission notice of
withdrawal must be received by the Depositary on or prior to Consent
Expiration Date at its address set forth on the back cover of the Statement.
Any such notice of withdrawal must (i) specify the name of the person who
tendered the Notes to be withdrawn, (ii) contain the description of the Notes
to be withdrawn and identify the certificate number or numbers shown on the
particular certificates evidencing such Notes (unless such Notes were tendered
by book-entry transfer) and the aggregate principal amount represented by such
Notes and (iii) be signed by the Holder of such Notes in the same manner as
the original signature on the Consent and Letter of Transmittal by which such
Notes were tendered (including any required signature guarantees), or be
accompanied by (x) documents of transfer sufficient to have the Trustee
register the transfer of the Notes into the name of the person withdrawing
such Notes or (y) a properly completed irrevocable proxy authorizing such
person to effect such withdrawal on behalf of such Holder. If the Notes to be
withdrawn have been delivered or otherwise identified to the Depositary, a
signed notice of withdrawal is effective immediately upon written or facsimile
notice of such withdrawal even if physical release is not yet effected.
Any valid revocation of Consents will automatically render the prior tender
of the Notes to which such Consents relate defective and the Company will have
the right, which it may waive, to reject such tender as invalid. Any permitted
withdrawal of Notes and revocation of Consents may not be rescinded, and any
Notes properly withdrawn will thereafter be deemed not validly tendered and
any Consents revoked will be deemed not validly delivered for purposes of the
Offer; provided, however, that withdrawn Notes may be re-tendered and revoked
Consents may be re-delivered by again following one of the appropriate
procedures described herein at any time on or prior to the Tender Offer
Expiration Date or the Consent Expiration Date, as applicable. After the
Consent Expiration Date, Consents may not be revoked, except in the limited
circumstances described above.
ALL QUESTIONS AS TO THE VALIDITY, FORM AND ELIGIBILITY (INCLUDING TIME OF
RECEIPT) OF NOTICES OF WITHDRAWAL AND REVOCATION OF CONSENTS WILL BE
DETERMINED BY THE COMPANY, IN THE COMPANY'S SOLE DISCRETION (WHOSE
DETERMINATION SHALL BE FINAL AND BINDING). NEITHER THE COMPANY, THE
DEPOSITARY, THE DEALER MANAGER, THE INFORMATION AGENT, THE TRUSTEE OR ANY
OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECTS OR
IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL OR REVOCATION OF CONSENTS, OR INCUR
ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION.
10
<PAGE>
5. PARTIAL TENDERS AND CONSENTS. Tenders of Notes pursuant to the Offer (and
the corresponding Consents thereto pursuant to the Solicitation) will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof. If less than the entire principal amount of any Notes evidenced by a
submitted certificate is tendered, the tendering Holder must fill in the
principal amount tendered in the last column of the box entitled "Description
of Notes" herein. The entire principal amount represented by the certificates
for all Notes delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated. If the entire principal amount of all Notes is not
tendered or not accepted for purchase, certificates for the principal amount
of Notes not tendered or not accepted for purchase will be sent (or, if
tendered by book-entry transfer, returned by credit to the account at DTC
designated herein) to the Holder unless otherwise provided in the appropriate
box on this Consent and Letter of Transmittal (see Instruction 7) promptly
after the Notes are accepted for purchase.
6. SIGNATURES ON THIS CONSENT AND LETTER OF TRANSMITTAL, BOND POWERS AND
ENDORSEMENT; GUARANTEE OF SIGNATURES. If this Consent and Letter of
Transmittal is signed by the registered holder(s) of the Notes tendered hereby
or with respect to which Consent is given, the signatures must correspond with
the name(s) as written on the face of the certificate(s) without alteration,
enlargement or any change whatsoever. If this Consent and Letter of
Transmittal is signed by a participant in DTC whose name is shown as the owner
of the Notes tendered hereby, the signature must correspond with the name
shown on the security position listing as the owner of the Notes.
IF THIS CONSENT AND LETTER OF TRANSMITTAL IS EXECUTED BY A HOLDER OF NOTES
WHO IS NOT THE REGISTERED HOLDER, THEN THE REGISTERED HOLDER MUST SIGN A VALID
PROXY, WITH THE SIGNATURE OF SUCH REGISTERED HOLDER GUARANTEED BY A MEDALLION
SIGNATURE GUARANTOR.
If any of the Notes tendered hereby (and with respect to which Consent is
given) are owned of record by two or more joint owners, all such owners must
sign this Consent and Letter of Transmittal. If any tendered Notes are
registered in different names on several certificates, it will be necessary to
complete, sign and submit as many separate copies of this Consent and Letter
of Transmittal and any necessary accompanying documents as there are different
names in which certificates are held.
If this Consent and Letter of Transmittal is signed by the Holder, and the
certificates for any principal amount of Notes not tendered or accepted for
purchase are to be issued (or if any principal amount of Notes that is not
tendered or not accepted for purchase is to be reissued or returned) to or, if
tendered by book-entry transfer, credited to the account at DTC of, the
registered Holder, and checks constituting payments for Notes to be purchased
and Consent Payments to be made in connection with the Offer and Solicitation
are to be issued to the order of the registered Holder, then the registered
Holder need not endorse any certificates for tendered Notes, nor provide a
separate bond power. In any other case (including if this Consent and Letter
of Transmittal is not signed by the registered Holder), the registered Holder
must either properly endorse the certificates for Notes tendered or transmit a
separate properly completed bond power with this Consent and Letter of
Transmittal (in either case, executed exactly as the name(s) of the registered
holder(s) appear(s) on such Notes, and, with respect to a participant in DTC
whose name appears on a security position listing as the owner of Notes,
exactly as the name(s) of the participant(s) appear(s) on such security
position listing), with the signature on the endorsement or bond power
guaranteed by a Medallion Signature Guarantor, unless such certificates or
bond powers are executed by an Eligible Institution. See Instruction 1.
If this Consent and Letter of Transmittal or any certificates of Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to the Company of their authority so to act must
be submitted with this Consent and Letter of Transmittal.
Endorsements on certificates for Notes, signatures on bond powers and
proxies and Consents provided in accordance with this Instruction 6 by
registered holders not executing this Consent and Letter of Transmittal must
be guaranteed by a Medallion Signature Guarantor. See Instruction 1.
11
<PAGE>
7. SPECIAL PAYMENT AND SPECIAL DELIVERY INSTRUCTIONS. Tendering Holders
should indicate in the applicable box or boxes the name and address to which
Notes for principal amounts not tendered or not accepted for purchase or
checks constituting payments for Notes to be purchased and Consent Payments to
be made in connection with the Offer and Solicitation are to be issued or
sent, if different from the name and address of the registered Holder signing
this Consent and Letter of Transmittal. In the case of issuance in a different
name, the taxpayer identification or social security number of the person
named must also be indicated. If no instructions are given, Notes not tendered
or not accepted for purchase will be returned to the registered Holder of the
Notes tendered. Holders of Notes tendering by book-entry transfer will have
Notes not tendered or not accepted for purchase returned by crediting their
account at DTC.
8. TAXPAYER IDENTIFICATION NUMBER. Each tendering Holder is required to
provide the Depositary with the Holder's correct taxpayer identification
number ("TIN"), generally the Holder's social security or federal employer
identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below, or, alternatively, to establish another
basis for exemption from backup withholding. A Holder must cross out item (2)
in the Certification box on Substitute Form W-9 if such Holder is subject to
backup withholding. Failure to provide the information on the form may subject
the tendering Holder to 31% federal income tax backup withholding on the
payments, including the Consent Payment, made to the Holder or other payee
with respect to Notes purchased pursuant to the Offer. The box in Part 3 of
the form should be checked if the tendering Holder has not been issued a TIN
and has applied for a TIN or intends to apply for a TIN in the near future. If
the box in Part 3 is checked and the Depositary is not provided with a TIN
within 60 days, thereafter the Depositary will withhold 31% from all such
payments with respect to the Notes to be purchased and the Consent Payments to
be made until a TIN is provided to the Depositary.
9. TRANSFER TAXES. The Company will pay all transfer taxes applicable to the
purchase and transfer of Notes pursuant to the Offer, except in the case of
deliveries of certificates for Notes for principal amounts not tendered or not
accepted for payment that are registered or issued in the name of any person
other than the registered Holder of Notes tendered hereby. Except as provided
in this Instruction 9, it will not be necessary for transfer stamps to be
affixed to the certificates listed in this Consent and Letter of Transmittal.
10. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any tendered Notes or delivery
of Consents pursuant to any of the procedures described above will be
determined by the Company in the Company's sole discretion (whose
determination shall be final and binding). The Company expressly reserves the
absolute right, in its sole discretion, subject to applicable law, to reject
any or all tenders of any Notes or delivery of Consents determined by it not
to be in proper form or, in the case of Notes, if the acceptance for payment
of, or payment for, such Notes may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right, in its sole
discretion, subject to applicable law, to waive or amend any of the conditions
of the Offer or the Solicitation or to waive any defect or irregularity in any
tender with respect to Notes or delivery of Consents of any particular Holder,
whether or not similar defects or irregularities are waived in the case of
other Holders. The Company's interpretation of the terms and conditions of the
Offer and Solicitation (including the Consent and Letter of Transmittal and
the Instructions thereto) will be final and binding. Neither the Company, the
Depositary, the Dealer Manager, the Information Agent, the Trustee or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification. If the Company waives its right to reject a defective
tender of Notes, the Holder will be entitled to the Tender Offer Consideration
and, if applicable, the Consent Payment.
11. WAIVER OF CONDITIONS. The Company expressly reserves the absolute right,
in its sole discretion, to amend or waive any of the conditions to the Offer
or Solicitation in the case of any Notes tendered or Consents delivered, in
whole or in part, at any time and from time to time.
12. MUTILATED, LOST, STOLEN, OR DESTROYED CERTIFICATES FOR NOTES. Any Holder
of Notes whose certificates for Notes have been mutilated, lost, stolen or
destroyed should write to The Bank of New York, a national banking association
duly organized and existing under the laws of the United States of America, as
Trustee.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering Notes and consenting to the Proposed Amendments and
requests for assistance or additional copies of the Statement and this Consent
12
<PAGE>
and Letter of Transmittal may be directed to, and additional information about
the Offer and Solicitation may be obtained from, either the Dealer Manager or
the Information Agent, whose addresses and telephone numbers appear below.
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Notes are accepted
for payment is required to provide the Depositary (as payer) with such
Holder's correct TIN on Substitute Form W-9 below or otherwise establish a
basis for exemption from backup withholding. If such Holder is an individual,
the TIN is his social security number. If the Depositary is not provided with
the correct TIN, a $50 penalty may be imposed by the Internal Revenue Service,
and payments, including any Consent Payment, made with respect to Notes
purchased pursuant to the Offer may be subject to backup withholding. Failure
to comply truthfully with the backup withholding requirements also may result
in the imposition of severe criminal and/or civil fines and penalties.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Depositary. A foreign person, including entities, may qualify as an
exempt recipient by submitting to the Depositary a properly completed Internal
Revenue Service Form W-8, signed under penalties of perjury, attesting to that
Holder's foreign status. A Form W-8 can be obtained from the Depositary. See
the enclosed "Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the Holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments, including any Total Consideration
or Tender Offer Consideration, as the case may be, made with respect to Notes
purchased pursuant to the Offer, the Holder is required to provide the
Depositary with either: (i) the Holder's correct TIN by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such Holder is awaiting a TIN) and that (a) the Holder has not been
notified by the Internal Revenue Service that the Holder is subject to backup
withholding as a result of failure to report all interest or dividends or (b)
the Internal Revenue Service has notified the Holder that the Holder is no
longer subject to backup withholding; or (ii) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Holder is required to give the Depositary the TIN (e.g., social security
number or employer identification number) of the registered holder of the
Notes. If the Notes are held in more than one name or are held not in the name
of the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
13
<PAGE>
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
------------------------------
SUBSTITUTE PART 1--PLEASE Social Security Number
PROVIDE YOUR TIN IN OR
THE BOX AT RIGHT AND
CERTIFY BY SIGNING
AND DATING BELOW
FORM W-9 ------------------------------
Employer Identification
Number
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
---------------------------------------------------------
PAYER'S REQUEST FOR PART 2--Certification--Under PART 3--
Penalties of Perjury, I Certify
that:
(1) The number shown on this form
is my correct Taxpayer
Identification Number (or I am
waiting for a number to be
issued to me) and
TAXPAYER IDENTIFICATION
NUMBER (TIN) Awaiting TIN [_]
- --------------------------------------------------------------------------------
Certificate instructions--You must cross out item (2) in Part 2 above if you
have been notified by the IRS that you are subject to backup withholding
because of under reporting interest or dividends on your tax return. However,
if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS stating that you
are no longer subject to backup withholding, do not cross out item (2).
(2) I am not subject to backup
withholding either because I
have not been notified by the
Internal Revenue Service
("IRS") that I am subject to
backup withholding as a result
of failure to report all
interest or dividends, or the
IRS has notified me that I am
no longer subject to backup
withholding.
SIGNATURE _________________________________________ DATE ___________ , 19 .
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER AND SOLICITATION.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
60 days, 31 percent of all reportable payments made to me thereafter will be
withheld until I provide a number.
SIGNATURE _________________________________________ DATE ___________ , 19 .
<PAGE>
The Depositary for the Offer and the Solicitation is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
Any questions or requests for assistance or additional copies of this
Statement, the Consent and Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone numbers and
address listed below. A Holder may also contact the Dealer Manager at its
telephone number set forth below or such Holder's broker, dealer, commercial
bank or trust company or nominee for assistance concerning the Offer and the
Solicitation.
The Information Agent for the Offer and the Solicitation is:
LOGO
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Collect)
Toll Free: (800) 322-2885
The Dealer Manager for the Offer and the Solicitation Agent for the
Solicitation is:
CHASE SECURITIES INC.
270 Park Avenue, 4th Floor
New York, New York 10017-2070
Attention: Robert Berk
Call: (212) 270-1100 (collect)
<PAGE>
NOTICE OF GUARANTEED DELIVERY
IN RESPECT OF
8 7/8% GUARANTEED SENIOR NOTES DUE NOVEMBER 1, 2003
OF
DOMINION TEXTILE (USA) INC.
PURSUANT TO THE OFFER TO PURCHASE AND CONSENT SOLICITATION STATEMENT
DATED DECEMBER 23, 1997
The Depositary for the Offer and the Solicitation is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE VALID DELIVERY.
As set forth in the Offer to Purchase and Consent Solicitation Statement
dated December 23, 1997 (as it may be supplemented and amended from time to
time, the "Statement") of Dominion Textile (USA) Inc. (the "Company") under
Item 7, "Procedures for Tendering Notes and Delivery Consents," and in the
Instructions of the Consent and Letter of Transmittal (the "Consent and Letter
of Transmittal"), this form, or one substantially equivalent hereto, or an
Agent's Message relating to the guaranteed delivery procedures, must be used
to accept the Company's offer (the "Offer") to purchase for cash any and all
of its outstanding 8 7/8% Guaranteed Senior Notes due November 1, 2003 (the
"Notes"), if, after the Consent Expiration Date (as defined in the Statement),
time will not permit the Consent and Letter of Transmittal, certificates
representing such Notes and other required documents to reach the Depositary,
or the procedures for book-entry transfer cannot be completed, on or prior to
the Tender Offer Expiration Date (as defined in the Statement).
In conjunction with the Offer, the Company is also soliciting (the
"Solicitation") consents (the "Consents") to certain proposed amendments (the
"Proposed Amendments") to the Indenture dated as of November 1, 1993 (the
"Indenture"), between the Company, Dominion Textile Inc., a corporation duly
organized and existing under the laws of Canada ("Dominion" or the "Parent
Guarantor"), and First Union National Bank, as trustee (the "Trustee"),
pursuant to which the Notes were issued. This Notice of Guaranteed Delivery
may not be used to tender Notes or deliver Consents on or prior to the Consent
Expiration Date. This form must be delivered by an Eligible Institution (as
defined herein) by mail or hand delivery or transmitted via facsimile to the
Depositary as set forth above. All capitalized terms used herein but not
defined herein shall have the meanings ascribed to them in the Statement.
This form is not to be used to guarantee signatures. If a signature on the
Consent and Letter of Transmittal is required to be guaranteed by a Medallion
Signature Guarantor under the instructions thereto, such signature guarantee
must appear in the applicable space provided in the Consent and Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Statement and the Consent and Letter of
Transmittal (receipt of which is hereby acknowledged), the principal amount of
the Notes specified below pursuant to the guaranteed delivery procedures set
forth in the Statement under Item 7, "Procedures for Tendering Notes and
Delivering Consents--Guaranteed Delivery." The undersigned hereby authorizes
the Depositary to deliver this Notice of Guaranteed Delivery to the Company
and the Trustee with respect to the Notes tendered pursuant to the Offer.
The undersigned understands that Holders who desire to tender their Notes
pursuant to the Offer and receive the Total Consideration are required to
provide Consents to the Proposed Amendments with respect to the full principal
amount of the Notes so tendered on or prior to the Consent Expiration Date.
The undersigned understands that tenders of Notes will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof. The
undersigned also understands that tenders of Notes may be withdrawn at any
time prior to the Tender Offer Expiration Date. This Notice of Guaranteed
Delivery may only be utilized after the Consent Expiration Date and on or
prior to the Tender Offer Expiration Date.
The undersigned understands that payment for Notes purchased will be made
only after timely receipt by the Depositary of (i) such Notes, or a Book-Entry
Confirmation, and (ii) a Consent and Letter of Transmittal (or a mutually
signed facsimile thereof), including by means of an Agent's Message, of the
transfer of such Notes into the Depositary's account at a Book-Entry Transfer
Facility, with respect to such Notes, properly completed and duly executed,
with any signature guarantees and any other documents required by the Consent
and Letter of Transmittal within three New York Stock Exchange, Inc. trading
days after the execution hereof. The undersigned also understands that under
no circumstances will interest be paid by the Company by reason of any delay
in making payment to the undersigned and that the Tender Offer Consideration
for Notes tendered pursuant to the guaranteed delivery procedures will be the
same as that for Notes delivered to the Depositary after the Consent
Expiration Date and on or prior to the Tender Offer Expiration Date, even if
the Notes to be delivered pursuant to the guaranteed delivery procedures are
not so delivered to the Depositary, and therefore payment by the Depositary on
account of such Notes is not made, until after the Payment Date. THE
UNDERSIGNED IS AWARE THAT, ON OR PRIOR TO THE CONSENT EXPIRATION DATE, TENDERS
OF NOTES AND THE RELATED CONSENTS CANNOT BE DELIVERED USING THE GUARANTEED
DELIVERY PROCESS AND THAT USE OF THE GUARANTEED DELIVERY PROCESS COULD RESULT
IN A TENDER OF NOTES AND THE RELATED CONSENT BEING DEFECTIVE.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall not be affected by, and shall survive, the death or
incapacity of the undersigned, and every obligation of the undersigned under
this Notice of Guaranteed Delivery shall be binding upon the heirs, executors,
administrators, trustees in bankruptcy, personal and legal representatives,
successors and assigns of the undersigned.
All capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Statement.
2
<PAGE>
PLEASE SIGN AND COMPLETE
Signature(s) of Registered Date: _____________________________
Holder(s) or Authorized
Signatory: ________________________
Address: __________________________
----------------------------------- -----------------------------------
-----------------------------------
Area Code and Telephone No. _______
Name(s) of Registered Holder(s): __
----------------------------------- If Notes will be delivered by
----------------------------------- book-entry transfer, check trust
company below:
Principal Amount of Notes
Tendered: _________________________ [_] The Depository Trust Company
-----------------------------------
DepositoryAccount No. _____________
Certificate No.(s) of Notes (if
available) ________________________
HOLDERS WHO DESIRE TO TENDER THEIR NOTES PURSUANT TO THE OFFER AND RECEIVE
THE TOTAL CONSIDERATION ARE REQUIRED TO CONSENT TO THE PROPOSED AMENDMENTS
WITH RESPECT TO SUCH NOTES ON OR PRIOR TO THE CONSENT EXPIRATION DATE.
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear(s) on certificate(s) for Notes or on a security
position listing as the owner of Notes, or by person(s) authorized to become
Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s): ____________________________________________________________________
-----------------------------------------------------------------------------
Capacity: ___________________________________________________________________
Address(es): ________________________________________________________________
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
DO NOT SEND NOTES WITH THIS FORM. NOTES SHOULD BE SENT TO THE DEPOSITARY
TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED CONSENT AND LETTER OF
TRANSMITTAL.
3
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock
Exchange, Inc. Medallion Signature Program (each, an "Eligible
Institution"), hereby (i) represents that the above-named persons are deemed
to own the Notes tendered hereby within the meaning of Rule 14e-4
promulgated under the Securities Exchange Act of 1934, as amended, ("Rule
14e-4"), (ii) represents that such tender of Notes complies with Rule 14e-4
and (iii) guarantees that the Notes tendered hereby are in proper form for
transfer (pursuant to the procedures set forth in the Statement under Item
7, "Procedures for Tendering Notes and Delivering Consents--Guaranteed
Delivery"), and that the Depositary will receive (a) such Notes, or a Book-
Entry Confirmation of the transfer of such Notes into the Depositary's
account at a Book-Entry Transfer Facility and (b) a properly completed and
duly executed Consent and Letter of Transmittal (or facsimile thereof) with
any required signature guarantees and any other documents required by the
Consent and Letter of Transmittal within three New York Stock Exchange, Inc.
trading days after the date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Consent and Letter of
Transmittal and Notes to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: _______________________________________________________________
Authorized Signature: _______________________________________________________
Title: ______________________________________________________________________
Address: ____________________________________________________________________
-----------------------------------------------------------------------------
(Zip Code)
Area Code and Telephone Number: _____________________________________________
Dated: _____________________ , 19 .
4
<PAGE>
Offer To Purchase and Consent Solicitation Statement
DOMINION TEXTILE (USA) INC.
OFFER TO PURCHASE FOR CASH ANY AND ALL OUTSTANDING 9 1/4% GUARANTEED SENIOR
NOTES DUE APRIL 1, 2006 AND SOLICITATION OF CONSENTS FOR AMENDMENT OF THE
RELATED INDENTURE
----------------
Dominion Textile (USA) Inc., a Delaware corporation (the "Company"), hereby
offers to purchase for cash, upon the terms and subject to the conditions set
forth in this Offer to Purchase and Consent Solicitation Statement (as it may
be amended or supplemented from time to time, the "Statement") and in the
accompanying Consent and Letter of Transmittal (the "Consent and Letter of
Transmittal" and, together with this Statement, the "Offer"), any and all of
its outstanding 9 1/4% Guaranteed Senior Notes due April 1, 2006 (the "Notes")
from each registered holder thereof (each a "Holder" and, collectively, the
"Holders").
The consideration for each $1,000 principal amount of Notes tendered
pursuant to the Offer shall be the price (calculated as described in Schedule
I to this Statement) equal to (i) the present value on the Payment Date (as
defined herein) of $1,046.25 per $1,000 principal amount of Notes (the amount
payable on April 1, 2001, which is the first date on which the Notes are
redeemable (the "Earliest Redemption Date")), determined on the basis of the
yield (the "Tender Offer Yield") to the Earliest Redemption Date equal to the
sum of (x) the yield on the 6 3/8% U.S. Treasury Note due March 31, 2001 (the
"Reference Security"), as calculated by the Dealer Manager in accordance with
standard market practice, based on the bid price for such Reference Security
as of 2:00 p.m., New York City time on January 9, 1998, the tenth business day
immediately preceding the scheduled Tender Offer Expiration Date (the "Price
Determination Date"), as displayed on the Bloomberg Government Pricing Monitor
on "Page PX5" (the "Bloomberg Page") (or, if any relevant price is not
available on a timely
(Continued on following page)
THE SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JANUARY 9,
1998 IF ON SUCH DATE THE COMPANY HAS RECEIVED THE REQUISITE CONSENTS (AS
DEFINED HEREIN) OR THE FIRST DATE THEREAFTER THAT THE COMPANY RECEIVES THE
REQUISITE CONSENTS FROM HOLDERS OF THE NOTES (THE "CONSENT EXPIRATION
DATE"). THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JANUARY
26, 1998 UNLESS EXTENDED (SUCH DATE, AS THE SAME MAY BE EXTENDED, THE
"TENDER OFFER EXPIRATION DATE"). HOLDERS WHO DESIRE TO RECEIVE THE CONSENT
PAYMENT AND THE TENDER OFFER CONSIDERATION MUST VALIDLY CONSENT TO THE
PROPOSED AMENDMENTS ON OR PRIOR TO THE CONSENT EXPIRATION DATE. HOLDERS WHO
TENDER AFTER THE CONSENT EXPIRATION DATE WILL RECEIVE ONLY THE TENDER OFFER
CONSIDERATION. CONSENTS MAY ONLY BE REVOKED ON OR PRIOR TO THE CONSENT
EXPIRATION DATE. TENDERS OF NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
TENDER OFFER EXPIRATION DATE.
----------------
The Dealer Manager for the Offer and the Solicitation Agent for the
Solicitation is:
CHASE SECURITIES INC.
December 23, 1997
<PAGE>
(Cover page continued)
basis on the Bloomberg Page or is manifestly erroneous, such other recognized
quotation source as the Dealer Manager shall select in its sole discretion)
plus (y) 50 basis points, the fixed spread (the "Fixed Spread") (such price
being rounded to the nearest cent per $1,000 principal amount of Notes), minus
(ii) $10.00 per $1,000 principal amount of Notes, which is equal to the
Consent Payment referred to below (such amount, the "Tender Offer
Consideration"), plus accrued and unpaid interest to, but not including, the
Payment Date (as defined herein).
In conjunction with the Offer, the Company hereby solicits (the
"Solicitation") consents (the "Consents") of registered Holders of the Notes
to certain proposed amendments (the "Proposed Amendments") to the Indenture
dated as of April 1, 1996 (the "Indenture"), between the Company, Dominion
Textile Inc., a corporation duly organized and existing under the laws of
Canada ("Dominion" or the "Parent Guarantor") and First Union National Bank,
as trustee (the "Trustee"), pursuant to which the Notes were issued, which
amendments would, among other things, eliminate substantially all of the
covenants contained in the Indenture. Subject to the terms and conditions set
forth in this Statement and the Consent and Letter of Transmittal, the Company
hereby offers to pay to each registered Holder who validly consents to the
Proposed Amendments on or prior to the Consent Expiration Date an amount in
cash (the "Consent Payment") equal to 1% of the principal amount ($10.00 for
each $1,000 principal amount) of Notes for which Consents have been validly
delivered and not validly revoked as of the Consent Expiration Date, with such
payment to be made on the Payment Date if, but only if, such Holder's Notes
are accepted for payment pursuant to the terms of the Offer. The Consent
Payment plus the Tender Offer Consideration is referred to herein as the
"Total Consideration."
If the Proposed Amendments are adopted and the Offer is consummated, Notes
that are not tendered, or that are not accepted for purchase pursuant to the
Offer, will remain outstanding, but will be subject to the terms of the
Indenture as modified by the Supplemental Indenture (as defined below)
described under Item 5, "Proposed Amendments." If a Holder does not properly
tender Notes pursuant to the Offer on or prior to the Consent Expiration Date,
or Consents either are not properly delivered, or are revoked and not properly
redelivered, on or prior to the Consent Expiration Date, such Holder will not
receive the Consent Payment, even though the Proposed Amendments will be
effective as to all Notes that are not purchased pursuant to the Offer.
Adoption of the Proposed Amendments may have adverse consequences for Holders
of Notes who do not validly tender Notes pursuant to the Offer. As a result of
the adoption of the Proposed Amendments, Holders of such outstanding Notes
will not be entitled to the benefit of substantially all of the covenants
presently contained in the Indenture. In addition, the consummation of certain
transactions upon which the Offer is conditioned will result in the sale of
substantially all of the assets of the Company and the Parent Guarantor. In
connection with the Business Unit Sales, PGI or GLI (each as defined below)
may determine that it is in their respective interest to acquire certain
portions of the Company with the remaining limited obligations of the Company
under the Indenture. Finally, the trading market for any Notes not properly
tendered pursuant to the Offer is likely to be significantly more limited in
the future if the Offer is consummated. See Item 5, "Proposed Amendments,"
Item 2, "Certain Significant Considerations," and Item 9, "Conditions to the
Offer."
Holders who tender Notes pursuant to the Offer on or prior to the Consent
Expiration Date are obligated to Consent to the Proposed Amendments. The
completion, execution and delivery of a Consent and Letter of Transmittal in
connection with a tender of Notes pursuant to the Offer on or prior to the
Consent Expiration Date will be deemed to constitute the delivery of Consents
with respect to the Notes tendered. Holders may not deliver Consents in the
Solicitation without tendering their Notes in the Offer.
The Company and the Trustee intend to execute a supplemental indenture (the
"Supplemental Indenture") to the Indenture providing for the Proposed
Amendments promptly after the Consent Expiration Date. Although the
Supplemental Indenture containing the Proposed Amendments will have been
executed by the Company and the Trustee promptly after the Consent Expiration
Date, the Proposed Amendments will not become effective unless and until the
Notes are accepted for purchase by the Company pursuant to the Offer, which is
expected to occur promptly after the Tender Offer Expiration Date.
-ii-
<PAGE>
(Cover page continued)
If the Notes are accepted for payment pursuant to the Offer, Holders who
validly tender Notes pursuant to the Offer on or prior to the Consent
Expiration Date and do not withdraw such tender or revoke such Consent will
receive the Total Consideration, which is equal to the Tender Offer
Consideration plus the Consent Payment. Holders who validly tender Notes and
deliver Consents pursuant to the Offer on or prior to the Consent Expiration
Date may not thereafter revoke such Consent after the Consent Expiration Date.
Holders who validly tender their Notes after the Consent Expiration Date will
receive only the Tender Offer Consideration and not the Consent Payment.
Upon the terms and subject to the conditions of the Offer and the
Solicitation (including, if the Offer or Solicitation is extended or amended,
the terms and conditions of any such extension or amendment) and applicable
law, the Company will (i) purchase all Notes validly tendered on or prior to
the Tender Offer Expiration Date (and not withdrawn) pursuant to the Offer,
and (ii) pay for all Consents validly delivered on or prior to the Consent
Expiration Date (and not revoked) pursuant to the Solicitation, promptly
following the Tender Offer Expiration Date.
Notwithstanding any other provision of the Offer or the Solicitation, the
Company's obligation to accept for purchase, and to pay for, Notes validly
tendered pursuant to the Offer and the Company's obligation to make Consent
Payments is conditioned upon (a) the Supplemental Indenture Condition, (b) the
Business Unit Sales Condition, (c) the 2003 Tender Condition and (d) the
General Conditions (each as defined herein). See Item 9, "Conditions to the
Offer."
In the event that the Offer and the Solicitation are withdrawn or otherwise
not completed, the Tender Offer Consideration and Consent Payment will not be
paid or become payable to Holders of the Notes who have validly tendered their
Notes and delivered Consents in connection with the Offer and the
Solicitation. In any such event, the Notes previously tendered pursuant to the
Offer will be promptly returned to the tendering Holder and the Supplemental
Indenture will not become operative.
See Item 2, "Certain Significant Considerations," and Item 10, "Certain
U.S. Federal Income Tax Considerations," for discussions of certain factors
that should be considered in evaluating the Offer and the Solicitation. See
Item 9, "Conditions to the Offer" for certain factors upon which the
Company's obligations under the Offer are conditioned. See Item 5, "Proposed
Amendments," for a description of the Proposed Amendments.
-iii-
<PAGE>
(Cover page continued)
IMPORTANT
Any Holder desiring to tender Notes and deliver Consents should either (a)
in the case of a Holder who holds physical certificates evidencing such Notes,
complete and sign the Consent and Letter of Transmittal (or a manually signed
facsimile thereof) in accordance with the instructions therein, have the
signature thereon guaranteed (if required by Instruction 1 of the Consent and
the Letter of Transmittal) and send or deliver such manually signed Consent
and Letter of Transmittal (or a manually signed facsimile thereof), together
with certificates evidencing such Notes being tendered and any other required
documents to Harris Trust Company of New York, as Depositary (the
"Depositary"), at its address set forth on the back cover of this Statement,
or (b) in the case of a beneficial owner who holds Notes in book-entry form,
request such beneficial owner's broker, dealer, commercial bank, trust company
or other nominee to effect the transaction on behalf of such beneficial owner.
See Item 7, "Procedures for Tendering Notes and Delivering Consents."
Any Holder who desires to tender Notes but who cannot comply with the
procedures set forth herein for tender on a timely basis or whose certificates
for Notes are not immediately available, may nevertheless tender the Notes by
following the procedures for guaranteed delivery set forth under Item 7,
"Procedures for Tendering Notes and Delivering Consents--Guaranteed Delivery."
The procedures for guaranteed delivery of Notes will not operate to effect the
timely delivery of the related Consent for purposes of determining eligibility
to receive a Consent Payment.
The Depository Trust Company ("DTC") has authorized DTC participants that
hold Notes on behalf of beneficial owners of Notes through DTC to tender their
Notes and consent to the Proposed Amendments as if they were Holders. To
effect a tender and deliver a Consent, DTC participants should transmit their
acceptance to DTC through the DTC Automated Tender Offer Program ("ATOP"), for
which the transaction will be eligible, and follow the procedure for book-
entry transfer set forth in Item 7, "Procedures for Tendering Notes and
Delivering Consents." A beneficial owner of Notes that are held of record by a
broker, dealer, commercial bank, trust company or other nominee must instruct
such broker, dealer, commercial bank, trust company or other nominee to tender
the Notes and deliver the related Consents on the beneficial owner's behalf.
See Item 7, "Procedures for Tendering Notes and Delivering Consents."
Tendering Holders will not be obligated to pay brokerage fees or commissions
or the fees and expenses of the Dealer Manager, the Information Agent or the
Depositary. See Item 11, "The Dealer Manager, the Information Agent and the
Depositary."
Questions and requests for assistance may be directed to MacKenzie Partners,
Inc., the Information Agent, or Chase Securities Inc., the Dealer Manager, at
their respective addresses and telephone numbers set forth on the back cover
of this Statement. Additional copies of this Statement, the Consent and Letter
of Transmittal, the Notice of Guaranteed Delivery and other related materials
may be obtained from the Information Agent. Beneficial owners may also contact
their brokers, dealers, commercial banks or trust companies through which they
hold the Notes with questions and requests for assistance.
THIS STATEMENT CONSTITUTES NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION
OF CONSENTS IN ANY JURISDICTION IN WHICH, OR TO OR FROM ANY PERSON TO OR FROM
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION UNDER APPLICABLE
SECURITIES OR BLUE SKY LAWS. THE DELIVERY OF THIS STATEMENT SHALL NOT UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN
NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN ANY ATTACHMENTS HERETO OR
IN THE AFFAIRS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR AFFILIATES SINCE
THE DATE HEREOF.
NEITHER THE COMPANY NOR THE DEALER MANAGER MAKE ANY RECOMMENDATION AS TO
WHETHER HOLDERS SHOULD TENDER NOTES PURSUANT TO THE OFFER OR PROVIDE CONSENTS
TO THE PROPOSED AMENDMENTS.
-iv-
<PAGE>
(Cover page continued)
AVAILABLE INFORMATION
The Company and its parent, Dominion, have filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form F-10
and Form F-3 (Reg. Nos. 333-01764 and 333-01764-01) relating to the Notes and
their underlying guarantees by Dominion (such registration statements,
together with all amendments and exhibits, the "Registration Statements").
Dominion is also subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Commission. The
Indenture also provides that the Holders of the Notes are entitled to receive
annual and quarterly consolidated financial statements with respect to
Dominion (including certain summarized historical information with respect to
the Company), even if Dominion were no longer subject to the informational
requirements of the Exchange Act, provided that greater than 10% of the
initial principal amount of the Notes are outstanding.
The Registration Statements and the reports filed by Dominion pursuant to
the Exchange Act as well as other information can be inspected and copied at
prescribed rates at the Public Reference Section of the Commission located at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 and
at regional public reference facilities maintained by the Commission located
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and Seven World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of
the Commission at prescribed rates. As a foreign issuer, Dominion does not
file reports or other information using the Commission's Electronic Data
Gathering, Analysis and Retrieval ("EDGAR") filing system.
Dominion is a Canadian issuer that is permitted, under a multi-
jurisdictional disclosure system adopted in the United States, to prepare
certain informational filings in accordance with the disclosure requirements
of its home jurisdiction. Holders of the Notes should be aware that such
requirements may vary from those of the United States. In addition, Dominion's
financial statements incorporated herein by reference have been prepared in
accordance with Canadian generally accepted accounting principles and are
subject to Canadian accounting and auditor independence standards, and thus
may not be comparable to financial statements of United States companies.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents listed hereafter and filed with the Quebec
Securities Commission are incorporated herein by reference and shall be deemed
to be a part hereof:
(a) The Consolidated Financial Statements of Dominion for the fiscal year
ended June 30, 1997 and the Auditors' Report thereon.
(b) The Annual Information Form of Dominion dated October 9, 1997.
(c) The interim unaudited comparative consolidated financial statements for
the period ended September 30, 1997 included in the quarterly report of
Dominion for the first quarter of fiscal 1998.
(d) The Management Proxy Circular of Dominion dated August 29, 1997 in
connection with the annual meeting of shareholders held on October 29,
1997.
In addition, Dominion's Annual Report on Form 40-F for the year ended June
30, 1997 filed with the Commission pursuant to the Exchange Act shall be
incorporated herein by reference and shall be deemed to be a part hereof.
All documents and reports filed with either the Commission or the Quebec
Securities Commission after the date of this Statement and on or prior to the
earlier of the Payment Date or termination of the Offer and Solicitation shall
be deemed incorporated herein by reference and shall be deemed to be a part
hereof from the
-v-
<PAGE>
(Cover page continued)
date of filing of such documents and reports. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Statement to the
extent that a statement contained herein or in any subsequently filed document
or report that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Statement.
The Company will provide without charge to each person to whom this
Statement is delivered, upon the written request of such person, a copy of any
or all of the documents which are incorporated by reference herein, other than
exhibits to such documents which are not specifically incorporated by
reference herein. Requests should be directed to the Information Agent or the
Dealer Manager at their respective addresses set forth on the back cover page
hereof or to the Acting Secretary and General Counsel of Dominion, 1950
Sherbrooke Street West, Montreal, Quebec, Canada H3H 1E7, telephone number
(514) 989-6000. The information relating to the Company contained in this
Statement does not purport to be complete and should be read together with the
information contained in the incorporated documents.
No person has been authorized to give any information or to make any
representation not contained in this Statement and, if given or made, such
information or representation may not be relied upon as having been authorized
by the Company, the Dealer Manager, the Depositary, or the Information Agent.
Neither the delivery of this Statement nor any purchase hereunder shall, under
any circumstances, create any implication that the information herein is
correct as of any time subsequent to the date hereof, or that there has been
no change in the affairs of the Company as of such date.
-vi-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................................................... 1
1. Terms of the Offer and the Solicitation............................... 7
2. Certain Significant Considerations.................................... 10
3. Purpose of the Offer and the Solicitation............................. 11
4. Certain Information Concerning the Company, Dominion, DT Acquisition
and the Notes............................................................ 11
5. Proposed Amendments................................................... 12
6. Acceptance for Payment and Payment for Notes; Acceptance of Consents.. 14
7. Procedures for Tendering Notes and Delivering Consents................ 15
8. Withdrawal of Tenders and Revocation of Consents...................... 19
9. Conditions to the Offer............................................... 20
10. Certain U.S. Federal Income Tax Consequences.......................... 21
11. The Dealer Manager, the Information Agent and the Depositary.......... 23
12. Fees and Expenses..................................................... 24
13. Source and Amount of Funds............................................ 24
14. Miscellaneous......................................................... 24
Schedule I:Formula for calculation of Tender Offer Consideration and Total
Consideration............................................................ 25
Schedule II: Hypothetical illustration of the calculation of Tender Offer
Consideration and Total Consideration............................ 26
</TABLE>
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere or incorporated by reference in this Statement
and the Consent and Letter of Transmittal. Capitalized terms have the meanings
assigned to them elsewhere in this Statement.
The Company..................... Dominion Textile (USA) Inc., a Delaware
corporation, is a wholly-owned subsidiary of
Dominion. The Company is a holding company
for the United States operations of Dominion.
Dominion........................ Dominion Textile Inc., a corporation
organized under the laws of Canada, is a
manufacturer and supplier of textile and
textile related products with leading
positions in selected markets and global
manufacturing capabilities. Dominion is one
of the world's largest manufacturers of high-
end denim fabrics. It is also a supplier to
the U.S. disposable diaper market and has
significant non-woven, spunbond multidenier
production capacity. Dominion operates
manufacturing plants in five countries,
including the United States, Canada and three
European countries. On December 19, 1997, DT
Acquisition acquired control of Dominion in
the Dominion Tender Offer (as defined). See
Item 4, "Certain Information Concerning the
Company, Dominion, DT Acquisition and the
Notes."
DT Acquisition.................. DT Acquisition Inc., a corporation organized
under the laws of Canada, is an affiliate of
Polymer Group, Inc., a Delaware corporation.
DT Acquisition acquired approximately 96% of
the outstanding first preferred shares and
approximately 98% of the outstanding common
shares of Dominion in the Dominion Tender
Offer. See Item 4, "Certain Information
Concerning the Company, Dominion, DT
Acquisition and the Notes."
The Notes....................... The Offer and the Solicitation are being made
with respect to the Company's 9 1/4%
Guaranteed Senior Notes due April 1, 2006.
See Item 4, "Certain Information Concerning
the Company, Dominion, DT Acquisition and the
Notes."
The Offer....................... The Company is offering to purchase for cash
from each Holder, upon the terms and subject
to the conditions described herein, any and
all outstanding Notes. The consideration for
each $1,000 principal amount of Notes
tendered pursuant to the Offer shall be equal
to (i) the present value on the Payment Date
of $1,046.25 per Note, determined on the
basis of the Tender Offer Yield to the
Earliest Redemption Date of April 1, 2001
equal to the sum of (x) the yield on the 6
3/8% U.S. Treasury Note due March 31, 2001 as
of 2:00 p.m., New York City time, on January
9, 1998, the tenth business day immediately
preceding the scheduled Tender Offer
Expiration Date plus (y) 50 basis points,
minus (ii) $10.00 per $1,000 principal amount
of Notes. Each tendering Holder will also
receive unpaid interest up to, but not
including, the Payment
1
<PAGE>
Date. Holders who tender Notes pursuant to
the Offer prior to the Consent Expiration
Date are obligated to consent to the Proposed
Amendments. The completion, execution and
delivery of a Consent and Letter of
Transmittal in connection with the tender of
Notes pursuant to the Offer prior to the
Consent Expiration Date will be deemed to
constitute the delivery of Consents with
respect to the Notes tendered. Holders may
not deliver Consents in the Solicitation
without tendering their Notes in the Offer.
See Item 1, "Terms of the Offer and the
Solicitation."
The Solicitation................ Upon the terms and subject to the conditions
described herein, the Company is soliciting
the Consents of Holders of Notes to the
Proposed Amendments to the Indenture. Each
Holder who consents to the Proposed
Amendments prior to the Consent Expiration
Date shall be entitled to a Consent Payment
in the amount of 1% of the principal amount
($10.00 per $1,000 principal amount) of Notes
with respect to which Consents are delivered.
Each Holder who tenders Notes pursuant to the
Offer on or prior to the Consent Expiration
Date is obligated to consent to the Proposed
Amendments, and the completion, execution and
delivery of a Consent and Letter of
Transmittal in connection with such a
Holder's tender of Notes on or prior to the
Consent Expiration Date will be deemed to
constitute the delivery of Consents with
respect to the Notes tendered. Holders may
not deliver Consents in the Solicitation
without tendering their Notes in the Offer.
The Company intends to effect the Proposed
Amendments by executing a Supplemental
Indenture immediately following the Consent
Expiration Date, assuming that the Requisite
Consents (as defined herein) have been
received. Although the Supplemental Indenture
reflecting the Proposed Amendments will
become effective upon execution by the
Company, the Parent Guarantor and the Trustee
immediately following the Consent Expiration
Date (assuming the Requisite Consents have
been received), the Proposed Amendments will
not become operative until Notes are accepted
for purchase by the Company pursuant to the
Offer, and the Consent Payment will not be
due and payable to those Holders who deliver
Consents on or prior to the Consent
Expiration Date until the Payment Date. See
Item 1, "Terms of the Offer and the
Solicitation," Item 5, "Proposed Amendments"
and Item 6, "Acceptance for Payment and
Payment of Notes; Acceptance of Consents."
Expiration...................... The Solicitation will expire at 5:00 p.m.,
New York City time, on January 9, 1998,
unless extended. The Offer will expire at
5:00 p.m., New York City time, on January 26,
1998, unless extended. See Item 1, "Terms of
the Offer and the Solicitation."
2
<PAGE>
Purpose of the Offer and the On December 19, 1997, DT Acquisition acquired
Solicitation.................... approximately 96% of the outstanding first
preferred and approximately 98% of the
outstanding common shares of Dominion in the
Dominion Tender Offer. In connection
therewith, DT Acquisition entered into
agreements to dispose of the two primary
business units of Dominion in the Business
Unit Sales (as defined herein). The Offer is
being made for the purpose of repurchasing
and retiring certain of the outstanding
indebtedness of Dominion and its subsidiaries
(including the Company) in order to
effectuate the Business Unit Sales. See Item
3, "Purpose of the Offer and the
Solicitation."
Conditions to the Offer......... The Offer is conditioned upon (a) the
Supplemental Indenture Condition, (b) the
Business Unit Sales Condition, (c) the 2003
Tender Condition and (d) the General
Conditions. See Item 9, "Conditions to the
Offer."
Requisite Consents.............. The aggregate outstanding principal amount of
the Notes is $125.0 million. The Proposed
Amendments require the Consent of the Holders
of at least a majority of the aggregate
principal amount of Notes outstanding.
Accordingly, the Proposed Amendments require
the Consent of the Holders of Notes in an
aggregate principal amount in excess of $62.5
million. See Item 5, "Proposed Amendments."
The Proposed Amendments......... The covenants in the Indenture set forth
under the headings "Parent Guarantor and
Issuer May Consolidate, Etc. and Purchases of
Assets Only on Certain Terms," "Successor
Substituted," "Existence," "Maintenance of
Properties," "Payment of Taxes and Other
Claims," "Maintenance of Insurance,"
"Limitation on Consolidated Debt,"
"Limitation on Debt and Preferred Stock of
Restricted Subsidiaries," "Limitation on
Restricted Payments," "Limitation on Dividend
and Other Payment Restrictions Affecting
Restricted Subsidiaries," "Limitation on
Liens," "Limitation on Sale and Leaseback
Transactions," "Limitation on Transactions
with Affiliates and Related Persons,"
"Limitation on Certain Sales of Capital Stock
of Restricted Subsidiaries and Certain
Assets," "Limitation on Issuances and Sales
of Capital Stock of Wholly Owned Restricted
Subsidiaries," "Ownership of the Issuer,"
"Payment of Additional Amounts," and
"Provision of Financial Information" would be
eliminated from the Indenture. Such
covenants, among other things, generally
limit the Parent Guarantor's ability to (i)
consolidate or merge with another entity,
sell or lease substantially all of its
assets, or acquire ownership interests in
other entities, (ii) cause a successor to the
Parent Guarantor or the Company (following a
consolidation or merger) to assume the
obligations under the Indenture, (iii) fail
to maintain its corporate existence, (iv)
fail to maintain its properties, (v) fail to
pay taxes, (vi) underinsure property against
loss or damage, or allow the Company to do
the same, (vii) incur debt, (viii) permit the
Company to incur debt or issue preferred
stock, (ix) permit certain restrictions on
the ability of the Company to
3
<PAGE>
pay dividends on capital stock, make loans to
the Parent Guarantor or other Restricted
Subsidiaries or transfer property to the
Parent Guarantor or other Restricted
Subsidiaries, declare or pay certain
dividends, or permit the Company to do the
same, (x) create liens on assets of the
Parent Guarantor or permit the Company to do
the same, (xi) enter into any sale or
leaseback transactions or permit the Company
to do the same, (xii) enter into certain
transactions with affiliates, or permit the
Company to do the same, (xiii) make asset
dispositions, (xiv) issue, transfer, convey,
sell or otherwise dispose of any Shares of
Capital Stock of any Restricted Subsidiary,
(xv) divest any of its interest in the
Company, (xvi) fail to pay taxes and other
amounts due to Canadian governmental
authorities in respect of the Notes, and
(xvii) fail to provide certain financial
information to the Holders, or to permit the
Company to do the same. See Item 5, "The
Proposed Amendments."
Withdrawal Rights............... Tenders of Notes pursuant to the Offer may be
withdrawn after tender at any time on or
prior to the Tender Offer Expiration Date,
upon compliance with the procedures described
herein. Tenders of Notes may also be
withdrawn if the Offer is terminated without
any Notes being purchased thereunder. A
withdrawal of tendered Notes on or prior to
the Consent Expiration Date shall be deemed a
revocation of the related Consent. Consents
may be revoked at any time on or prior to the
Consent Expiration Date, but are thereafter
irrevocable. Valid revocation of Consents
will render a tender of Notes prior to the
Consent Expiration Date defective, and,
unless the Company waives such defect (or
unless the Notes are withdrawn and re-
tendered), the tendering Holder will not be
eligible to receive the Tender Offer
Consideration with respect to such Notes. See
Item 8, "Withdrawal of Tenders and Revocation
of Consents."
Source of Funds................. Assuming 100% of the outstanding principal
amount of Notes is tendered and accepted for
payment, approximately $140.4 million is
required to pay the Total Consideration in
connection with the Offer and the
Solicitation. Such funds will be obtained by
the Company from proceeds of the Business
Unit Sales and/or borrowings under the DT
Credit Agreement (as defined). Each of PGI
and GLI (each as defined) has obtained the
financing necessary to complete its part of
the Business Unit Sales. It is currently
anticipated that the proceeds from the
Business Unit Sales will provide all of the
funds necessary to pay for the Notes
purchased pursuant to the Offer.
Untendered Notes................ Notes not tendered and purchased pursuant to
the Offer will remain outstanding. If the
Requisite Consents are received and the
Proposed Amendments become operative pursuant
to the Supplemental Indenture, such Notes
will not have the benefits of the restrictive
covenants that will be eliminated from the
Indenture by the Proposed Amendments. In
addition, the
4
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consummation of the Business Unit Sales will
result in the sale of substantially all of
the assets of the Company and the Parent
Guarantor. In connection with the Business
Unit Sales, PGI or GLI may determine that it
is in their respective interest to acquire
certain portions of the Company with the
remaining limited obligations of the Company
under the Indenture. Further, as a result of
the consummation of the Offer, the aggregate
principal amount of the Notes that are
outstanding will be significantly reduced,
which may adversely affect the liquidity and,
consequently, the market price for the Notes,
if any, that remain outstanding after
consummation of the Offer. See Item 2,
"Certain Significant Considerations."
Holders who tender only a portion of their
Notes pursuant to the Offer will be issued
Notes equal in principal amount to the
unpurchased portion of the Notes surrendered.
Procedures for Tendering Notes
and Delivering Consents.........
Any Holder desiring to tender Notes pursuant
to the Offer and/or deliver Consents pursuant
to the Solicitation should either (a) in the
case of a Holder who holds physical
certificates evidencing such Notes, complete
and sign the enclosed Consent and Letter of
Transmittal (or a manually signed facsimile
thereof) in accordance with the instructions
set forth therein, have the signature thereon
guaranteed if required by Instruction 1 of
the Consent and Letter of Transmittal, and
send or deliver such manually signed Consent
and Letter of Transmittal (or such manually
signed facsimile), together with the
certificates evidencing the Notes being
tendered and any other required documents to
the Depositary, or (b) in the case of Holders
who hold Notes in book-entry form, request
his or her broker, dealer, commercial bank,
trust company or other nominee to effect the
transaction for him or her. Beneficial owners
of Notes that are registered in the name of a
broker, dealer, commercial bank, trust
company or other nominee must contact such
broker dealer, commercial bank, trust company
or other nominee if they desire to tender
their Notes and deliver Consents. Holders of
Notes who are tendering by book-entry
transfer to the Depositary's account at DTC
can execute the tender to DTC through ATOP,
after which DTC will verify the acceptance
and execute a book-entry delivery to the
Depositary's account at DTC. Delivery of the
Agent's Message by DTC will satisfy the terms
of the Offer as to the tender of Notes;
however, any Holder tendering on or prior to
the Consent Expiration Date must also execute
and deliver a Consent and Letter of
Transmittal. To receive the Consent Payment,
each Holder (including any Holder tendering
Notes through ATOP) must deliver or cause to
be delivered a completed and properly
executed Consent and Letter of Transmittal
and any other required documents to the
Depositary on or prior to the Consent
Expiration Date.
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A Holder who desires to tender Notes pursuant
to the Offer and who cannot comply with the
procedures set forth herein for tender or
delivery on a timely basis or whose Notes are
not immediately available may tender such
Notes pursuant to the procedures for
guaranteed delivery set forth herein. See
Item 7, "Procedures for Tendering Notes and
Delivering Consents."
Acceptance of Tendered Notes Upon the terms of the Offer and the
and Payment..................... Solicitation and upon satisfaction or waiver
of the conditions thereto, the Company will
accept for purchase Notes validly tendered
(and not withdrawn) prior to the Tender Offer
Expiration Date. Only Holders who validly
tender Notes on or prior to the Consent
Expiration Date (and do not withdraw such
tender and revoke such Consent) will receive
the Total Consideration, which includes the
Consent Payment. Payment of the Total
Consideration or the Tender Offer
Consideration, as applicable, for Notes
validly tendered and accepted for payment,
will be made by deposit of such amounts, as
applicable, with the Depositary who, in each
case, will act as agent for the tendering and
consenting Holders for the purpose of
receiving payments from the Company and
transmitting such payments to the tendering
and consenting Holders. Such payments are
expected to be made on the Payment Date,
promptly following the acceptance of the
Notes by the Company pursuant to the Offer.
See Item 6, "Acceptance for Payment and
Payment for Notes; Acceptance of Consents."
Certain Tax Considerations...... For a discussion of certain U.S. federal
income tax consequences of the Offer and the
Solicitation applicable to Holders of the
Notes, see Item 10, "Certain U.S. Federal
Income Tax Consequences."
Certain Significant For a discussion of certain considerations
Considerations.................. relevant to the Offer and the Solicitation,
see Item 2, "Certain Significant
Considerations."
The Dealer Manager, the
Information Agent and the
Depositary......................
Chase Securities Inc. has been retained as
Dealer Manager in connection with the Offer
and the Solicitation. In such capacities, the
Dealer Manager may contact Holders regarding
the Offer and the Solicitation and may
request brokers, dealers, commercial banks,
trust companies and other nominees to forward
this Statement and related materials to
beneficial owners of Notes. The Depositary is
Harris Trust Company of New York. MacKenzie
Partners, Inc. has been retained as the
Information Agent in connection with the
Offer and the Solicitation. The respective
addresses and telephone numbers of the Dealer
Manager, the Depositary and the Information
Agent are set forth on the back cover of this
Statement. See Item 11, "The Dealer Manager,
the Information Agent, and the Depositary."
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TO HOLDERS OF THE 9 1/4% GUARANTEED SENIOR NOTES DUE APRIL 1, 2006
OF DOMINION TEXTILE (USA) INC.:
THIS STATEMENT AND THE RELATED CONSENT AND LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER AND THE SOLICITATION.
1.TERMS OF THE OFFER AND THE SOLICITATION.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment) set forth herein and in the accompanying Consent and Letter of
Transmittal, the Company is offering to purchase for cash all of its
outstanding Notes at a price equal to (i) the present value on the Payment
Date (as defined herein) of $1,046.25 per $1,000 principal amount of Notes
(the amount payable on April 1, 2001, which is the first date on which the
Notes are redeemable (the "Earliest Redemption Date")), determined on the
basis of the yield (the "Tender Offer Yield") to the Earliest Redemption Date
equal to the sum of (x) the yield on the 6 3/8% U.S. Treasury Note due March
31, 2001 (the "Reference Security"), as calculated by the Dealer Manager in
accordance with standard market practice, based on the bid price for such
Reference Security as of 2:00 p.m., New York City time, on January 9, 1998,
the tenth (10th) business day immediately preceding the scheduled Tender Offer
Expiration Date (the "Price Determination Date"), as displayed on the
Bloomberg Government Pricing Monitor on "Page PX5" (the "Bloomberg Page") (or,
if any relevant price is not available on a timely basis on the Bloomberg Page
or is manifestly erroneous, such other recognized quotation source as the
Dealer Manager shall select in its sole discretion) plus (y) 50 basis points,
the fixed spread (the "Fixed Spread") (such price being rounded to the nearest
cent per $1,000 principal amount of Notes), minus (ii) $10.00 per $1,000
principal amount of Notes, which is equal to the Consent Payment referred to
below (such amount, the "Tender Offer Consideration"), plus accrued and unpaid
interest to, but not including, the Payment Date. Payment of the Total
Consideration (the Tender Offer Consideration plus the Consent Payment) or the
Tender Offer Consideration, as applicable, for Notes validly tendered and
accepted for payment shall be made promptly following the Tender Offer
Expiration Date (the "Payment Date").
Although the Tender Offer Yield on the applicable Reference Treasury
Security on the Price Determination Date will be determined only from the
source noted above, information regarding the closing yield for the Reference
Treasury Security may also be found in The Wall Street Journal. The yield on
the Reference Treasury Security for the Notes as of 2:00 p.m., New York City
time, on December 22, 1997 was 5.74%. Accordingly, if such yield was
determined to be the yield on the Reference Treasury Security at the Price
Determination Date, and January 27, 1998 was the Payment Date for the Notes,
the Tender Offer Yield, the Tender Offer Consideration and the Total
Consideration per $1,000 principal amount of Notes would be 6.24%, $1,113.45
and $1,123.45, respectively. A hypothetical illustration of the calculation of
the Tender Offer Consideration and the Total Consideration for the Notes
demonstrating the application of the assumptions and methodologies to be used
in pricing the Offer is set forth in Schedule II hereto.
Promptly after 2:00 p.m. on the Price Determination Date, and in any event
before 9:00 a.m., New York City time, on the following business day, the
Company will publicly announce the pricing information referred to above by
press release to the Dow Jones News Service.
Prior to 2:00 p.m., New York City time, on the Price Determination Date,
holders may obtain hypothetical quotes of the yield on the Reference Treasury
Security (calculated as of a then recent time) and the resulting hypothetical
Tender Offer Consideration and the Total Consideration by contacting the
Dealer Manager at its telephone numbers set forth on the back cover of this
Statement. After such time on the Price Determination Date, holders may
ascertain the actual yield on the Reference Treasury Security as of the Price
Determination Date and the resulting actual Tender Offer Consideration and
Total Consideration by contacting the Dealer Manager at its telephone numbers
set forth on the back cover of this Statement.
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<PAGE>
Because the Tender Offer Consideration and the Total Consideration prior to
the Price Determination Date are based on a fixed spread pricing formula that
is linked to the yield on the Reference Treasury Security, the actual amount
of cash that will be received by a tendering Holder pursuant to the Offer will
be affected by changes in such yield during the term of the Offer prior to
such Price Determination Date. After the Price Determination Date when the
Tender Offer Consideration and the Total Consideration are fixed, the actual
amount of cash that will be received by a tendering Holder pursuant to the
Offer will be known and holders will be able to ascertain the Tender Offer
Consideration and the Total Consideration in the manner described above.
Upon the terms and subject to the conditions of the Solicitation (including,
if the Solicitation is extended or amended, the terms and conditions of any
such extension or amendment), the Company also is soliciting Consents to the
Proposed Amendments to the Indenture from Holders, and is offering to pay to
each Holder who consents to the Proposed Amendments on or prior to the Consent
Expiration Date, a Consent Payment in cash in respect of Notes for which
Consents have been validly delivered and not validly revoked on or prior to
the Consent Expiration Date, with such payment to be made promptly following
the Tender Offer Expiration Date if, but only if, the Notes are accepted for
payment pursuant to the terms of the Offer. Holders who desire to tender their
Notes pursuant to the Offer and to receive the Total Consideration are
required to validly tender such Notes and consent to the Proposed Amendments
on or prior to the Consent Expiration Date. The completion, execution and
delivery of the Consent and Letter of Transmittal by a Holder in connection
with the tender of Notes will constitute the Consent of the tendering Holder
to the Proposed Amendments with respect to such Notes. If a Holder's Notes are
not properly tendered pursuant to the Offer on or prior to the Consent
Expiration Date, such Holder will not receive the Consent Payment, even though
the Proposed Amendments will be effective as to all Notes that are not
purchased in the Offer. The Company is not soliciting and will not accept
Consents to the Proposed Amendments from Holders who are not also tendering
their Notes pursuant to the Offer.
If the Notes are accepted for payment pursuant to the Offer, Holders who
validly tender Notes pursuant to the Offer on or prior to the Consent
Expiration Date and do not withdraw such tender or revoke such Consent on or
prior to the Consent Expiration Date will receive the Total Consideration,
which is equal to the Tender Offer Consideration plus the Consent Payment.
Holders who validly tender Notes and deliver Consents pursuant to the Offer on
or prior to the Consent Expiration Date may not thereafter revoke such Consent
after the Consent Expiration Date. Holders who validly tender their Notes
after the Consent Expiration Date will receive only the Tender Offer
Consideration and not the Consent Payment.
Holders may not deliver Consents without tendering their Notes in the Offer,
and may not revoke Consents on or prior to the Consent Expiration Date without
withdrawing the previously tendered Notes to which such Consent relates.
Holders may not withdraw previously tendered Notes on or prior to the Consent
Expiration Date without revoking the previously delivered Consents to which
such tender relates. Consents may not be revoked after the Consent Expiration
Date. Tenders of Notes may be withdrawn at any time prior to the Tender Offer
Expiration Date.
All Notes validly tendered in accordance with the procedures set forth under
Item 7, "Procedures for Tendering Notes and Delivering Consents," and not
withdrawn in accordance with the procedures set forth under Item 8,
"Withdrawal of Tenders and Revocation of Consents," on or prior to the Consent
Expiration Date or the Tender Offer Expiration Date, as the case may be, will,
upon the terms and subject to the conditions hereof, including satisfaction of
the Supplemental Indenture Condition, the Business Unit Sales Condition, the
2003 Tender Condition and the General Conditions, be accepted for payment by
the Company, and payments will be made therefor, promptly after the Tender
Offer Expiration Date on the Payment Date.
The Company, the Parent Guarantor and the Trustee intend to execute the
Supplemental Indenture promptly after the Consent Expiration Date, but the
elimination of the covenants set forth in the Supplemental Indenture will not
become operative unless and until the Notes are accepted for purchase by the
Company pursuant to the Offer, which is expected to occur promptly after the
later of (a) the Tender Offer Expiration Date or (b) subject
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<PAGE>
to Rule 14e-1 under the Exchange Act, the satisfaction or waiver of the
conditions to the Offer described herein. If the Offer is terminated or
withdrawn, or the Notes are not accepted for payment, the Supplemental
Indenture will not become operative, and no Tender Offer Consideration or
Consent Payment will be paid or payable. If any tendered Notes are not
purchased pursuant to the Offer for any reason, or certificates are submitted
evidencing more Notes than are tendered, such Notes not purchased will be
returned, without expense, to the tendering Holder (or, in the case of Notes
tendered by book-entry transfer, such Notes will be credited to the account
maintained at DTC from which such Notes were delivered) promptly following the
Tender Offer Expiration Date or termination of the Offer.
IF THE REQUISITE CONSENTS ARE RECEIVED AND THE SUPPLEMENTAL INDENTURE HAS
BECOME OPERATIVE, THE PROPOSED AMENDMENTS WILL BE BINDING ON ALL NON-TENDERING
HOLDERS OF NOTES. ACCORDINGLY, CONSUMMATION OF THE OFFER AND THE ADOPTION OF
THE PROPOSED AMENDMENTS MAY HAVE ADVERSE CONSEQUENCES FOR HOLDERS WHO ELECT
NOT TO TENDER IN THE OFFER. SEE ITEM 2, "CERTAIN SIGNIFICANT CONSIDERATIONS."
The Company's obligation to accept and pay for Notes validly tendered
pursuant to the Offer is conditioned upon satisfaction of (a) the Supplemental
Indenture Condition, (b) the Business Unit Sales Condition, (c) the 2003
Tender Condition and (d) the General Conditions. Consent Payments to Holders
who have validly consented to (and not revoked) the Proposed Amendments on or
prior to the Consent Expiration Date are conditioned upon the Company's
acceptance of Notes for purchase pursuant to the Offer. Subject to applicable
securities laws and the terms and conditions set forth in this Statement, the
Company reserves the right, on or prior to the Tender Offer Expiration Date,
to (i) waive any and all conditions to the Offer or the Solicitation, (ii)
extend or terminate the Offer or the Solicitation or (iii) otherwise amend the
Offer or the Solicitation in any respect. See Item 9, "Conditions to the
Offer." The rights reserved by the Company in this paragraph are in addition
to the Company's rights to terminate the Offer described under Item 9,
"Conditions to the Offer." Any extension, amendment or termination will be
followed promptly by public announcement thereof, the announcement in the case
of an extension of the Offer to be issued no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled Tender
Offer Expiration Date. Without limiting the manner in which any public
announcement may be made, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to the Dow Jones News Service.
If the Company extends the Offer, or if, for any reason, the acceptance for
payment of, or the payment for, Notes is delayed or if the Company is unable
to accept for payment or pay for Notes pursuant to the Offer, then, without
prejudice to the Company's rights under the Offer, the Depositary may retain
tendered Notes on behalf of the Company, and such Notes may not be withdrawn
except to the extent tendering Holders are entitled to withdrawal rights as
described in Item 8, "Withdrawal of Tenders and Revocation of Consents."
However, the ability of the Company to delay the payment for Notes which the
Company has accepted for payment is limited by Rule 14e-l(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of a tender offer.
If the Company makes a material change in the terms of the Offer or the
Solicitation or the information concerning the Offer or the Solicitation, the
Company will disseminate additional offering materials and extend such Offer
or, if applicable, the Solicitation, to the extent required by law. If the
Solicitation is amended on or prior to the Consent Expiration Date in a manner
determined by the Company to constitute a material adverse change to the
Holders of the Notes, the Company promptly will disclose such amendment and,
if necessary, extend the Solicitation for such Notes for a period deemed by
the Company to be adequate to permit Holders of the Notes to withdraw their
Notes and revoke their Consents. In addition, if the consideration to be paid
in the Offer is increased or decreased or the principal amount of Notes
subject to the Offer is decreased, the Offer will remain open at least 10
business days from the date the Company first gives notice to Holders, by
public announcement or otherwise, of such increase or decrease. See Item 8,
"Withdrawal of Tenders and Revocation of Consents."
9
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2.CERTAIN SIGNIFICANT CONSIDERATIONS.
The following considerations, in addition to the other information described
elsewhere in this Statement, should be carefully considered by each Holder
before deciding whether to participate in the Offer and the Solicitation.
Effects of the Proposed Amendments. If the Proposed Amendments become
effective, Holders of Notes that are not tendered and purchased pursuant to
the Offer will no longer be entitled to the benefits of substantially all of
the covenants contained in the Indenture, which will be eliminated by the
Proposed Amendments. The Indenture, as amended with respect to the Notes, will
continue to govern the terms of all Notes that remain outstanding after the
consummation of the Offer. The elimination of these covenants and other
provisions would permit the Company and the Parent Guarantor to take certain
actions previously prohibited that could increase the credit risks with
respect to the Company and the Parent Guarantor, adversely affect the market
price and credit rating of the remaining Notes or otherwise be materially
adverse to the interests of Holders, which would otherwise not have been
permitted pursuant to the Indenture. In addition, in connection with the
Business Unit Sales, PGI or GLI may determine that it is in their respective
interest to acquire certain portions of the Company with the remaining limited
obligations of the Company under the Indenture. See Item 5, "Proposed
Amendments."
Limited Trading Market. The Notes were issued in 1996 and are not listed on
any national or regional securities exchange. To the Company's knowledge, the
Notes are traded infrequently in transactions arranged through brokers.
Quotations for securities that are not widely traded, such as the Notes, may
differ from actual trading prices and should be viewed as approximations.
Holders are urged to contact their brokers with respect to current information
regarding the Notes. To the extent that Notes are tendered and accepted in the
Offer, any existing trading market for the remaining Notes may become more
limited. A debt security with a smaller outstanding principal amount available
for trading (a smaller "float") may command a lower price than would a
comparable debt security with a greater float. The reduced float may also make
the trading price of the Notes that are not tendered and accepted for payment
more volatile. Consequently, the liquidity, market value and price volatility
of Notes which remain outstanding may be adversely affected. Holders of
unpurchased Notes may attempt to obtain quotations for the Notes from their
brokers; however, there can be no assurance that any trading market will exist
for the Notes following consummation of the Offer. The extent of the public
market for the Notes following consummation of the Offer will depend upon the
number of Holders remaining at such time, the interest in maintaining a market
in such Notes on the part of securities firms and other factors.
Change of Control Purchase Offer. Pursuant to Section 1017 of the Indenture,
within 30 days following a "Change of Control Triggering Event" (as defined in
the Indenture), the Company is required to commence an offer to purchase all
outstanding Notes at a purchase price equal to 101% of the principal amount of
each Note. This Offer is not being made pursuant to, or in accordance with,
the provisions of Section 1017 of the Indenture. A "Change of Control
Triggering Event" is deemed to occur if a "Change of Control" (as defined in
the Indenture) has occurred and a Rating Decline (as defined in the Indenture)
occurs. The acquisition of Dominion by DT Acquisition constitutes a "Change of
Control" under the Indenture. However, as of the date of the Offer, no Rating
Decline has occurred. In the event a Rating Decline occurs, and any Notes
remain outstanding at such time, the Company intends to comply with Section
1017 of the Indenture. The Company believes the amount that a Holder will
receive in the Offer will exceed the amount payable in an offer under Section
1017 of the Indenture. The offer under Section 1017 of the Indenture, if any,
will be made pursuant to a separate offer to purchase and related letter of
transmittal.
Recent Acquisition and Proposed Sales. Pursuant to the Offer to Purchase
dated October 29, 1997, as supplemented by the Notices of Extension and
Variation dated November 18, 1997, November 28, 1997, December 2, 1997, and
December 15, 1997, approximately 96% of the outstanding first preferred shares
and approximately 98% of the outstanding common shares of the Company's
parent, Dominion, were acquired by DT Acquisition on December 19, 1997 (the
"Dominion Tender Offer"). DT Acquisition intends to acquire the remaining
outstanding first preferred and common shares on the same terms as such shares
were acquired in the Dominion Tender Offer pursuant to Section 206 of the
Canadian Business Corporation Act. In connection with
10
<PAGE>
the Dominion Tender Offer, DT Acquisition entered into agreements to dispose
of the two primary business units of Dominion in the Business Unit Sales. The
Offer is being made for the purpose of repurchasing and retiring certain of
the outstanding indebtedness of Dominion and its subsidiaries (including the
Company) in order to effectuate the Business Unit Sales. There can be no
assurances that the Company or Dominion will be successful in repurchasing and
retiring other issuances of notes or sources of indebtedness, including
without limitation the 2003 Notes (as defined), the repurchase of which is
conditioned upon, among other things, the Offer and Solicitation.
The ability of the Company and Dominion to effectuate the Business Unit
Sales will depend on multiple factors, many of which are not within the
control of the Company or Dominion. In addition, if the Business Unit Sales
are consummated, substantially all of the assets of the Company and Dominion
will be sold. As a result, the ability of the Company and Dominion to sustain
operations and thereby generate sufficient cash flow to meet interest
obligations to Holders will be substantially reduced or eliminated.
3.PURPOSE OF THE OFFER AND THE SOLICITATION.
On December 19, 1997, DT Acquisition acquired approximately 96% of the
outstanding first preferred shares and approximately 98% of the outstanding
common shares of Dominion in the Dominion Tender Offer. In connection
therewith, DT Acquisition entered into agreements to dispose of the two
primary business units of Dominion in the Business Unit Sales. The principal
purpose of the Offer, which is conditioned upon the satisfaction of the
Supplemental Indenture Condition, the Business Unit Sales Condition, the 2003
Tender Condition and the General Conditions, is to acquire all of the
outstanding Notes in order to effectuate the Business Unit Sales. See Item 9,
"Conditions to the Offer."
The purpose of the Solicitation and the Proposed Amendments is to eliminate
substantially all of the covenants contained in the Indenture, and, together
with the Offer, to permit the Company to effectuate the Business Unit Sales.
If the Requisite Consents are not obtained with respect to the Notes, the
covenants currently contained in the Indenture will continue to bind the
Company. In such event, the Company may, among other things, elect to exercise
its rights under Article Thirteen of the Indenture to defease the Notes, or
may engage in asset sales and comply with Section 1015 of the Indenture
governing sales of assets in order to carry out the Business Unit Sales.
The Company expressly reserves the absolute right, in its sole discretion,
from time to time to purchase any Notes after the Tender Offer Expiration
Date, through open market or privately negotiated transactions, one or more
additional tender or exchange offers or otherwise on terms that may differ
materially from the terms of the Offer.
4.CERTAIN INFORMATION CONCERNING THE COMPANY, DOMINION, DT ACQUISITION AND THE
NOTES.
The Company. The Company, a wholly-owned subsidiary of Dominion, is the
holding company for the United States operations of Dominion. The Company was
organized under the laws of the State of Delaware on June 17, 1976. In order
to effectuate the Business Unit Sales, the Company is offering to repurchase
all of the outstanding Notes and 2003 Notes (as defined). The principal
executive offices of the Company are located at 120 West 45th Street, 23rd
floor, New York, New York 10036-4003; the Company's telephone number is (212)
704-7600. For discussion of the Business Unit Sales and the 2003 Notes, see
Item 9, "Conditions to the Offer."
Dominion. Dominion is a manufacturer and supplier of textile and textile
related products with leading positions in selected markets and global
manufacturing capabilities. Dominion is one of the world's largest
manufacturer of high-end denim fabrics. It is also a supplier to the U.S.
disposable diaper market and has significant non-woven, spunbond multidenier
production capacity. The Company operates manufacturing plants in five
countries, including the United States, Canada and three European countries.
Dominion was incorporated under the law of Canada by letters of patent dated
December 9, 1922 for the purpose of acquiring the entire undertaking of its
predecessor company. The predecessor company had been incorporated in 1905 to
amalgamate
11
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the businesses of four cotton manufacturing companies. The principal executive
offices of Dominion are located at 1950 Sherbrooke Street West, Montreal,
Quebec, Canada H3H 1E7; Dominion's telephone number is (514) 969-6000.
Dominion's operations primarily consist of two distinct lines of business:
the Apparel Fabric Business and the Nonwovens Business. The "Apparel Fabric
Business" consists of the apparel fabrics textile group businesses of Dominion
conducted primarily through the Swift Textiles Canada division of Dominion,
six direct or indirect wholly-owned subsidiaries of Dominion (being the
Company, Swift Textiles, Inc., a Delaware corporation, Dominion Textile (Asia)
Pte. Ltd., a company organized under the laws of Singapore, Swift Textiles
(Far East) Ltd., a company organized under the laws of Hong Kong, Dominion
Textile International B.V., a company organized under the laws of the
Netherlands, and Klopman International S.r.L., a company organized under the
laws of Italy) and Swift Textiles Europe Ltd., a company organized under the
laws of the Republic of Ireland. The "Nonwovens Business" consists of the
nonwovens group businesses of Dominion conducted primarily through the
Dominion Industrial Fabrics Company division ("DIFCO") of Dominion, two
indirect, wholly-owned subsidiaries of Dominion (being Poly-Bond Inc., a
Delaware corporation, and Nordlys S.A., a company organized under the laws of
the Republic of France) and the Dominion Nonwoven (South America) Argentinean
joint venture.
DT Acquisition. DT Acquisition Inc. is an affiliate of Polymer Group, Inc.,
a Delaware corporation. DT Acquisition was organized under the laws of Canada
on October 21, 1997 for the purpose of acquiring control of Dominion. DT
Acquisition acquired control of Dominion in the Dominion Tender Offer on
December 19, 1997. The principal executive offices of DT Acquisition are
located at Suite 3000, Aetna Tower, P.O. Box 270, Toronto-Dominion Centre,
Toronto, Canada M5K IN2.
The Notes. The Notes were issued by the Company on April 1, 1996 in the
aggregate principal amount of $125,000,000. The Notes, which are unsecured
senior obligations of the Company and mature on April 1, 2006, were issued
under the Indenture. Pursuant to the Indenture, the Notes may be redeemed on
or after April 1, 2001 at a price equal to 104.625% of the principal amount
outstanding. A form of the Indenture was filed as an exhibit to the Company's
registration statements on Form F-10 (Reg. No. 333-01764) and Form F-3 (Reg.
No. 333-01764-01).
5.PROPOSED AMENDMENTS.
This section sets forth a brief description of the Proposed Amendments to
the Indenture for which Consents are being sought pursuant to the
Solicitation. The summaries of provisions of the Indenture set forth below are
qualified in their entirety by reference to the full and complete terms
contained in the Indenture. Capitalized terms appearing below but not defined
in this Statement have the meanings assigned to such terms in the Indenture.
Deletion of Covenants in the Indenture. The Proposed Amendments would delete
in their entirety the following covenants and references thereto from the
Indenture as well as the events of default related to such covenants:
SECTION 801 . Parent Guarantor and Issuer May Consolidate, Etc. and Purchases
of Assets Only on Certain Terms. This provision limits the
terms under which the Parent Guarantor or the Company may
consolidate or merge with or into another entity, sell or
lease substantially all of its assets, or acquire capital
stock or other ownership interests in other entities.
SECTION 802 . Successor Substituted. This provision requires the successor
parent or successor issuer following any consolidation with or
merger into the Parent Guarantor or the Company to be
substituted for the Parent Guarantor or the Company, as the
case may be, under the Indenture with the same effect as if
such person had been named as the Parent Guarantor or the
Company therein.
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SECTION1004 . Existence. This provision currently requires the Company and the
Parent Guarantor to preserve and keep in effect its existence,
rights (charter and statutory) and franchises.
SECTION1005 . Maintenance of Properties. This provision currently requires the
Parent Guarantor to maintain all material properties used in
its business or the business of any Restricted Subsidiary.
SECTION1006 . Payment of Taxes and Other Claims. This provision currently
requires the Parent Guarantor to pay all taxes, assessments
and governmental charges levied against it or any Restricted
Subsidiary.
SECTION1007 . Maintenance of Insurance. This provision currently requires the
Parent Guarantor and each Restricted Subsidiary to keep all
properties insured at commercial standards and to reinvest
insurance proceeds from such policies.
SECTION1008 . Limitation on Consolidated Debt. This provision currently
restricts the ability of the Parent Guarantor and its
Restricted Subsidiaries to incur certain Indebtedness.
SECTION1009 . Limitation on Debt and Preferred Stock of Restricted
Subsidiaries. This provision currently restricts the ability
of the Parent Guarantor and its Restricted Subsidiaries to
issue Preferred Stock or to incur certain other Indebtedness.
SECTION1010 . Limitation on Restricted Payments. This provision currently
restricts the ability of the Parent Guarantor and its
Restricted Subsidiaries to make certain Restricted Payments,
including (i) dividends or distributions in respect of any
shares of Capital Stock of the Parent Guarantor or of any
Restricted Subsidiary, (ii) purchases, redemptions, other
acquisitions or retirements of Capital Stock of the Parent
Guarantor, any Restricted Subsidiary or any Related Person,
including options, warrants or other rights to acquire such
Capital Stock, held by persons other than the Company or any
Wholly-Owned Restricted Subsidiary, (iii) Investments in or
payments on guarantees of any obligations of Unrestricted
Subsidiaries or Affiliates or Related Persons of the Parent
Guarantor, and (iv) voluntary or optional principal payments,
repurchases, redemptions, defeasances, retirements or other
acquisitions of any subordinated indebtedness of the Parent
Guarantor or the Company.
SECTION1011 . Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries. This provision currently restricts
the Parent Guarantor and its Significant Restricted
Subsidiaries from permitting to exist certain encumbrances or
restrictions on the ability of any Significant Restricted
Subsidiary to (i) pay dividends or make any other
distributions on its Capital Stock or pay any Debt owed to the
Parent Guarantor or any Restricted Subsidiary of the Parent
Guarantor, (ii) make loans or advances to the Parent Guarantor
or any Restricted Subsidiary of the Parent Guarantor, and
(iii) transfer any property or assets to the Parent Guarantor
or any Restricted Subsidiary of the Parent Guarantor, except
in certain circumstances.
SECTION1012 . Limitation on Liens. This provision currently restricts the
ability of the Parent Guarantor and its Restricted
Subsidiaries to create, incur, affirm or suffer to exist any
Lien upon any of its property or assets, except in certain
circumstances.
SECTION1013 . Limitation on Sale and Leaseback Transactions. This provision
currently restricts the ability of the Parent Guarantor and
its Restricted Subsidiaries to enter into Sale and Leaseback
transactions, except in certain circumstances.
SECTION1014 . Limitation on Transactions with Affiliates and Related Persons.
This provision currently restricts the ability of the Parent
Guarantor and its Restricted Subsidiaries to engage in certain
transactions with Affiliates or Related Persons of the Parent
Guarantor.
SECTION1015 . Limitation on Certain Sales of Capital Stock of Restricted
Subsidiaries and Certain Assets. This provision currently
restricts the ability of the Parent Guarantor and its
Restricted Subsidiaries to make Asset Dispositions, except in
certain circumstances.
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SECTION1016 . Limitation on Issuances and Sales of Capital Stock of Wholly
Owned Restricted Subsidiaries. This provision currently
restricts the ability of the Parent Guarantor and its
Restricted Subsidiaries to issue, transfer, convey, sell or
otherwise dispose of any Shares of Capital Stock of any
Restricted Subsidiary (except to the Parent Guarantor or a
Wholly- Owned Subsidiary of the Parent Guarantor), except in
certain circumstances.
SECTION1018 . Ownership of Issuer. This provision currently requires the
Company to remain a wholly-owned subsidiary of the Parent
Guarantor.
SECTION1019 . Payment of Additional Amounts. This provision currently requires
the Parent Guarantor to make all payments under or with
respect to the Notes free and clear of any present or future
tax, duty, levy, impost, assessment or other governmental
charge imposed or levied by the Government of Canada or of any
province or territory thereof. Further, if the Parent
Guarantor is required to withhold or deduct any Canadian taxes
from any payment made under or with respect to the Notes, it
must pay such amount as may be necessary so that the net
amount received by each Holder will not be less than the
amount received if such Canadian taxes had not been withheld
or deducted.
SECTION1020 . Provision of Financial Information. This provision currently
requires the Parent Guarantor to timely file with the
Securities and Exchange Commission and to provide to Holders
and the Trustee periodic and annual reports required to be
filed under the Exchange Act, whether or not the Parent
Guarantor is actually subject to those reporting requirements.
Deletion of Definitions. The Proposed Amendments would delete definitions
from the Indenture when all references to such definitions would be eliminated
as a result of the foregoing.
The Proposed Amendments with respect to the Indenture constitute a single
proposal and a consenting Holder must consent to the Proposed Amendments as an
entirety and may not consent selectively with respect to certain of the
Proposed Amendments.
The Supplemental Indenture relating to the Indenture will be executed by the
Company, the Parent Guarantor and the Trustee on or promptly after the Consent
Expiration Date, but the modification or elimination of the covenants set
forth in the Supplemental Indenture will not become operative unless and until
the Notes are accepted for purchase by the Company pursuant to the Offer,
which is expected to occur promptly after the Tender Offer Expiration Date. If
the Requisite Consents are not obtained with respect to the Notes on or prior
to the Consent Expiration Date, no Supplemental Indenture relating to the
Indenture will be executed or become operative.
IF THE PROPOSED AMENDMENTS ARE ADOPTED AND THE OFFER IS CONSUMMATED, NOTES
THAT ARE NOT TENDERED, OR THAT ARE NOT ACCEPTED FOR PURCHASE PURSUANT TO THE
OFFER, WILL REMAIN OUTSTANDING, BUT WILL BE SUBJECT TO THE TERMS OF THE
INDENTURE AS MODIFIED BY THE SUPPLEMENTAL INDENTURE.
Pursuant to the terms of the Indenture, the Proposed Amendments require the
written consent of the Holders of not less than a majority in aggregate
principal amount of the then outstanding Notes issued pursuant to the
Indenture, excluding for such purposes any Notes owned at the time by the
Company, any obligor of the Notes and any of their affiliates (the "Requisite
Consents").
The valid tender by a Holder of Notes pursuant to the Offer on or prior to
the Consent Expiration Date will be deemed to constitute the giving of a
Consent by such Holder to the Proposed Amendments with respect to such Notes.
The Company is not soliciting and will not accept Consents from Holders who
are not tendering their Notes pursuant to the Offer.
6.ACCEPTANCE FOR PAYMENT AND PAYMENT FOR NOTES; ACCEPTANCE OF CONSENTS.
Upon the terms and subject to the conditions of the Offer (including if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment) and applicable law, the Company will purchase,
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by accepting for payment, and will pay for, all Notes validly tendered (and
not withdrawn) pursuant to the Offer on or prior to the Tender Offer
Expiration Date, such payment to be made by the deposit of the Tender Offer
Consideration and Consent Payment, as applicable, in immediately available
funds by the Company on the Payment Date with the Depositary. The Depositary
will act as agent for tendering Holders for the purpose of receiving payment
from the Company and transmitting such payment to tendering Holders. Under no
circumstances will interest on the Tender Offer Consideration and the Consent
Payment, as applicable, be paid by the Company by reason of any delay on
behalf of the Depositary in making such payment.
The Company expressly reserves the right, in its sole discretion and subject
to Rule 14e-l(c) under the Exchange Act, to delay acceptance for payment of or
payment for Notes in order to comply, in whole or in part, with any applicable
law. See Item 9, "Conditions to the Offer." In all cases, payment by the
Depositary to Holders of the Tender Offer Consideration for Notes accepted for
purchase pursuant to the Offer or Consent Payments for Consents delivered on
or prior to the Consent Expiration Date will be made only after timely receipt
by the Depositary of (i) certificates representing such Notes or timely
confirmation of a book-entry transfer of such Notes into the Depositary's
account at DTC pursuant to the procedures set forth under Item 7, "Procedures
for Tendering Notes and Delivering Consents," (ii) a properly completed and
duly executed Consent and Letter of Transmittal (or manually signed facsimile
thereof) and (iii) any other documents required by the Consent and Letter of
Transmittal, as applicable.
For purposes of the Offer, validly tendered Notes (or defectively tendered
Notes for which the Company has waived such defect) will be deemed to have
been accepted for payment by the Company if, as and when the Company gives
oral or written notice thereof to the Depositary. For purposes of the
Solicitation, Consents delivered to the Depositary will be deemed to have been
accepted by the Company if, as and when (a) the Company and the Trustee
execute the Supplemental Indenture promptly after the Consent Expiration Date,
and (b) the Company has accepted the Notes for purchase pursuant to the Offer.
If any tendered Notes are not purchased pursuant to the Offer for any
reason, or certificates are submitted evidencing more Notes than are tendered,
such Notes not purchased will be returned, without expense, to the tendering
Holder (or, in the case of Notes tendered by book-entry transfer, such Notes
will be credited to the account maintained at DTC from which such Notes were
delivered), promptly following the Tender Offer Expiration Date or termination
of the Offer.
The Company reserves the right to transfer or assign, in whole at any time
or in part from time to time, to one or more of its affiliates, the right to
purchase Notes tendered pursuant to the Offer, but any such transfer or
assignment will not relieve the Company of its obligations under the Offer or
prejudice the rights of tendering Holders to receive the Tender Offer
Consideration or Consent Payment, as applicable, pursuant to the Offer and
Solicitation.
It is a condition precedent to the Company's obligation to purchase Notes
pursuant to the Offer that, among other conditions, the Supplemental Indenture
relating to the Indenture will have been executed. It is a condition
subsequent to the effectiveness of the Proposed Amendments contained in the
Supplemental Indenture that the Company accept for payment all Notes validly
tendered (and not withdrawn) pursuant to the Offer (in which event, the
Company will be obligated to promptly pay the Tender Offer Consideration and
the Consent Payment, as applicable, for the Notes so accepted). See Item 9,
"Conditions to the Offer."
7.PROCEDURES FOR TENDERING NOTES AND DELIVERING CONSENTS.
Holders will not be entitled to receive the Total Consideration unless they
BOTH tender their Notes pursuant to the Offer AND deliver Consents to the
Proposed Amendments with respect to such Notes on or prior to the Consent
Expiration Date. The tender of Notes pursuant to the Offer and in accordance
with the procedures described below will constitute (i) a tender of the Notes
and (ii) the delivery of a Consent by such Holder with respect to such Notes
(if such tender is on or prior to the Consent Expiration Date). On or prior to
the Consent
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Expiration Date, the Company is not soliciting and will not accept Consents to
the Proposed Amendments from Holders who are not tendering their Notes
pursuant to the Offer. Holders who tender after the Consent Expiration Date
will receive only the Tender Offer Consideration.
The method of delivery of Notes and Consents and Letters of Transmittal, any
required signature guarantees and all other required documents, including
delivery through DTC and any acceptance of an Agent's Message transmitted
through ATOP, is at the election and risk of the person tendering Notes and
delivering the Consent and Letter of Transmittal and, except as otherwise
provided in the Consent and Letter of Transmittal, delivery will be deemed
made only when actually received by the Depositary. If delivery is by mail, it
is suggested that the Holder use properly insured, registered mail with return
receipt requested, and that the mailing be made sufficiently in advance of the
Consent Expiration Date or Tender Offer Expiration Date, as applicable, to
permit delivery to the Depositary on or prior to such date.
Tender of and Consent for Notes. The tender by a Holder of Notes and
delivery of Consents (and subsequent acceptance of such tender by the Company)
pursuant to one of the procedures set forth below will constitute a binding
agreement between such Holder and the Company in accordance with the terms and
subject to the conditions set forth herein and in the Consent and Letter of
Transmittal.
Only registered Holders are authorized to tender their Notes and deliver
their Consent to the Proposed Amendments. The procedures by which Notes may be
tendered and Consents given by beneficial owners who are not registered
Holders will depend upon the manner in which the Notes are held.
Tender of Notes Held in Physical Form. To effectively tender Notes held in
physical form (and deliver the related Consents), a properly completed Consent
and Letter of Transmittal (or a manually signed facsimile thereof) duly
executed by the Holder thereof, and any other documents required by the
Consent and Letter of Transmittal, must be received by the Depositary at its
address set forth on the back cover of this Statement on or prior to the
Consent Expiration Date or the Tender Offer Expiration Date, as applicable. A
tender of Notes may also be effected through the deposit of Notes with DTC
combined with book-entry delivery as described below; however, a completed and
executed Consent and Letter of Transmittal is still required to effectuate the
valid delivery of related Consents with respect to such Notes. After the
Consent Expiration Date, a tendering Holder may comply with the guaranteed
delivery procedure set forth below if such Holder is unable to tender Notes on
or prior to the Tender Offer Expiration Date. The guaranteed delivery
procedure may not be used to tender Notes or deliver Consents on or prior to
the Consent Expiration Date. In order to receive both the Consent Payment and
the Tender Offer Consideration, the Notes and the Consent and Letter of
Transmittal must be received by the Depositary on or prior to the Consent
Expiration Date. Consents and Letters of Transmittal and Notes should be sent
only to the Depositary and should not be sent to the Company, the Information
Agent, the Dealer Manager or the Trustee.
Tender of Notes Held Through DTC. To effectively tender Notes (and deliver
the related Consents) that are held through DTC, DTC participants should
either (i) properly complete and duly execute the Consent and Letter of
Transmittal (or a manually signed facsimile thereof), together with any other
documents required by the Consent and Letter of Transmittal, and mail or
deliver the Consent and Letter of Transmittal and such other documents to the
Depositary, or (ii) electronically transmit their acceptance through ATOP (and
thereby tender Notes), for which the transaction will be eligible, followed by
a properly completed and duly executed Consent and Letter of Transmittal
delivered to the Depositary to effectuate the delivery of the related Consent.
Upon receipt of such Holder's acceptance through ATOP, DTC will then edit and
verify the acceptance and send an Agent's Message (as defined below) to the
Depositary for its acceptance. Delivery of tendered Notes must be made to the
Depositary pursuant to the book-entry delivery procedures or the tendering DTC
participant must comply with the guaranteed delivery procedures, in each case
as set forth below, but such guaranteed delivery procedures may only be used
for tenders of Notes after the Consent Expiration Date.
Except as provided below, unless the Notes being tendered are deposited with
the Depositary on or prior to the Consent Expiration Date or on or prior to
the Tender Offer Expiration Date, as the case may be (accompanied
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by a properly completed and duly executed Consent and Letter of Transmittal,
as applicable), the Company may, at its option, treat such tender as defective
for purposes of the right to receive the Total Consideration or Tender Offer
Consideration, as applicable. Payment for the Notes will be made only against
deposit of the tendered Notes and delivery of any other required documents.
Book-Entry Delivery Procedures. The Depositary will establish accounts with
respect to the Notes at DTC for purposes of the Offer within two business days
after the date of this Statement, and any financial institution that is a
participant in DTC may make book-entry delivery of the Notes and Consents by
causing DTC to transfer such Notes into the Depositary's account in accordance
with DTC's procedures for such transfer. However, although delivery of Notes
and Consents may be effected through book-entry transfer into the Depository's
account at DTC, the Consent and Letter of Transmittal (or a manually signed
facsimile thereof), with any required signature guarantees or an Agent's
Message (as defined below) in connection with a book-entry transfer, and any
other required documents, must, in any case, be transmitted to and received by
the Depositary at one or more of its addresses set forth on the back cover of
this Statement on or prior to the Consent Expiration Date or the Tender Offer
Expiration Date, as the case may be, or, to be validly tendered after the
Consent Expiration Date but on or prior to the Tender Offer Expiration Date,
the guaranteed delivery procedure described below must be complied with.
Holders who tender Notes after the Consent Expiration Date will only receive
the Tender Offer Consideration and will not be entitled to the Consent
Payment. Delivery of documents to DTC does not constitute delivery to the
Depositary. The confirmation of a book-entry transfer into the Depositary's
account at DTC as described above is referred to herein as a "Book-Entry
Confirmation."
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Depositary and forming a part of the Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from each
participant in DTC tendering the Notes and delivering the Consents and that
such participants have received the Consent and Letter of Transmittal and
agree to be bound by the terms of the Consent and Letter of Transmittal and
the Company may enforce such agreement against such participants.
In order to validly deliver a Consent with respect to Notes transferred
pursuant to ATOP, a DTC participant using ATOP must also properly complete and
duly execute the Consent and Letter of Transmittal and deliver it to the
Depositary. Pursuant to authority granted by DTC, any DTC participant which
has Notes credited to its DTC account at any time (and thereby held of record
by DTC's nominee) may directly provide a Consent to the Proposed Amendments as
though it were the registered Holder by so completing, executing and
delivering the Consent and Letter of Transmittal.
Signature Guarantees. Signatures on all Consents and Letters of Transmittal
must be guaranteed by a recognized participant in the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Program or the Stock Exchange Medallion Program (each a "Medallion Signature
Guarantor"), unless the Notes tendered and Consents delivered thereby are
tendered and delivered (i) by a registered Holder of Notes (or by a
participant in DTC whose name appears on a security position listing as the
owner of such Notes) who has not completed any of the boxes entitled "Special
Payment Instructions" or "Special Delivery Instructions" on the Consent and
Letter of Transmittal, or (ii) for the account of a member firm of a
registered national securities exchange, a member of the National Association
of Securities Dealers, Inc. ("NASD") or a commercial bank or trust company
having an office or correspondent in the United States (each of the foregoing
being referred to as an "Eligible Institution"). See Instruction 1 of the
Consent and Letter of Transmittal. If the Notes are registered in the name of
a person other than the signer of the Consent and Letter of Transmittal or if
Notes not accepted for payment or not tendered are to be returned to a person
other than the registered Holder, then the signature on the Consent and Letter
of Transmittal accompanying the tendered Notes must be Guaranteed by a
Medallion Signature Guarantor as described above. See Instructions 1, 5 and 6
of the Consent and Letter of Transmittal.
Guaranteed Delivery. If a registered Holder desires to tender Notes pursuant
to the Offer after the Consent Expiration Date and (a) certificates
representing such Notes are not immediately available, (b) time will not
permit such Holder's Consent and Letter of Transmittal, certificates
representing such Notes and all other
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required documents to reach the Depositary on or prior to the Tender Offer
Expiration Date, or (c) the procedures for book-entry transfer (including
delivery of an Agent's Message) cannot be completed on or prior to the Tender
Offer Expiration Date, such Holder may nevertheless tender such Notes with the
effect that such tender will be deemed to have been received on or prior to
the Tender Offer Expiration Date if all the following conditions are
satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company herewith, or an
Agent's Message with respect to guaranteed delivery that is accepted by the
Company, is received by the Depositary on or prior to the Tender Offer
Expiration Date as provided below; and
(iii) the certificates for the tendered Notes, in proper form for
transfer (or a Book-Entry Confirmation of the transfer of such Notes into
the Depositary's account at DTC as described above), together with a
Consent and Letter of Transmittal (or manually signed facsimile thereof)
properly completed and duly executed, with any signature guarantees and any
other documents required by the Consent and Letter of Transmittal or a
properly transmitted Agent's Message, are received by the Depositary within
three business days after the date of execution of the Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be sent by hand delivery, facsimile
transmission or mail to the Depositary and must include a guarantee by an
Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE COMPANY BY REASON OF ANY
DELAY IN MAKING PAYMENT TO ANY PERSON USING THE GUARANTEED DELIVERY
PROCEDURES. THE TENDER OFFER CONSIDERATION FOR NOTES TENDERED PURSUANT TO THE
GUARANTEED DELIVERY PROCEDURES WILL BE THE SAME AS FOR NOTES DELIVERED TO THE
DEPOSITARY AFTER THE CONSENT EXPIRATION DATE AND ON OR PRIOR TO THE TENDER
OFFER EXPIRATION DATE, EVEN IF THE NOTES TO BE DELIVERED PURSUANT TO THE
GUARANTEED DELIVERY PROCEDURES ARE NOT SO DELIVERED TO THE DEPOSITARY, AND
THEREFORE PAYMENT BY THE DEPOSITARY ON ACCOUNT OF SUCH NOTES IS NOT MADE,
UNTIL AFTER THE PAYMENT DATE. HOLDERS SHOULD BE AWARE THAT, ON OR PRIOR TO THE
CONSENT EXPIRATION DATE, TENDERS OF NOTES AND THE RELATED CONSENTS CANNOT BE
DELIVERED USING THE GUARANTEED DELIVERY PROCESS AND THAT USE OF THE GUARANTEED
DELIVERY PROCESS COULD RESULT IN A TENDER OF NOTES AND THE RELATED CONSENT
BEING DEFECTIVE.
Holders who tender Notes after the Consent Expiration Date will only receive
the Tender Offer Consideration and will not be entitled to the Consent
Payment. Notwithstanding any other provision hereof, payment of the Tender
Offer Consideration for Notes tendered and accepted for payment pursuant to
the Offer will, in all cases, be made only after receipt by the Depositary of
the tendered Notes (or Book-Entry Confirmation of the transfer of such Notes
into the Depositary's account at DTC as described above), and a Consent and
Letter of Transmittal (or manually signed facsimile thereof) with respect to
such Notes, properly completed and duly executed, with any signature
guarantees and any other documents required by the Consent and Letter of
Transmittal, or a properly transmitted Agent's Message.
Backup U.S. Federal Income Tax Withholding. To prevent backup U.S. federal
income tax withholding, each tendering Holder of Notes must provide the
Depositary with such Holder's correct taxpayer identification number and
certify that such Holder is not subject to backup U.S. federal income tax
withholding by completing the Substitute Form W-9 included in the Consent and
Letter of Transmittal. See Item 10, "Certain U.S. Federal Income Tax
Consequences."
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tendered Notes
or delivery of Consents pursuant to any of the procedures described above will
be determined by the Company in the Company's sole discretion (whose
determination shall be final and binding). The Company expressly reserves the
absolute right, in its sole discretion, subject to applicable law, to reject
any or all tenders of any Notes or delivery of Consents determined by it not
to be in proper form or, in the case of Notes, if the acceptance for payment
of, or payment for, such Notes may, in the opinion of the
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Company's counsel, be unlawful. The Company also reserves the absolute right,
in its sole discretion, subject to applicable law, to waive or amend any of
the conditions of the Offer or the Solicitation or to waive any defect or
irregularity in any tender with respect to Notes or delivery of Consents of
any particular Holder, whether or not similar defects or irregularities are
waived in the case of other Holders. The Company's interpretation of the terms
and conditions of the Offer and Solicitation (including the Consent and Letter
of Transmittal and the Instructions thereto) will be final and binding.
Neither the Company, the Depositary, the Dealer Manager, the Information
Agent, the Trustee or any other person will be under any duty to give
notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification. If the Company waives its
right to reject a defective tender of Notes, the Holder will be entitled to
the Tender Offer Consideration and, if applicable, the Consent Payment.
8.WITHDRAWAL OF TENDERS AND REVOCATION OF CONSENTS.
Tenders of Notes may be withdrawn at any time prior to the Tender Offer
Expiration Date. Consents may be revoked at any time on or prior to the
Consent Expiration Date. A valid withdrawal of tendered Notes effected on or
prior to the Consent Expiration Date will constitute the concurrent valid
revocation of such Holder's related Consent. Consents may not be revoked after
the Consent Expiration Date except in the limited circumstances described
below. In order for a Holder to revoke a Consent, such Holder must withdraw
the related tendered Notes. Tenders of Notes may be validly withdrawn if the
Offer is terminated without any Notes being purchased thereunder. In the event
of a termination of the Offer, the Notes tendered pursuant to the Offer will
be promptly returned to the tendering Holder and the Supplemental Indenture
will not become operative. If the Solicitation is amended on or prior to the
Consent Expiration Date in a manner determined by the Company to constitute a
material adverse change to the Holders of the Notes, the Company promptly will
disclose such amendment and, if necessary, extend the Solicitation for such
Notes for a period deemed by the Company to be adequate to permit Holders of
the Notes to withdraw their Notes and revoke their Consents. In addition, if
the consideration to be paid in the Offer is increased or decreased or the
principal amount of Notes subject to the Offer is decreased, the Offer will
remain open at least 10 business days from the date the Company first gives
notice to Holders, by public announcement or otherwise, of such increase or
decrease.
On or prior to the Consent Expiration Date, and in the limited circumstances
described above for a withdrawal of a tender of Notes (and the concurrent
revocation of Consents, as the case may be) to be effective, a written or
facsimile transmission notice of withdrawal must be received by the Depositary
on or prior to the Consent Expiration Date at its address set forth on the
back cover of this Statement. Any such notice of withdrawal must (i) specify
the name of the person who tendered the Notes to be withdrawn, (ii) contain
the description of the Notes to be withdrawn and identify the certificate
number or numbers shown on the particular certificates evidencing such Notes
(unless such Notes were tendered by book-entry transfer) and the aggregate
principal amount represented by such Notes, and (iii) be signed by the Holder
of such Notes in the same manner as the original signature on the Consent and
Letter of Transmittal by which such Notes were tendered (including any
required signature Guarantees), or be accompanied by (x) documents of transfer
sufficient to have the Trustee register the transfer of the Notes into the
name of the person withdrawing such Notes and (y) a properly completed
irrevocable proxy authorizing such person to effect such withdrawal on behalf
of such Holder. If the Notes to be withdrawn have been delivered or otherwise
identified to the Depositary, a signed notice of withdrawal is effective
immediately upon written or facsimile notice of such withdrawal even if
physical release is not yet effected.
Any valid revocation of Consents will automatically render the prior tender
of the Notes to which such Consents relate defective and the Company will have
the right, which it may waive, to reject such tender as invalid. Any permitted
withdrawal of Notes and revocation of Consents may not be rescinded, and any
Notes properly withdrawn will thereafter be deemed not validly tendered and
any Consents revoked will be deemed not validly delivered for purposes of the
Offer; provided, however, that withdrawn Notes may be re-tendered and revoked
Consents may be re-delivered by again following one of the appropriate
procedures described herein at any time on or prior to the Consent Expiration
Date. After the Consent Expiration Date, Consents may not be revoked, except
in the limited circumstances described above.
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If the Company extends the Offer or is delayed in its acceptance for
purchase of Notes or is unable to purchase Notes pursuant to the Offer for any
reason, then, without prejudice to the Company's rights hereunder, tendered
Notes may be retained by the Depositary on behalf of the Company and may not
be withdrawn (subject to Rule 14e-1(c) under the Exchange Act, which requires
that an offeror pay the consideration offered or return the securities
deposited by or on behalf of the investor promptly after the termination or
withdrawal of a tender offer), except as otherwise provided in this section.
ALL QUESTIONS AS TO THE VALIDITY, FORM AND ELIGIBILITY (INCLUDING TIME OF
RECEIPT) OF NOTICES OF WITHDRAWAL AND REVOCATION OF CONSENTS WILL BE
DETERMINED BY THE COMPANY, IN THE COMPANY'S SOLE DISCRETION (WHOSE
DETERMINATION SHALL BE FINAL AND BINDING). NEITHER THE COMPANY, THE
DEPOSITARY, THE DEALER MANAGER, THE INFORMATION AGENT, THE TRUSTEE OR ANY
OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECTS OR
IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL OR REVOCATION OF CONSENTS, OR INCUR
ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION.
9.CONDITIONS TO THE OFFER.
Notwithstanding any other provisions of the Offer and the Solicitation and
in addition to (and not in limitation of) the Company's rights to extend
and/or amend the Offer and the Solicitation, the Company shall not be required
to accept for payment, purchase or pay for, and may delay the acceptance for
payment of, or payment for, any tendered Notes, in each event subject to Rule
14e-1(c) under the Exchange Act, and may terminate the Offer and the
Solicitation, if the Supplemental Indenture Condition, the Business Unit Sales
Condition, the 2003 Tender Condition or the General Conditions shall not have
been satisfied.
The "Supplemental Indenture Condition" shall mean receipt of the Requisite
Consents with respect to the Proposed Amendments and the execution of the
Supplemental Indenture providing for the Proposed Amendments.
The "Business Unit Sales Condition" shall mean the consummation of (A) the
acquisition of the Apparel Fabric Business of Dominion (including certain
associated liabilities) by Galey & Lord Incorporated, a Delaware corporation
("GLI"), and (B) the acquisition of the Nonwovens Business of Dominion
(including certain associated liabilities) by Polymer Group, Inc., a Delaware
corporation ("PGI"), in each case as contemplated in the Purchase Agreement
dated October 27, 1997 among PGI, DT Acquisition and GLI (together, the
"Business Unit Sales"). PGI owns approximately 68% of DT Acquisition. The
InterTech Group, Inc., an affiliate of PGI, owns approximately 32% of DT
Acquisition.
The "2003 Tender Condition" shall mean the successful completion of both the
tender offer and the consent solicitation with respect to the Company's 8 7/8%
Guaranteed Senior Notes due November 1, 2003 (the "2003 Notes"), which are
guaranteed by the Parent Guarantor and issued under the Indenture, dated as of
November 1, 1993, among the Company, the Parent Guarantor and First Union
National Bank, as Trustee. In order to consummate the Business Unit Sales, the
Company is offering to repurchase all of the outstanding 2003 Notes in
addition to the Offer with respect to the Notes set forth herein.
Consequently, the Offer is conditioned on the concurrent completion of the
tender offer and consent solicitation with respect to the 2003 Notes.
The "General Conditions"' shall mean the conditions set forth below in
paragraphs (i) through (v). The General Conditions shall be deemed to have
been satisfied or waived unless any of the following conditions shall occur on
or prior to the Tender Offer Expiration Date.
(i) There shall have been instituted, threatened or be pending any action
or proceeding (or there shall have been any material adverse development in
any action or proceeding currently instituted, threatened or pending)
before or by any court, governmental, regulatory or administrative agency
or instrumentality, or by any other person, in connection with the Offer or
the Solicitation that is, or is reasonably likely to be, in the sole
judgment of the Company, materially adverse to the business, operations,
properties, condition (financial or otherwise), assets, liabilities or
prospects of the Company and its subsidiaries, taken as a whole, or which
would or might, in the sole judgment of the Company, prohibit, prevent,
restrict or delay consummation of the Offer or the Solicitation;
20
<PAGE>
(ii) An order, statute, rule, regulation, executive order, stay, decree,
judgment or injunction shall have been proposed, enacted, entered, issued,
promulgated, enforced or deemed applicable by any court or governmental,
regulatory or administrative agency or instrumentality that, in the sole
judgment of the Company, would or might prohibit, prevent, restrict or
delay consummation of the Offer or the Solicitation or that is, or is
reasonably likely to be, in the sole judgment of the Company, materially
adverse to the business, operations, properties, condition (financial or
otherwise), assets, liabilities or prospects of the Company and its
subsidiaries, taken as a whole, or Dominion;
(iii) There shall have occurred or be likely to occur any event affecting
the business or financial affairs of the Company or Dominion that, in the
sole judgment of the Company, would or might prohibit, prevent, restrict or
delay consummation of the Offer or the Solicitation;
(iv) The Trustee under the Indenture shall have objected in any respect
to, or taken action that could, in the sole judgment of the Company,
adversely affect the consummation of the Offer or the Solicitation or the
Company's ability to cause the Proposed Amendments to become operative or
shall have taken any action that challenges the validity or effectiveness
of the Supplemental Indenture or the procedures used by the Company in
soliciting the Consents (including the form thereof) or in the making of
the Offer or the Solicitation or the acceptance of, or payment for, the
Notes or the Consents; or
(v) There shall have occurred (1) any general suspension of, shortening
of hours for, or limitation on prices for, trading in securities in the
United States, Canadian, European or other major securities or financial
markets, (2) any significant adverse change in the price of the Notes or
any publicly traded securities of the Company or any of its affiliates in
the United States, Canadian, European or other major securities or
financial markets, (3) a material impairment in the trading market for debt
securities, (4) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, Canada, Europe or other
major financial markets, (5) any limitation (whether or not mandatory) by
any government or governmental, administrative or regulatory authority or
agency, domestic or foreign, or other event that, in the reasonable
judgment of the Company, might affect the extension of credit by banks or
other lending institutions, (6) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or Canada, or (7) in the case of any
of the foregoing existing on the date hereof, a material acceleration or
worsening thereof.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company, in its sole discretion, regardless of the
circumstances giving rise to any such condition (including any action or
inaction by the Company) and may be waived by the Company, in whole or in
part, at any time and from time to time, in the sole discretion of the
Company, whether any other condition of the Offer and the Solicitation is also
waived. The failure by the Company at any time to exercise any of the
foregoing rights will not be deemed a waiver of any other right and each right
will be deemed an ongoing right which may be asserted at any time and from
time to time.
10.CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a general summary of the principal United States federal
income tax consequences to a Holder of (i) the Offer and the Solicitation to
Holders of Notes and (ii) the retention of Notes and the adoption of the
Proposed Amendments. This summary is based upon current provisions of the
United States Internal Revenue Code of 1986, as amended (the "Code"),
applicable United States Treasury regulations promulgated thereunder, judicial
authority and current Internal Revenue Service ("IRS") rulings and practice,
all of which are subject to change, possibly on a retroactive basis. The tax
treatment of a Holder of Notes may vary depending upon such Holder's
particular situation, and certain Holders (including insurance companies, tax
exempt organizations, financial institutions, brokers, dealers, nonresident
aliens, foreign corporations, foreign partnerships or foreign estates or
trusts) might be subject to special rules not discussed below. This discussion
assumes that Notes are held as capital assets and is directed to Holders who
are United States persons. As used herein, a "Holder" means a beneficial owner
of a Note that is for United States federal income tax purposes (i) a citizen
or resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or
21
<PAGE>
under the laws of the United States or of any political subdivision thereof,
(iii) an estate whose income is subject to United States federal income tax
regardless of its source, (iv) a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States persons have the authority to control all
substantial decisions of the trust, or (v) any other person whose income or
gain in respect of a Note is effectively connected with the conduct of a
United States trade or business. No information is provided herein with
respect to foreign, state or local tax laws or estate and gift tax
considerations. Each Holder is urged to consult its own tax advisor regarding
federal, state, local, foreign and any other tax consequences of tendering the
Notes pursuant to the Offer or retaining the Notes, especially in light of the
Holder's particular circumstances.
This summary is based in part on certain recently finalized United States
Treasury regulations addressing the United States federal income tax treatment
of modifications of debt instruments (the "Regulations"). The Regulations are
effective for modifications occurring on or after September 24, 1996 and may
be relied upon for modifications occurring after December 2, 1992. Therefore,
the Regulations will apply to the Offer and the Solicitation. No assurances
can be given that the treatment described herein of the Proposed Amendments or
the cash payments pursuant to the Offer will be accepted by the IRS or, if
challenged, by a court.
Sale of Notes Pursuant to the Offer. In general, a Holder who receives cash
in exchange for Notes pursuant to the Offer will recognize gain or loss for
United States federal income tax purposes equal to the difference between (i)
the amount of cash received (other than cash attributable to accrued interest,
which will be taxable as ordinary income) in exchange for such Notes, and (ii)
such Holder's adjusted tax basis in such Notes at the time of the sale. A
Holder's adjusted tax basis for Notes generally will be the price such Holder
paid for the Notes increased by original issue discount which was previously
included in income by the Holder (including any original issue discount
includible in the taxable year of the sale prior to the sale) and by market
discount to the extent such market discount was previously included in income
by the Holder (including any market discount included in the taxable year of
the sale prior to the sale) and reduced (but not below zero) by amortized
premium and any payments received by the Holder other than interest payments.
If the Consent Payment is treated as a separate fee for consenting to the
Proposed Amendments, it is possible that such amount would be taxable as
ordinary income to the Holder (rather than as sales proceeds, discussed
above).
Any gain or loss recognized on a sale of a Note pursuant to the Offer should
be capital gain or loss and will be long-term capital gain or loss if the
Holder has held the Note for more than eighteen months at the time of sale or
mid-term capital gain or loss if the Holder has held the Note for more than
twelve months, but less than eighteen months, at the time of sale. A Holder
who has acquired a Note with market discount generally will be required to
treat a portion of any gain on a sale of the Note as ordinary income to the
extent of the market discount accrued to the date of the disposition, less any
accrued market discount previously reported as ordinary income.
Retention of Notes; Adoption of Proposed Amendments. In the case of a Holder
who does not tender its Notes pursuant to the Offer, the adoption of the
Proposed Amendments should not cause a deemed exchange of the Notes under the
Regulations because the Proposed Amendments should not constitute a
significant modification to the terms of the Notes for federal income tax
purposes. Alternatively, even if the Proposed Amendments were to cause a
deemed exchange of the Notes for federal income tax purposes, a Holder who
does not tender its Notes pursuant to the Offer should not recognize gain or
loss on such deemed exchange since such deemed exchange should qualify as a
tax-free recapitalization; provided, however, that to the extent that such
Holder were deemed to receive new Notes with a principal amount in excess of
the principal amount of the Notes surrendered, gain would be recognized to the
extent of such excess. There can be no assurance, however, that the IRS will
not take a contrary view. If an exchange were deemed to have occurred and such
exchange did not qualify as a recapitalization, a Holder would recognize gain
or loss on such exchange and would have a new holding period for the Notes.
22
<PAGE>
In the event that the adoption of the Proposed Amendments causes a deemed
exchange (whether or not the deemed exchange qualifies as a tax-free
recapitalization) and the issue price of the new Notes is less than their
principal amount, the new Notes would generally have original issue discount
and a Holder of such new Note would generally be required to include such
original issue discount in income as it accrues (regardless of whether such
Holder is a cash or accrual basis taxpayer).
Backup Withholding and Information Reporting. In general, information
reporting requirements will apply to the payment of the gross proceeds of the
Offer to the Holders of Notes. Federal income tax law requires that a Holder
whose tendered Notes are accepted for payment must provide the Depositary (as
payor) with such Holder's correct taxpayer identification number ("TIN")
which, in the case of a Holder who is an individual, is his or her social
security number, and certain other information, or otherwise establish a basis
for exemption from backup withholding. Exempt Holders (including, among
others, all corporations and certain foreign individuals) are not subject to
these backup withholding and information reporting requirements.
If the Depositary is not provided with the correct TIN or an adequate basis
for exemption, the Holder may be subject to a penalty imposed by the IRS and
the gross proceeds of the Offer paid to the Holder may be subject to a 31%
backup withholding tax. If withholding results in an overpayment of taxes, a
refund or credit may be obtained, provided that the required information is
provided to the IRS.
To prevent backup withholding, each tendering Holder must complete the
Substitute Form W-9 provided in the Consent and Letter of Transmittal and
either (i) provide the Holder's correct TIN and certain other information
under penalties of perjury or (ii) provide an adequate basis for exemption.
11.THE DEALER MANAGER, THE INFORMATION AGENT AND THE DEPOSITARY.
Chase Securities Inc. has been engaged to act as Dealer Manager and
Solicitation Agent in connection with the Offer and the Solicitation (the
"Dealer Manager"). In such capacity, the Dealer Manager may contact Holders of
Notes regarding the Offer and the Solicitation and may request brokers,
dealers, commercial banks, trust companies and other nominees to forward this
Statement and related materials to beneficial owners of Notes.
The Company has agreed to indemnify the Dealer Manager against certain
liabilities, including certain liabilities under the federal securities laws.
The Dealer Manager and its affiliates have provided in the past, and are
currently providing other investment banking, commercial banking and financial
advisory services to PGI and its affiliates, including DT Acquisition. At any
given time, the Dealer Manager may trade the Notes of the Company for their
own accounts or for the accounts of customers and, accordingly, may hold a
long or short position in the Notes. Any Holder that has questions concerning
the terms of the Offer or the Solicitation may contact the Dealer Manager at
its address and telephone numbers set forth on the back cover of this
Statement.
MacKenzie Partners, Inc. has been appointed Information Agent (the
"Information Agent") for the Offer and the Solicitation. Questions and
requests for assistance or additional copies of this Statement, the Consent
and Letter of Transmittal or the Notice of Guaranteed Delivery may be directed
to the Information Agent at the address and telephone numbers set forth on the
back cover of this Statement. Holders of Notes may also contact their broker,
dealer, commercial bank or trust company for assistance concerning the Offer
and Solicitation.
Harris Trust Company of New York has been appointed as Depositary (the
"Depositary") for the Offer and the Solicitation. Consents and Letters of
Transmittal and all correspondence in connection with the Offer and the
Solicitation should be sent or delivered by each Holder or a beneficial
owner's broker, dealer, commercial bank, trust company or other nominee to the
Depositary at the addresses and telephone number set forth on the back cover
of this Statement. Any Holder or beneficial owner that has questions
concerning the procedures for tendering Notes or whose Notes have been
mutilated, lost, stolen or destroyed should contact the Depositary at the
addresses and telephone number set forth on the back cover of this Statement.
23
<PAGE>
12.FEES AND EXPENSES.
The Company will pay the Dealer Manager, the Information Agent and the
Depositary reasonable and customary fees for their services and will reimburse
them for their reasonable out-of-pocket expenses in connection therewith. The
Company will pay brokerage firms and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of this Statement and related materials to the beneficial
owners of Notes.
13.SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Company to pay the Total
Consideration in connection with the Offer and the Solicitation is estimated
to be approximately $140.4 million (assuming 100% of the outstanding principal
amount of Notes is tendered and accepted for payment). Such funds will be
obtained by the Company from the proceeds of the Business Unit Sales and/or
permitted borrowing through term and revolving commitments under the U.S. $600
million Credit Agreement, dated December 17, 1997, among the DT Acquisition,
various financial institutions, The Chase Manhattan Bank, as Administrative
Agent, and First Union National Bank, as Documentation Agent (the "DT Credit
Agreement"). In connection with the acquisition of the common shares and first
preferred shares of Dominion, DT Acquisition entered into the DT Credit
Agreement. Pursuant to the terms of the DT Credit Agreement, DT Acquisition is
permitted to borrow money for the purpose of defeasing the Notes under the
Indenture. In addition, following the amalgamation of DT Acquisition with
Dominion, DT Acquisition may borrow under the DT Credit Agreement for the
purpose of purchasing the Notes and the 2003 Notes. Consummation of the Offer
and the Solicitation is subject to satisfaction of the Supplemental Indenture
Condition, the Business Unit Sales Condition, the 2003 Tender Condition and
the General Conditions.
14.MISCELLANEOUS.
The Offer and the Solicitation are being made to all Holders of the Notes.
The Company is not aware of any jurisdiction in which the making of the Offer
and the Solicitation is not in compliance with applicable law. If the Company
becomes aware of any jurisdiction in which the making of the Offer and the
Solicitation would not be in compliance with applicable law, the Company will
make a good faith effort to comply with any such law. If, after such good
faith effort, the Company cannot comply with any such law, the Offer and the
Solicitation will not be made to (nor will tenders of Notes and Consents be
accepted from or on behalf of) the owners of Notes residing in such
jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Company not contained in this Statement or in
the Consent and Letter of Transmittal and, if given or made, such information
or representation must not be relied upon as having been authorized.
DOMINION TEXTILE (USA) INC.
December 23, 1997
24
<PAGE>
SCHEDULE I
YLD = The Tender Offer Yield equals the sum of the yield on the 6 3/8%
U.S. Treasury Note due March 31, 2001 (the "Reference Security"),
as calculated by the Dealer Manager in accordance with standard
market practice, based on the bid price for such Reference
Security as of 2:00 p.m., New York City time, on the Price
Determination Date, as displayed on the Bloomberg Government
Pricing Monitor on "Page PX5" (the "Bloomberg Page") (or, if any
relevant price is not available on a timely basis on the
Bloomberg Page or is manifestly erroneous, such other recognized
quotation source as the Dealer Manager shall select in its sole
discretion), plus 50 basis points, expressed as a decimal number.
CPN = the contractual rate of interest payable on a Note expressed as a
decimal number.
N = the number of semi-annual interest payments, based on the
Earliest Redemption Date, from (but not including) the expected
Payment Date to (and including) the Earliest Redemption Date.
S = the number of days from and including the semi-annual interest
payment date immediately preceding the expected Payment Date up
to, but not including, the expected Payment Date. The number of
days is computed using the 30/360 day-count method.
exp = Exponentiate. The term to the left of "exp" is raised to the
power indicated by the term to the right of "exp."
CP = $10.00 per $1,000 principal amount of Notes, which is equal to
the Consent Payment.
RV = the assumed redemption amount, based on the Earliest Redemption
Date, for each note per $1,000 principal amount of a Note (as
rounded to the nearest one hundredth of one percent).
Total
Consideration
= the Tender Offer Consideration plus the Consent Payment of a Note
per $1,000 principal amount of a Note if tender is made on or
prior to 5:00 p.m., New York City time, on the Consent Expiration
Date. The Total Consideration is rounded to the nearest cent.
Tender
Offer
Consideration
= the applicable purchase price of a Note per $1,000 principal
amount of a Note if tender is made after 5:00 p.m., New York City
time, on the Consent Expiration Date. The Tender Offer
Consideration is rounded to the nearest cent.
N
Total
Consideration
= S
RV + $1,000 (CPN/2) - $1,000
(CPN/2)(S/180)
------------------- k=1-------------------
(1 + YLD/2) exp (N (1 + YLD/2) exp (k
- S/180) - S/180)
N
Tender
Offer
Consideration
= S
RV + $1,000 (CPN/2) - $1,000
(CPN/2)(S/180) -
------------------- ------------------- CP
k=1
(1 + YLD/2) exp (N (1 + YLD/2) exp (k
- S/180) - S/180)
25
<PAGE>
SCHEDULE II
This Schedule provides a hypothetical illustration of the Total
Consideration (i.e., Tender Offer Consideration plus Consent Payment) of the
9 1/4% Guaranteed Senior Notes due 2006 based on hypothetical data, and should,
therefore, be used solely for the purpose of obtaining an understanding of the
calculation of the Total Consideration, as quoted at hypothetical rates and
times, and should not be used or relied upon for any other purpose:
9 1/4% GUARANTEED SENIOR NOTES DUE 2006
Earliest Redemption = April 1, 2001
Date
Reference Security = 6 3/8% U.S. Treasury Note due March 31, 2001 as
displayed on the Bloomberg Government Pricing
Monitor on "Page PX5"
Fixed Spread = 0.50% (50 basis points)
EXAMPLE
Assumed Pricing = 2:00 p.m., New York City time, on January 9, 1998
Determination
Date and Time
Assumed Payment Date = January 27, 1998
Assumed Reference
Security
Yield as of Assumed
Price
Determination Date = 5.74%
and Time
Fixed Spread = 0.50%
YLD = 0.0624
CPN = 0.0925
N = 7
S = 116
RV = $1,046.25
CP = $10.00
Total Consideration = $1,123.45
N
S
$1,046.25 + $1,000 (0.0925/2) - $1,000
(0.0925/2)(116/180)
k=1
- ---------------------- ----------------------
(1 + 0.0624/2) exp (7 (1 + 0.0624/2) exp (k -
- 116/180) 116/180)
Tender Offer = $1,113.45
Consideration
N
S
$1,046.25 + $1,000 (0.0925/2) -$1,000 (0.0925/2)(116/180) -
$10.00
k=1
- ---------------------- ----------------------
1 + 0.0624/2) exp (7 -( (1 + 0.0624/2) exp (k -
116/180) 116/180)
26
<PAGE>
The Depositary for the Offer and the Solicitation is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
Wall Street Station P.O. Box 1023 New Receive Window
York, NY 10268-1023 Wall Street Plaza
88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
Any questions or requests for assistance or additional copies of this
Statement, the Consent and Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone numbers and
address listed below. A Holder may also contact the Dealer Manager at the
telephone number set forth below or such Holder's broker, dealer, commercial
bank or trust company or nominee for assistance concerning the Offer and the
Solicitation.
The Information Agent for the Offer and the Solicitation is:
LOGO
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (collect)
Toll Free: (800) 322-2885
The Dealer Manager for the Offer and the Solicitation Agent for the
Solicitation is:
CHASE SECURITIES INC.
270 Park Avenue, 4th Floor
New York, New York 10017-2070
Attention: Robert Berk
Call: (212) 270-1100 (collect)
<PAGE>
CONSENT AND LETTER OF TRANSMITTAL
TO TENDER AND TO GIVE CONSENT IN RESPECT OF
9 1/4% GUARANTEED SENIOR NOTES DUE APRIL 1, 2006
(CUSIP: 25754HAC1)
OF
DOMINION TEXTILE (USA) INC.
PURSUANT TO THE OFFER TO PURCHASE AND CONSENT SOLICITATION STATEMENT DATED
DECEMBER 23, 1997
THE SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JANUARY 9,
1998, IF ON SUCH DATE THE COMPANY HAS RECEIVED THE REQUISITE CONSENTS (AS
DEFINED HEREIN) OR THE FIRST DATE THEREAFTER THAT THE COMPANY RECEIVES THE
REQUISITE CONSENTS FROM HOLDERS OF THE NOTES (THE "CONSENT EXPIRATION DATE").
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JANUARY 26, 1998,
UNLESS EXTENDED (SUCH DATE, AS THE SAME MAY BE EXTENDED, THE "TENDER OFFER
EXPIRATION DATE"). HOLDERS WHO DESIRE TO RECEIVE THE CONSENT PAYMENT AND THE
TENDER OFFER CONSIDERATION MUST VALIDLY CONSENT TO THE PROPOSED AMENDMENTS ON
OR PRIOR TO THE CONSENT EXPIRATION DATE. HOLDERS WHO TENDER AFTER THE CONSENT
EXPIRATION DATE WILL RECEIVE ONLY THE TENDER OFFER CONSIDERATION. CONSENTS
MAY ONLY BE REVOKED ON OR PRIOR TO THE CONSENT EXPIRATION DATE. TENDERS MAY
BE WITHDRAWN AT ANY TIME PRIOR TO THE TENDER OFFER EXPIRATION DATE.
The Depositary for the Offer and the Solicitation is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
Wall Street Station P.O. Box 1023 New Receive Window Wall Street Plaza 88
York, NY 10268-1023 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
DELIVERY OF THIS CONSENT AND LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
HOLDERS WHO WISH TO CONSENT TO THE PROPOSED AMENDMENTS AND TO RECEIVE THE
CONSENT PAYMENT PURSUANT TO THE SOLICITATION MUST VALIDLY TENDER (AND NOT
WITHDRAW) THEIR NOTES TO THE DEPOSITARY ON OR PRIOR TO THE CONSENT EXPIRATION
DATE.
<PAGE>
THE INSTRUCTIONS CONTAINED HEREIN AND IN THE OFFER (AS DEFINED BELOW) SHOULD
BE READ CAREFULLY BEFORE THIS CONSENT AND LETTER OF TRANSMITTAL IS COMPLETED.
List below the Notes to which this Consent and Letter of Transmittal
relates. If the space provided below is inadequate, list the certificate
numbers and principal amounts on a separately executed schedule and affix the
schedule to this Consent and Letter of Transmittal. Tenders of Notes will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof.
DESCRIPTION OF NOTES
- -------------------------------------------------------
[CAPTION]
NAME(S) AND
ADDRESS(ES)
OF PRINCIPAL AMOUNT
HOLDER(S) AGGREGATE TENDERED AND
(PLEASE PRINCIPAL AS TO WHICH
FILL IN, IF CERTIFICATE AMOUNT CONSENTS ARE
BLANK) NUMBER(S)* REPRESENTED** GIVEN
- -------------------------------------------------------
----------
----------
----------
----------
- -------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
TOTAL PRINCIPAL AMOUNT OF NOTES
- ----------------------------------------------
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer (see
below).
** Unless otherwise indicated in the column labeled "Principal Amount
Tendered And As To Which Consents Are Given" and subject to the
terms and conditions of the Statement, a Holder will be deemed to
have tendered the entire aggregate principal amount represented by
the Notes indicated in the column labeled "Aggregate Principal
Amount Represented." See Instruction 5.
THE COMPLETION, EXECUTION AND DELIVERY OF THIS CONSENT AND LETTER OF
TRANSMITTAL IN CONNECTION WITH THE TENDER OF NOTES AND DELIVERY OF CONSENTS ON
OR PRIOR TO THE CONSENT EXPIRATION DATE WILL CONSTITUTE A CONSENT TO THE
PROPOSED AMENDMENTS WITH RESPECT TO SUCH NOTES TENDERED. HOLDERS WHO TENDER
THEIR NOTES AFTER THE CONSENT EXPIRATION DATE WILL NOT RECEIVE THE CONSENT
PAYMENT.
2
<PAGE>
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution: ______________________________________________
Account Number with DTC: ____________________________________________________
Transaction Code Number: ____________________________________________________
[_] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name of Registered Holder(s): _______________________________________________
Window Ticket No. (if any): _________________________________________________
Date of Execution of Notice of Guaranteed Delivery: _________________________
Name of Eligible Institution that Guaranteed Delivery: ______________________
If Delivered by Book-Entry Transfer:
Account Number with DTC: _________________________________________________
Transaction Code Number: _________________________________________________
3
<PAGE>
By execution hereof, the undersigned acknowledges receipt of the Offer to
Purchase and Consent Solicitation Statement, dated December 23, 1997 (as the
same may be amended from time to time, the "Statement") of Dominion Textile
(USA) Inc., a Delaware corporation (the "Company"), and this Consent and
Letter of Transmittal and instructions hereto (the "Consent and Letter of
Transmittal" and together with the Statement, the "Offer"), which together
constitute (i) the Company's offer to purchase any and all of its outstanding
Notes, upon the terms and subject to the conditions set forth in the
Statement, and (ii) the Company's solicitation (the "Solicitation") of
consents (the "Consents") from each registered holder (each a "Holder" and,
collectively, the "Holders") to certain proposed amendments (the "Proposed
Amendments") to the Indenture dated as of April 1, 1996 (the "Indenture"),
between the Company, Dominion Textile Inc., a corporation duly organized and
existing under the laws of Canada ("Dominion" or the "Parent Guarantor") and
First Union National Bank, as trustee (the "Trustee"), pursuant to which the
Notes were issued. Holders who tender Notes under this Consent and Letter of
Transmittal on or prior to the Consent Expiration Date will be deemed to
consent with respect to the Proposed Amendments.
This Consent and Letter of Transmittal is to be used by Holders if (i)
certificates representing Notes are to be physically delivered to the
Depositary herewith by Holders, (ii) tender of Notes is to be made by book-
entry transfer to the Depositary's account at The Depository Trust Company
("DTC") pursuant to the procedures set forth in the Statement under Item 7,
"Procedures for Tendering Notes and Delivering Consents--Tender of Notes Held
Through DTC," by any financial institution that is a participant in DTC and
whose name appears on a security position listing as the owner of Notes,
unless an Agent's Message is delivered in connection with such book-entry
transfer, or (iii) tender of Notes after the Consent Expiration Date is to be
made according to the guaranteed delivery procedures set forth in the
Statement under Item 7, "Procedures for Tendering Notes and Delivering
Consents--Guaranteed Delivery." Delivery of documents to DTC does not
constitute delivery to the Depositary.
THE UNDERSIGNED HAS COMPLETED, EXECUTED AND DELIVERED THIS CONSENT AND
LETTER OF TRANSMITTAL TO INDICATE THE ACTION THE UNDERSIGNED DESIRES TO TAKE
WITH RESPECT TO THE OFFER AND THE SOLICITATION.
All capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Statement.
The instructions included with this Consent and Letter of Transmittal must
be followed. Questions and requests for assistance or for additional copies of
the Statement, this Consent and Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to Chase Securities Inc., the Dealer
Manager for the Offer and Solicitation, or MacKenzie Partners, Inc., the
Information Agent, in each case at the address and telephone number set forth
on the back cover page of this Consent and Letter of Transmittal. See
Instruction 13 below.
Holders of Notes that are tendering by book-entry transfer to the
Depositary's account at DTC can execute the tender through the DTC Automated
Tender Offer Program ("ATOP") for which the transaction will be eligible. DTC
participants that are accepting the Offer must transmit their acceptance to
DTC, which will verify the acceptance and execute a book-entry delivery to the
Depositary's DTC account. DTC will then send an Agent's Message to the
Depositary for its acceptance. Delivery of the Agent's Message by DTC will
satisfy the terms of the Offer as to the tender of Notes; however, any such
Holders tendering on or prior to the Consent Expiration Date must also execute
and deliver a Consent and Letter of Transmittal. TO RECEIVE THE CONSENT
PAYMENT, EACH HOLDER (INCLUDING ANY HOLDER TENDERING NOTES THROUGH ATOP) MUST
DELIVER OR CAUSE TO BE DELIVERED A COMPLETED AND PROPERLY EXECUTED CONSENT AND
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE DEPOSITARY ON OR
PRIOR TO THE CONSENT EXPIRATION DATE.
If a registered Holder desires to tender Notes pursuant to the Offer after
the Consent Expiration Date and (a) certificates representing such Notes are
not immediately available, (b) time will not permit such Holder's Consent and
Letter of Transmittal, certificates representing such Notes and all other
required documents to reach the Depositary on or prior to the Tender Offer
Expiration Date, or (c) the procedures for book-entry transfer (including
delivery of an Agent's Message) cannot be completed on or prior to the Tender
Offer Expiration Date, such Holder may nevertheless tender such Notes with the
effect that such tender will be deemed to have been received on or prior to
the Tender Offer Expiration Date. Holders may effect such a tender of Notes in
accordance with the guaranteed delivery procedures set forth in the Statement
under Item 7, "Procedures for Tendering Notes and Delivering Consents--
Guaranteed Delivery." See Instruction 2 below.
4
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Offer and Solicitation,
the undersigned hereby tenders to the Company the principal amount of Notes
indicated above and consents to the Proposed Amendments.
Subject to, and effective upon, the acceptance for purchase of, and payment
for, the principal amount of Notes tendered with this Consent and Letter of
Transmittal, the undersigned hereby sells, assigns and transfers to, or upon
the order of, the Company, all right, title and interest in and to the Notes
that are being tendered hereby, waives any and all other rights with respect
to the Notes (including without limitation any existing or past defaults and
their consequences in respect of the Notes and the Indenture under which the
Notes were issued) and releases and discharges the Company from any and all
claims such Holder may have now, or may have in the future, arising out of, or
related to, the Notes, including without limitation any claims that such
Holder is entitled to receive additional principal or interest payments with
respect to the Notes or to participate in any redemption or defeasance of the
Notes, and also consents to the Proposed Amendments (as defined in the
Statement). The undersigned hereby irrevocably constitutes and appoints the
Depositary the true and lawful agent and attorney-in-fact of the undersigned
(with full knowledge that the Depositary also acts as the agent of the
Company) with respect to such Notes, with full power of substitution and
resubstitution (such power-of-attorney being deemed to be an irrevocable power
coupled with an interest) to (i) present such Notes and all evidences of
transfer and authenticity to, or transfer ownership of, such Notes on the
account books maintained by DTC to, or upon the order of, the Company, (ii)
present such Notes for transfer of ownership on the books of the Company,
(iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Notes and (iv) deliver to the Company and the Trustee this
Consent and Letter of Transmittal on or prior to the Consent Expiration Date
as evidence of the undersigned's Consent to the Proposed Amendments and as
certification that validly tendered and not revoked Consents from Holders of a
majority of the aggregate principal amount of outstanding Notes not owned by
the Company or its affiliates (the "Requisite Consents") to the Proposed
Amendments duly executed by Holders of such Notes have been received, all in
accordance with the terms and conditions of the Offer and Solicitation.
Execution and delivery of this Consent and Letter of Transmittal on or prior
to the Consent Expiration Date will also be deemed to constitute a Consent to
the Proposed Amendments.
The undersigned agrees and acknowledges that, by the execution and delivery
hereof, the undersigned makes and provides the written Consent, with respect
to the Notes tendered hereby, to the Proposed Amendments as permitted by
Article Nine of the Indenture if this Consent and Letter of Transmittal is
executed and delivered on or prior to the Consent Expiration Date. The
undersigned understands that the Consent provided hereby shall remain in full
force and effect until such Consent is revoked in accordance with the
procedures set forth in the Statement and this Consent and Letter of
Transmittal, which procedures are hereby agreed to be applicable in lieu of
any and all other procedures for revocation set forth in the Indenture, which
are hereby waived.
The undersigned understands that Consents may not be revoked after the
Consent Expiration Date. The Company intends to execute the supplemental
indenture to the Indenture providing for the Proposed Amendments (the
"Supplemental Indenture") on or promptly after the Consent Expiration Date.
The Proposed Amendments will become effective upon certification that the
Requisite Consents have been received, but will not become operative until the
Company accepts for purchase the Notes tendered in the Offer.
The undersigned understands that tenders of Notes may be withdrawn by
written notice of withdrawal received by the Depositary at any time on or
prior to the Tender Offer Expiration Date. Holders may not deliver Consents
without tendering their Notes in the Offer, and may not revoke Consents on or
prior to the Consent Expiration Date without withdrawing the previously
tendered Notes to which such Consent relates. Holders may not withdraw
previously tendered Notes on or prior to the Consent Expiration Date without
revoking the previously delivered Consents to which such tender relates.
Consents may not be revoked after the Consent Expiration Date, except under
certain limited circumstances.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Notes tendered
hereby and to give the Consent contained herein, and that when such Notes are
accepted for purchase and payment by the Company, the Company will acquire
good title thereto, free and clear of all liens, restrictions,
5
<PAGE>
charges and encumbrances and not subject to any adverse claim or right. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Company to be necessary or desirable to
complete the sale, assignment and transfer of the Notes tendered hereby, to
perfect the undersigned's Consent to the Proposed Amendments and to complete
the execution of the Supplemental Indenture reflecting such Proposed
Amendments.
The undersigned understands that tenders of Notes pursuant to any of the
procedures described in the Statement and in the instructions hereto and
acceptance thereof by the Company will constitute a binding agreement between
the undersigned and the Company, upon the terms and subject to the conditions
of the Offer and Solicitation.
For purposes of the Offer, the undersigned understands that the Company will
be deemed to have accepted for purchase validly tendered Notes if, as and when
the Company gives oral or written notice thereof to the Depositary.
The undersigned understands that the Company's obligation to accept for
payment, and to pay for, Notes validly tendered pursuant to the Offer is
conditioned upon the satisfaction of (a) the Supplemental Indenture Condition,
(b) the Business Unit Sales Condition, (c) the 2003 Tender Condition and (d)
the General Conditions. See Item 9, "Conditions to the Offer," in the
Statement. Any Notes not accepted for purchase will be returned promptly to
the undersigned at the address set forth above unless otherwise indicated
herein under "Special Delivery Instructions" below.
All authority conferred or agreed to be conferred by this Consent and Letter
of Transmittal shall survive the death or incapacity of the undersigned and
every obligation of the undersigned under this Consent and Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, executors, administrators, successors, assigns, trustees in
bankruptcy and other legal representatives.
The undersigned understands that the delivery and surrender of the Notes is
not effective, and the risk of loss of the Notes does not pass to the
Depositary, until receipt by the Depositary of this Consent and Letter of
Transmittal (or a manually signed facsimile hereof), properly completed and
duly executed, together with all accompanying evidences of authority and any
other required documents in form satisfactory to the Company, or receipt of an
Agent's Message. All questions as to the form of all documents and the
validity (including time of receipt) and acceptance of tenders and withdrawals
of Notes and deliveries and revocations of Consents will be determined by the
Company, in its sole discretion, which determination shall be final and
binding.
Unless otherwise indicated under "Special Payment Instructions" below,
please issue a check from the Depositary for the Total Consideration or Tender
Offer Consideration, as the case may be, for any Notes tendered hereby that
are purchased, and/or return any certificates representing Notes not tendered
or not accepted for purchase in the name(s) of the Holder(s) appearing under
"Description of Notes." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the Total Consideration or
Tender Offer Consideration, as the case may be, and/or return any certificates
representing Notes not tendered or not accepted for purchase (and accompanying
documents, as appropriate) to the address(es) of the Holder(s) appearing under
"Description of Notes." In the event that both the Special Payment
Instructions and the Special Delivery Instructions are completed, please issue
the check for the Total Consideration or Tender Offer Consideration, as the
case may be, and/or return any certificates representing Notes not tendered or
not accepted for purchase (and any accompanying documents, as appropriate) to,
the person or persons so indicated. In the case of a book-entry delivery of
Notes, please credit the same account maintained at DTC with any Notes not
tendered or not accepted for purchase. The undersigned recognizes that the
Company does not have any obligation pursuant to the Special Payment
Instructions to transfer any Notes from the name of the Holder thereof if the
Company does not accept for purchase any of the Notes so tendered.
6
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL CONSENTING HOLDERS)
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF NOTES REGARDLESS OF WHETHER NOTES
ARE
BEING PHYSICALLY DELIVERED HEREWITH, UNLESS AN AGENT'S MESSAGE IS DELIVERED
IN CONNECTION WITH A BOOK-ENTRY TRANSFER OF SUCH NOTES)
The completion, execution and delivery of this Consent and Letter of
Transmittal on or prior to the Consent Expiration Date will be deemed to
constitute a Consent to the Proposed Amendments.
This Consent and Letter of Transmittal must be signed by the registered
holder(s) of Notes exactly as their name(s) appear(s) on certificate(s) for
Notes or, if tendered by a participant in DTC, exactly as such participant's
name appears on a security position listing as the owner of Notes, or by
person(s) authorized to become registered holder(s) by endorsements and
documents transmitted with this Consent and Letter of Transmittal. If the
signature is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer or other person acting in a fiduciary or representative capacity, such
person must set forth his or her full title below under "Capacity" and submit
evidence satisfactory to the Company of such person's authority to so act. See
Instruction 6 below.
If the signature appearing below is not of the registered holder(s) of the
Notes, then the registered holder(s) must sign a valid proxy.
X
-----------------------------------------------------------------------------
X
-----------------------------------------------------------------------------
(Signature(s) of Holder(s) or Authorized Signatory)
Date: , 19 .
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity:
------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone No.:
--------------------------------------------------------
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (SEE INSTRUCTIONS 1 AND 6 BELOW)
Certain Signatures Must be Guaranteed by a Medallion Signature Guarantor
- --------------------------------------------------------------------------------
(Name of Medallion Signature Guarantor Guaranteeing Signatures)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Address (including zip code) and Telephone Number (including area code) of
Firm)
- --------------------------------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Printed Name)
- --------------------------------------------------------------------------------
(Title)
Date: , 19 .
7
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6, 7 AND 8)
To be completed ONLY if
certificates for Notes in a
principal amount not tendered or
not accepted for purchase are to be
issued in the name of, or checks
constituting payments for Notes to
be purchased or Consent Payments to
be made in connection with the
Offer and Solicitation are to be
issued to the order of, someone
other than the person or persons
whose signature(s) appear(s) within
this Consent and Letter of
Transmittal or issued to an address
different from that shown in the
box entitled "Description of Notes"
within this Consent and Letter of
Transmittal, or if Notes tendered
by book-entry transfer that are not
accepted for purchase are to be
credited to an account maintained
at DTC other than the one designed
above.
Issue: r Notes
r Checks
(check as applicable)
Name: ______________________________
(Please Print)
Address: ___________________________
(Please Print)
------------------------------------
Zip Code
------------------------------------
Taxpayer Identification or Security Number
(See Substitute Form W-9 herein)
SIGNATURE GUARANTEE (See
Instruction 1 below)
Certain Signatures Must be Guaranteed by a Medallion Signature Guarantor
------------------------------------
(Name of Medallion Signature Guarantor Guaranteeing Signatures)
------------------------------------
------------------------------------
------------------------------------
(Address (including zip code) and Telephone Number) (including area code of
Firm)
------------------------------------
(Authorized Signature)
------------------------------------
(Printed Name)
------------------------------------
(Title)
Date: , 19 .
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6, 7 AND 8)
To be completed ONLY if
certificates for Notes in a
principal amount not tendered or
not accepted for purchase or checks
constituting payments for Notes to
be purchased or Consent Payments to
be made in connection with the
Offer and the Solicitation are to
be sent to someone other than the
person or persons whose
signature(s) appear(s) within this
Consent and Letter of Transmittal
or to an address different from
that shown in the box entitled
"Description of Notes" within this
Consent and Letter of Transmittal.
Deliver: r Notes
r Checks
(check as applicable)
Name: ______________________________
(Please Print)
Address: ___________________________
(Please Print)
------------------------------------
Zip Code
------------------------------------
Taxpayer Identification or Security Number
(See Substitute Form W-9 herein)
8
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER AND SOLICITATION
1. GUARANTEE OF SIGNATURES. Signatures on this Consent and Letter of
Transmittal must be guaranteed by a recognized participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchange Medallion Program (each a "Medallion
Signature Guarantor"), unless the Notes tendered thereby are tendered (i) by a
registered Holder of Notes (or by a participant in DTC whose name appears on a
security position listing as the owner of such Notes) who has not completed
any of the boxes entitled "Special Payment Instructions" or "Special Delivery
Instructions" on the Consent and Letter of Transmittal, or (ii) for the
account of a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc. ("NASD") or a
commercial bank or trust company having an office or correspondent in the
United States (each of the foregoing being referred to as an "Eligible
Institution"). If the Notes are registered in the name of a person other than
the signer of the Consent and Letter of Transmittal or if Notes not accepted
for payment or not tendered are to be returned to a person other than the
registered Holder, then the signature on this Consent and Letter of
Transmittal accompanying the tendered Notes must be guaranteed by a Medallion
Signature Guarantor as described above. Beneficial owners whose Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if they desire to tender Notes and deliver Consents with
respect to Notes so registered. See Item 7, "Procedures for Tendering Notes
and Delivering Consents," in the Statement.
2. REQUIREMENTS OF TENDER. This Consent and Letter of Transmittal is to be
completed by registered Holders of Notes if certificates representing such
Notes are to be forwarded herewith, or if delivery of such certificates is to
be made by book-entry transfer to the account maintained by DTC, pursuant to
the procedures set forth in the Statement under Item 7, "Procedures for
Tendering Notes and Delivering Consents," unless such Notes are being
transferred through ATOP in connection with a tender after the Consent
Expiration Date. For a holder to properly tender Notes and deliver Consents
pursuant to the Offer and the Solicitation, a properly completed and duly
executed Consent and Letter of Transmittal (or a manually signed facsimile
thereof), together with any signature guarantees and any other documents
required by these Instructions, must be received by the Depositary at its
address set forth herein on or prior to the Consent Expiration Date or Tender
Offer Expiration Date, as applicable, and either (i) certificates representing
such Notes must be received by the Depositary at its address or (ii) such
Notes must be transferred pursuant to the procedures for book-entry transfer
described in the Statement under Item 7, "Procedures for Tendering Notes and
Delivering Consents," and a Book-Entry Confirmation must be received by the
Depositary, in each case, on or prior to the Consent Expiration Date or Tender
Offer Expiration Date, as applicable; provided, however, that no Consent
Payment will be paid to Holders who tender Notes and deliver their Consents
after the Consent Expiration Date. A Holder who desires to tender Notes and
who cannot comply with procedures set forth herein for tender on a timely
basis or whose Notes are not immediately available must comply with the
guaranteed delivery procedures discussed below, but only if such Notice of
Guaranteed Delivery is transmitted after the Consent Expiration Date.
If a registered Holder desires to tender Notes pursuant to the Offer after
the Consent Expiration Date and (a) certificates representing such Notes are
not immediately available, (b) time will not permit such Holder's Consent and
Letter of Transmittal, certificates representing such Notes and all other
required documents to reach the Depositary on or prior to the Tender Offer
Expiration Date, or (c) the procedures for book-entry transfer cannot be
completed on or prior to the Tender Offer Expiration Date, such Holder may
nevertheless tender such Notes with the effect that such tender will be deemed
to have been received on or prior to the Tender Offer Expiration Date if the
procedures set forth in the Statement under Item 7, "Procedures for Tendering
Notes and Delivering Consents--Guaranteed Delivery," are followed. Pursuant to
such procedures, (i) the tender must be made by or through an Eligible
Institution, (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company herewith, or an
Agent's Message with respect to a guaranteed delivery that is accepted by the
Company, must be received by the Depositary on or prior to the Tender Offer
Expiration Date, and (iii) the certificates for the tendered Notes, in proper
form for transfer (or a Book-Entry Confirmation of the transfer of such Notes
into the Depositary's account at DTC as described in the Statement), together
with a Consent and Letter of Transmittal (or manually signed facsimile
thereof) properly completed and duly executed, with
9
<PAGE>
any required signature guarantees and any other documents required by the
Consent and Letter of Transmittal or a properly transmitted Agent's Message,
must be received by the Depositary within three business days after the date
of execution of the Notice of Guaranteed Delivery.
3. CONSENTS TO PROPOSED AMENDMENTS. A valid Consent to the Proposed
Amendments may be given only by the Holder or their attorney-in-fact. A
beneficial owner who is not a Holder must arrange with the Holder to execute
and deliver a Consent on their behalf, obtain a properly completed irrevocable
proxy that authorizes such beneficial owner to consent to the Proposed
Amendments on behalf of such Holder or become a Holder. Notwithstanding the
foregoing, any DTC participant which has Notes credited to its DTC account at
any time (and thereby held of record by DTC's nominee) may directly provide a
Consent to the Proposed Amendments as though it were the registered Holder by
so completing, executing and delivering the Consent and Letter of Transmittal.
TO VALIDLY DELIVER A CONSENT WITH RESPECT TO NOTES TRANSFERRED PURSUANT TO
ATOP ON OR PRIOR TO THE CONSENT EXPIRATION DATE, A DTC PARTICIPANT USING ATOP
MUST ALSO PROPERLY COMPLETE AND DULY EXECUTE A CONSENT AND LETTER OF
TRANSMITTAL AND DELIVER IT TO THE DEPOSITARY ON OR PRIOR TO THE CONSENT
EXPIRATION DATE.
4. WITHDRAWAL OF TENDERS AND REVOCATION OF CONSENTS. Tenders of Notes may be
withdrawn at any time prior to the Tender Offer Expiration Date. Consents may
be revoked at any time on or prior to the Consent Expiration Date. A valid
withdrawal of tendered Notes effected on or prior to the Consent Expiration
Date will constitute the concurrent valid revocation of such Holder's related
Consent. Consents may not be revoked after the Consent Expiration Date except
in the limited circumstances described below. In order for a Holder to revoke
a Consent, such Holder must withdraw the related tendered Notes. Tenders of
Notes may be validly withdrawn if the Offer is terminated without any Notes
being purchased thereunder. In the event of a termination of the Offer, the
Notes tendered pursuant to the Offer will be promptly returned to the
tendering Holder and the Supplemental Indenture will not become operative. If
the Solicitation is amended on or prior to the Consent Expiration Date in a
manner determined by the Company to constitute a material adverse change to
the Holders of the Notes, the Company promptly will disclose such amendment
and, if necessary, extend the Solicitation for such Notes for a period deemed
by the Company to be adequate to permit Holders of the Notes to withdraw their
Notes and revoke their Consents. In addition, if the consideration to be paid
in the Offer is increased or decreased or the principal amount of Notes
subject to the Offer is decreased, the Offer will remain open at least 10
business days from the date the Company first gives notice to Holders, by
public announcement or otherwise, of such increase or decrease.
For a withdrawal of a tender of Notes (and the concurrent revocation of
Consents) to be effective, a written or facsimile transmission notice of
withdrawal must be received by the Depositary on or prior to Tender Offer
Expiration Date at its address set forth on the back cover of the Statement.
Any such notice of withdrawal must (i) specify the name of the person who
tendered the Notes to be withdrawn, (ii) contain the description of the Notes
to be withdrawn and identify the certificate number or numbers shown on the
particular certificates evidencing such Notes (unless such Notes were tendered
by book-entry transfer) and the aggregate principal amount represented by such
Notes and (iii) be signed by the Holder of such Notes in the same manner as
the original signature on the Consent and Letter of Transmittal by which such
Notes were tendered (including any required signature guarantees), or be
accompanied by (x) documents of transfer sufficient to have the Trustee
register the transfer of the Notes into the name of the person withdrawing
such Notes or (y) a properly completed irrevocable proxy authorizing such
person to effect such withdrawal on behalf of such Holder. If the Notes to be
withdrawn have been delivered or otherwise identified to the Depositary, a
signed notice of withdrawal is effective immediately upon written or facsimile
notice of such withdrawal even if physical release is not yet effected.
Any valid revocation of Consents will automatically render the prior tender
of the Notes to which such Consents relate defective and the Company will have
the right, which it may waive, to reject such tender as invalid. Any permitted
withdrawal of Notes and revocation of Consents may not be rescinded, and any
Notes properly withdrawn will thereafter be deemed not validly tendered and
any Consents revoked will be deemed not validly delivered for purposes of the
Offer; provided, however, that withdrawn Notes may be re-tendered and revoked
Consents may be re-delivered by again following one of the appropriate
procedures described herein at any time on or prior to the Tender Offer
Expiration Date or the Consent Expiration Date, as applicable. After the
Consent Expiration Date, Consents may not be revoked, except in the limited
circumstances described above.
10
<PAGE>
ALL QUESTIONS AS TO THE VALIDITY, FORM AND ELIGIBILITY (INCLUDING TIME OF
RECEIPT) OF NOTICES OF WITHDRAWAL AND REVOCATION OF CONSENTS WILL BE
DETERMINED BY THE COMPANY, IN THE COMPANY'S SOLE DISCRETION (WHOSE
DETERMINATION SHALL BE FINAL AND BINDING). NEITHER THE COMPANY, THE
DEPOSITARY, THE DEALER MANAGER, THE INFORMATION AGENT, THE TRUSTEE OR ANY
OTHER PERSON WILL BE UNDER ANY DUTY TO GIVE NOTIFICATION OF ANY DEFECTS OR
IRREGULARITIES IN ANY NOTICE OF WITHDRAWAL OR REVOCATION OF CONSENTS, OR INCUR
ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTIFICATION.
5. PARTIAL TENDERS AND CONSENTS. Tenders of Notes pursuant to the Offer (and
the corresponding Consents thereto pursuant to the Solicitation) will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof. If less than the entire principal amount of any Notes evidenced by a
submitted certificate is tendered, the tendering Holder must fill in the
principal amount tendered in the last column of the box entitled "Description
of Notes" herein. The entire principal amount represented by the certificates
for all Notes delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated. If the entire principal amount of all Notes is not
tendered or not accepted for purchase, certificates for the principal amount
of Notes not tendered or not accepted for purchase will be sent (or, if
tendered by book-entry transfer, returned by credit to the account at DTC
designated herein) to the Holder unless otherwise provided in the appropriate
box on this Consent and Letter of Transmittal (see Instruction 7) promptly
after the Notes are accepted for purchase.
6. SIGNATURES ON THIS CONSENT AND LETTER OF TRANSMITTAL, BOND POWERS AND
ENDORSEMENT; GUARANTEE OF SIGNATURES. If this Consent and Letter of
Transmittal is signed by the registered holder(s) of the Notes tendered hereby
or with respect to which Consent is given, the signatures must correspond with
the name(s) as written on the face of the certificate(s) without alteration,
enlargement or any change whatsoever. If this Consent and Letter of
Transmittal is signed by a participant in DTC whose name is shown as the owner
of the Notes tendered hereby, the signature must correspond with the name
shown on the security position listing as the owner of the Notes.
IF THIS CONSENT AND LETTER OF TRANSMITTAL IS EXECUTED BY A HOLDER OF NOTES
WHO IS NOT THE REGISTERED HOLDER, THEN THE REGISTERED HOLDER MUST SIGN A VALID
PROXY, WITH THE SIGNATURE OF SUCH REGISTERED HOLDER GUARANTEED BY A MEDALLION
SIGNATURE GUARANTOR.
If any of the Notes tendered hereby (and with respect to which Consent is
given) are owned of record by two or more joint owners, all such owners must
sign this Consent and Letter of Transmittal. If any tendered Notes are
registered in different names on several certificates, it will be necessary to
complete, sign and submit as many separate copies of this Consent and Letter
of Transmittal and any necessary accompanying documents as there are different
names in which certificates are held.
If this Consent and Letter of Transmittal is signed by the Holder, and the
certificates for any principal amount of Notes not tendered or accepted for
purchase are to be issued (or if any principal amount of Notes that is not
tendered or not accepted for purchase is to be reissued or returned) to or, if
tendered by book-entry transfer, credited to the account at DTC of, the
registered Holder, and checks constituting payments for Notes to be purchased
and Consent Payments to be made in connection with the Offer and Solicitation
are to be issued to the order of the registered Holder, then the registered
Holder need not endorse any certificates for tendered Notes, nor provide a
separate bond power. In any other case (including if this Consent and Letter
of Transmittal is not signed by the registered Holder), the registered Holder
must either properly endorse the certificates for Notes tendered or transmit a
separate properly completed bond power with this Consent and Letter of
Transmittal (in either case, executed exactly as the name(s) of the registered
holder(s) appear(s) on such Notes, and, with respect to a participant in DTC
whose name appears on a security position listing as the owner of Notes,
exactly as the name(s) of the participant(s) appear(s) on such security
position listing), with the signature on the endorsement or bond power
guaranteed by a Medallion Signature Guarantor, unless such certificates or
bond powers are executed by an Eligible Institution. See Instruction 1.
If this Consent and Letter of Transmittal or any certificates of Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to the Company of their authority so to act must
be submitted with this Consent and Letter of Transmittal.
11
<PAGE>
Endorsements on certificates for Notes, signatures on bond powers and
proxies and Consents provided in accordance with this Instruction 6 by
registered holders not executing this Consent and Letter of Transmittal must
be guaranteed by a Medallion Signature Guarantor. See Instruction 1.
7. SPECIAL PAYMENT AND SPECIAL DELIVERY INSTRUCTIONS. Tendering Holders
should indicate in the applicable box or boxes the name and address to which
Notes for principal amounts not tendered or not accepted for purchase or
checks constituting payments for Notes to be purchased and Consent Payments to
be made in connection with the Offer and Solicitation are to be issued or
sent, if different from the name and address of the registered Holder signing
this Consent and Letter of Transmittal. In the case of issuance in a different
name, the taxpayer identification or social security number of the person
named must also be indicated. If no instructions are given, Notes not tendered
or not accepted for purchase will be returned to the registered Holder of the
Notes tendered. Holders of Notes tendering by book-entry transfer will have
Notes not tendered or not accepted for purchase returned by crediting their
account at DTC.
8. TAXPAYER IDENTIFICATION NUMBER. Each tendering Holder is required to
provide the Depositary with the Holder's correct taxpayer identification
number ("TIN"), generally the Holder's social security or federal employer
identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below, or, alternatively, to establish another
basis for exemption from backup withholding. A Holder must cross out item (2)
in the Certification box on Substitute Form W-9 if such Holder is subject to
backup withholding. Failure to provide the information on the form may subject
the tendering Holder to 31% federal income tax backup withholding on the
payments, including the Consent Payment, made to the Holder or other payee
with respect to Notes purchased pursuant to the Offer. The box in Part 3 of
the form should be checked if the tendering Holder has not been issued a TIN
and has applied for a TIN or intends to apply for a TIN in the near future. If
the box in Part 3 is checked and the Depositary is not provided with a TIN
within 60 days, thereafter the Depositary will withhold 31% from all such
payments with respect to the Notes to be purchased and the Consent Payments to
be made until a TIN is provided to the Depositary.
9. TRANSFER TAXES. The Company will pay all transfer taxes applicable to the
purchase and transfer of Notes pursuant to the Offer, except in the case of
deliveries of certificates for Notes for principal amounts not tendered or not
accepted for payment that are registered or issued in the name of any person
other than the registered Holder of Notes tendered hereby. Except as provided
in this Instruction 9, it will not be necessary for transfer stamps to be
affixed to the certificates listed in this Consent and Letter of Transmittal.
10. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any tendered Notes or delivery
of Consents pursuant to any of the procedures described above will be
determined by the Company in the Company's sole discretion (whose
determination shall be final and binding). The Company expressly reserves the
absolute right, in its sole discretion, subject to applicable law, to reject
any or all tenders of any Notes or delivery of Consents determined by it not
to be in proper form or, in the case of Notes, if the acceptance for payment
of, or payment for, such Notes may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right, in its sole
discretion, subject to applicable law, to waive or amend any of the conditions
of the Offer or the Solicitation or to waive any defect or irregularity in any
tender with respect to Notes or delivery of Consents of any particular Holder,
whether or not similar defects or irregularities are waived in the case of
other Holders. The Company's interpretation of the terms and conditions of the
Offer and Solicitation (including the Consent and Letter of Transmittal and
the Instructions thereto) will be final and binding. Neither the Company, the
Depositary, the Dealer Manager, the Information Agent, the Trustee or any
other person will be under any duty to give notification of any defects or
irregularities in tenders or will incur any liability for failure to give any
such notification. If the Company waives its right to reject a defective
tender of Notes, the Holder will be entitled to the Tender Offer Consideration
and, if applicable, the Consent Payment.
11. WAIVER OF CONDITIONS. The Company expressly reserves the absolute right,
in its sole discretion, to amend or waive any of the conditions to the Offer
or Solicitation in the case of any Notes tendered or Consents delivered, in
whole or in part, at any time and from time to time.
12
<PAGE>
12. MUTILATED, LOST, STOLEN, OR DESTROYED CERTIFICATES FOR NOTES. Any Holder
of Notes whose certificates for Notes have been mutilated, lost, stolen or
destroyed should write to First Union National Bank of Georgia, the Trustee.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering Notes and consenting to the Proposed Amendments and
requests for assistance or additional copies of the Statement and this Consent
and Letter of Transmittal may be directed to, and additional information about
the Offer and Solicitation may be obtained from, either the Dealer Manager or
the Information Agent, whose addresses and telephone numbers appear below.
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Notes are accepted
for payment is required to provide the Depositary (as payer) with such
Holder's correct TIN on Substitute Form W-9 below or otherwise establish a
basis for exemption from backup withholding. If such Holder is an individual,
the TIN is his social security number. If the Depositary is not provided with
the correct TIN, a $50 penalty may be imposed by the Internal Revenue Service,
and payments, including any Consent Payment, made with respect to Notes
purchased pursuant to the Offer may be subject to backup withholding. Failure
to comply truthfully with the backup withholding requirements also may result
in the imposition of severe criminal and/or civil fines and penalties.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Depositary. A foreign person, including entities, may qualify as an
exempt recipient by submitting to the Depositary a properly completed Internal
Revenue Service Form W-8, signed under penalties of perjury, attesting to that
Holder's foreign status. A Form W-8 can be obtained from the Depositary. See
the enclosed "Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the Holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments, including any Total Consideration
or Tender Offer Consideration, as the case may be, made with respect to Notes
purchased pursuant to the Offer, the Holder is required to provide the
Depositary with either: (i) the Holder's correct TIN by completing the form
below, certifying that the TIN provided on Substitute Form W-9 is correct (or
that such Holder is awaiting a TIN) and that (a) the Holder has not been
notified by the Internal Revenue Service that the Holder is subject to backup
withholding as a result of failure to report all interest or dividends or (b)
the Internal Revenue Service has notified the Holder that the Holder is no
longer subject to backup withholding; or (ii) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Holder is required to give the Depositary the TIN (e.g., social security
number or employer identification number) of the registered holder of the
Notes. If the Notes are held in more than one name or are held not in the name
of the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
13
<PAGE>
PAYER'S NAME: HARRIS TRUST COMPANY OF NEW YORK
------------------------------
SUBSTITUTE PART 1--PLEASE Social Security Number
PROVIDE YOUR TIN IN OR
THE BOX AT RIGHT AND
CERTIFY BY SIGNING
AND DATING BELOW
FORM W-9 ------------------------------
Employer Identification
Number
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
---------------------------------------------------------
PAYER'S REQUEST FOR PART 2--Certification--Under PART 3--
Penalties of Perjury, I Certify
that:
(1) The number shown on this form
is my correct Taxpayer
Identification Number (or I am
waiting for a number to be
issued to me) and
TAXPAYER IDENTIFICATION
NUMBER (TIN) Awaiting TIN [_]
- --------------------------------------------------------------------------------
Certificate instructions--You must cross out item (2) in Part 2 above if you
have been notified by the IRS that you are subject to backup withholding
because of under reporting interest or dividends on your tax return. However,
if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS stating that you
are no longer subject to backup withholding, do not cross out item (2).
(2) I am not subject to backup
withholding either because I
have not been notified by the
Internal Revenue Service
("IRS") that I am subject to
backup withholding as a result
of failure to report all
interest or dividends, or the
IRS has notified me that I am
no longer subject to backup
withholding.
SIGNATURE _________________________________________ DATE _________ , 19 .
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER AND SOLICITATION.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
60 days, 31 percent of all reportable payments made to me thereafter will be
withheld until I provide a number.
SIGNATURE _________________________________________ DATE _________ , 19 .
<PAGE>
The Depositary for the Offer and the Solicitation is:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Courier:
Wall Street Station Receive Window
P.O. Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
</TABLE>
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
Any questions or requests for assistance or additional copies of this
Statement, the Consent and Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone numbers and
address listed below. A Holder may also contact the Dealer Manager at its
telephone number set forth below or such Holder's broker, dealer, commercial
bank or trust company or nominee for assistance concerning the Offer and the
Solicitation.
The Information Agent for the Offer and the Solicitation is:
LOGO
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Collect)
Toll Free: (800) 322-2885
The Dealer Manager for the Offer and the Solicitation Agent for the
Solicitation is:
CHASE SECURITIES INC.
270 Park Avenue, 4th Floor
New York, New York 10017-2070
Attention: Robert Berk
Call: (212) 270-1100 (collect)
<PAGE>
NOTICE OF GUARANTEED DELIVERY
IN RESPECT OF
9 1/4% GUARANTEED SENIOR NOTES DUE APRIL 1, 2006
OF
DOMINION TEXTILE (USA) INC.
PURSUANT TO THE OFFER TO PURCHASE AND CONSENT SOLICITATION STATEMENT DATED
DECEMBER 23, 1997
The Depositary for the Offer and the Solicitation is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
Wall Street Station P.O. Box 1023 New Receive Window Wall Street Plaza 88
York, NY 10268-1023 Pine Street, 19th Floor New York, NY
10005
By Facsimile Transmission: (for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE VALID DELIVERY.
As set forth in the Offer to Purchase and Consent Solicitation Statement
dated December 23, 1997 (as it may be supplemented and amended from time to
time, the "Statement") of Dominion Textile (USA) Inc. (the "Company") under
Item 7, "Procedures for Tendering Notes and Delivery Consents," and in the
Instructions of the Consent and Letter of Transmittal (the "Consent and Letter
of Transmittal"), this form, or one substantially equivalent hereto, or an
Agent's Message relating to the guaranteed delivery procedures, must be used
to accept the Company's offer (the "Offer") to purchase for cash any and all
of its outstanding 9 1/4% Guaranteed Senior Notes due April 1, 2006 (the
"Notes"), if, after the Consent Expiration Date (as defined in the Statement),
time will not permit the Consent and Letter of Transmittal, certificates
representing such Notes and other required documents to reach the Depositary,
or the procedures for book-entry transfer cannot be completed, on or prior to
the Tender Offer Expiration Date (as defined in the Statement).
In conjunction with the Offer, the Company is also soliciting (the
"Solicitation") consents (the "Consents") to certain proposed amendments (the
"Proposed Amendments") to the Indenture dated as of April 1, 1996 (the
"Indenture"), between the Company, Dominion Textile Inc., a corporation duly
organized and existing under the laws of Canada (the "Parent Guarantor"), and
First Union National Bank, as trustee (the "Trustee"), pursuant to which the
Notes were issued. This Notice of Guaranteed Delivery may not be used to
tender Notes or deliver Consents on or prior to the Consent Expiration Date.
This form must be delivered by an Eligible Institution (as defined herein) by
mail or hand delivery or transmitted via facsimile to the Depositary as set
forth above. All capitalized terms used herein but not defined herein shall
have the meanings ascribed to them in the Statement.
This form is not to be used to guarantee signatures. If a signature on the
Consent and Letter of Transmittal is required to be guaranteed by a Medallion
Signature Guarantor under the instructions thereto, such signature guarantee
must appear in the applicable space provided in the Consent and Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and subject
to the conditions set forth in the Statement and the Consent and Letter of
Transmittal (receipt of which is hereby acknowledged), the principal amount of
the Notes specified below pursuant to the guaranteed delivery procedures set
forth in the Statement under Item 7, "Procedures for Tendering Notes and
Delivering Consents--Guaranteed Delivery." The undersigned hereby authorizes
the Depositary to deliver this Notice of Guaranteed Delivery to the Company
and the Trustee with respect to the Notes tendered pursuant to the Offer.
The undersigned understands that Holders who desire to tender their Notes
pursuant to the Offer and receive the Total Consideration are required to
provide Consents to the Proposed Amendments with respect to the full principal
amount of the Notes so tendered on or prior to the Consent Expiration Date.
The undersigned understands that tenders of Notes will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof. The
undersigned also understands that tenders of Notes may be withdrawn at any
time prior to the Tender Offer Expiration Date. This Notice of Guaranteed
Delivery may only be utilized after the Consent Expiration Date and on or
prior to the Tender Offer Expiration Date.
The undersigned understands that payment for Notes purchased will be made
only after timely receipt by the Depositary of (i) such Notes, or a Book-Entry
Confirmation, and (ii) a Consent and Letter of Transmittal (or a mutually
signed facsimile thereof), including by means of an Agent's Message, of the
transfer of such Notes into the Depositary's account at a Book-Entry Transfer
Facility, with respect to such Notes, properly completed and duly executed,
with any signature guarantees and any other documents required by the Consent
and Letter of Transmittal within three New York Stock Exchange, Inc. trading
days after the execution hereof. The undersigned also understands that under
no circumstances will interest be paid by the Company by reason of any delay
in making payment to the undersigned and that the Tender Offer Consideration
for Notes tendered pursuant to the guaranteed delivery procedures will be the
same as that for Notes delivered to the Depositary after the Consent
Expiration Date and on or prior to the Tender Offer Expiration Date, even if
the Notes to be delivered pursuant to the guaranteed delivery procedures are
not so delivered to the Depositary, and therefore payment by the Depositary on
account of such Notes is not made, until after the Payment Date. THE
UNDERSIGNED IS AWARE THAT, ON OR PRIOR TO THE CONSENT EXPIRATION DATE, TENDERS
OF NOTES AND THE RELATED CONSENTS CANNOT BE DELIVERED USING THE GUARANTEED
DELIVERY PROCESS AND THAT USE OF THE GUARANTEED DELIVERY PROCESS COULD RESULT
IN A TENDER OF NOTES AND THE RELATED CONSENT BEING DEFECTIVE.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall not be affected by, and shall survive, the death or
incapacity of the undersigned, and every obligation of the undersigned under
this Notice of Guaranteed Delivery shall be binding upon the heirs, executors,
administrators, trustees in bankruptcy, personal and legal representatives,
successors and assigns of the undersigned.
All capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Statement.
2
<PAGE>
PLEASE SIGN AND COMPLETE
Signature(s) of Registered Date: _____________________________
Holder(s) or Authorized
Signatory: ________________________
Address: __________________________
----------------------------------- -----------------------------------
-----------------------------------
Area Code and Telephone No. _______
Name(s) of Registered Holder(s): __
----------------------------------- If Notes will be delivered by
----------------------------------- book-entry transfer, check trust
company below:
Principal Amount of Notes
Tendered: _________________________ [_] The Depository Trust Company
-----------------------------------
DepositoryAccount No. _____________
Certificate No.(s) of Notes (if
available) ________________________
HOLDERS WHO DESIRE TO TENDER THEIR NOTES PURSUANT TO THE OFFER AND RECEIVE
THE TOTAL CONSIDERATION ARE REQUIRED TO CONSENT TO THE PROPOSED AMENDMENTS
WITH RESPECT TO SUCH NOTES ON OR PRIOR TO THE CONSENT EXPIRATION DATE.
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly
as their name(s) appear(s) on certificate(s) for Notes or on a security
position listing as the owner of Notes, or by person(s) authorized to become
Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.
Please print name(s) and address(es)
Name(s): ____________________________________________________________________
-----------------------------------------------------------------------------
Capacity: ___________________________________________________________________
Address(es): ________________________________________________________________
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
DO NOT SEND NOTES WITH THIS FORM. NOTES SHOULD BE SENT TO THE DEPOSITARY
TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED CONSENT AND LETTER OF
TRANSMITTAL.
3
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock
Exchange, Inc. Medallion Signature Program (each, an "Eligible
Institution"), hereby (i) represents that the above-named persons are deemed
to own the Notes tendered hereby within the meaning of Rule 14e-4
promulgated under the Securities Exchange Act of 1934, as amended, ("Rule
14e-4"), (ii) represents that such tender of Notes complies with Rule 14e-4
and (iii) guarantees that the Notes tendered hereby are in proper form for
transfer (pursuant to the procedures set forth in the Statement under Item
7, "Procedures for Tendering Notes and Delivering Consents--Guaranteed
Delivery"), and that the Depositary will receive (a) such Notes, or a Book-
Entry Confirmation of the transfer of such Notes into the Depositary's
account at a Book-Entry Transfer Facility and (b) a properly completed and
duly executed Consent and Letter of Transmittal (or facsimile thereof) with
any required signature guarantees and any other documents required by the
Consent and Letter of Transmittal within three New York Stock Exchange, Inc.
trading days after the date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Consent and Letter of
Transmittal and Notes to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm: _______________________________________________________________
Authorized Signature: _______________________________________________________
Title: ______________________________________________________________________
Address: ____________________________________________________________________
-----------------------------------------------------------------------------
(Zip Code)
Area Code and Telephone Number: _____________________________________________
Dated: ____________________ , 19 .
4
