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Pursuant to Rule 424(b)(3)
File Number 333-40663
PROSPECTUS
2,235,030 SHARES
PURETEC CORPORATION
COMMON STOCK
($.01 PAR VALUE)
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This Prospectus relates to 2,235,030 shares (the "Shares") of Common Stock,
$.01 par value per share (the "Common Stock"), of PureTec Corporation, a
Delaware corporation (the "Company" or "PureTec"). The Shares may be offered by
certain stockholders of the Company (the "Selling Stockholders") from time to
time in transactions for their own account, including transactions on The Nasdaq
SmallCap Market, at market prices prevailing at the time of sale. The Selling
Stockholders may effect any such transactions through broker-dealers and such
broker-dealers may receive compensation in the form of customary commissions.
The Selling Stockholders received the Shares in connection with a private
exchange offer made by the Company to exchange two shares of Common Stock for
each share of Common Stock, $.01 par value per share (the "PS&T Common Stock"),
of Plastic Specialties and Technologies, Inc., a subsidiary of the Company
("PS&T"), beneficially owned by Permitted Offerees (as defined herein). See
"Selling Stockholders" and "Plan of Distribution."
All expenses of registration incurred in connection with this offering are
being borne by the Company. The Company will, however, not be entitled to any of
the proceeds from the sale of the Shares by the Selling Stockholders. See "Use
of Proceeds."
The Common Stock is quoted on The Nasdaq SmallCap Market under the symbol
PURT. The Shares have been approved for trading on The Nasdaq SmallCap Market.
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FOR A DISCUSSION OF CERTAIN RISKS ASSOCIATED WITH AN INVESTMENT IN THE
SHARES, SEE "RISK FACTORS" BEGINNING AT PAGE 3.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS JANUARY 29, 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the SEC at 500 West
Madison Street, 14th Floor, Chicago, Illinois 60661, and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The SEC maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants, like the Company, that file electronically with the SEC
at the following address: http://www.sec.gov. The Common Stock is quoted on The
Nasdaq SmallCap Market, and such reports, proxy statements and other information
may be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed a Registration Statement on Form S-3 (together
with all exhibits and amendments thereto, the "Registration Statement") with the
SEC under the Securities Act of 1933, as amended (the "Securities Act") with
respect to the Shares. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. For further information,
reference is made to the Registration Statement. Statements contained herein
concerning any document filed as an exhibit to the Registration Statement are
not necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the SEC
pursuant to the Exchange Act are incorporated herein by reference:
(i) The Company's Annual Report on Form 10-K for the fiscal
year ended July 31, 1997 filed by the Company with the SEC on November
13, 1997, as amended by the Company's Annual Reports on Form 10-K/A
filed by the Company with the SEC on November 19, 1997, January 14,
1998 and January 26, 1998; and
(ii) The Company's Quarterly Report on Form 10-Q for the
quarterly period ended October 31, 1997 filed by the Company with the
SEC on December 15, 1997, as amended by the Company's Quarterly Report
on Form 10-Q/A filed by the Company with the SEC on January 14, 1998.
In addition, all documents filed by the Company with the SEC pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering made by this
Prospectus shall be deemed to be incorporated herein by reference and shall be
deemed to be a part hereof from the date of filing of such documents (such
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documents, and the document enumerated above, being herein referred to as
"Incorporated Documents"; provided, however, in each year during which an
offering is made by this Prospectus, all documents filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the filing
with the SEC of the Company's Annual Report on Form 10-K covering such year
shall not be Incorporated Documents or be incorporated by reference in this
Prospectus or be a part hereof from and after the filing of such Annual Report
on Form 10-K). All statements contained herein relating to the Company are
qualified in their entirety by reference to the more detailed information set
forth in the Incorporated Documents.
Any statement contained in an Incorporated Document shall be deemed to
be modified or superseded for all purposes to the extent that a statement
contained herein or in any other subsequently filed Incorporated Document
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as modified or superseded, to constitute
a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, on the written or oral request of such person, a copy of any or all
of the Incorporated Documents, other than exhibits to such Incorporated
Documents, unless such exhibits are specifically incorporated by reference into
the information that this Prospectus incorporates. Written or oral requests for
such copies should be directed to: Paul Litwinczuk, Corporate Secretary, PureTec
Corporation, 65 Railroad Avenue, Ridgefield, New Jersey 07657, telephone number
(201) 941-6550.
RISK FACTORS
Risk of Non-completion of Acquisition of PureTec; Potential Significant Dilution
As discussed herein under "Pending Acquisition of the Company," on
November 11, 1997, the Company and PS&T entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Tekni-Plex, Inc., a private company
("Tekni-Plex"), and P.T. Holding, Inc., a wholly-owned subsidiary of Tekni-Plex
("Sub"), pursuant to which PureTec would become a wholly-owned subsidiary of
Tekni-Plex in a merger transaction (the "Merger"), holders of Common Stock would
receive $3.50 in cash per share in the Merger and Tekni-Plex would assume or
refinance all of the Company's debt. Completion of the Merger, which is
anticipated to occur in the first quarter of 1998, is subject to a number of
conditions, including approval by the Company's stockholders and the receipt of
sufficient financing by Tekni-Plex to pay the merger consideration and complete
the refinancing and other transactions described herein. The Company cannot
assure that the conditions to the Merger will be satisfied. Failure to complete
the Merger may have an adverse effect on the current trading prices of the
Common Stock.
If the Merger Agreement is terminated for any reason, including due to
a breach of Tekni-Plex's obligations thereunder or Tekni-Plex's failure to
obtain sufficient financing to consummate the Merger, and Tekni-Plex exercises
the Tekni-Plex Option (as defined herein) in full and/or its conversion rights
under the Convertible Note (as defined herein) issued by PureTec to Tekni-Plex,
each as described herein under "Pending Acquisition of the Company,"
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Tekni-Plex would become the Company's largest single stockholder and holders
of Common Stock could suffer dilution in an amount that could be significant.
Substantial Leverage
The Company and its subsidiaries have substantial indebtedness. As of
October 31, 1997, the Company's ratio of indebtedness to total capitalization
was approximately 74%. The degree to which the Company and its subsidiaries are
leveraged could affect their respective ability to service their indebtedness,
to make capital investments, take advantage of certain business opportunities,
withstand downturns in business or economic cycles or obtain financing necessary
for the Company's businesses. Declines in the future business of the Company and
its subsidiaries, increases in costs or the inability to borrow additional funds
for operations as and when required could impair the ability of the Company and
its subsidiaries to meet their respective debt service obligations and,
therefore, could adversely affect their respective businesses and future
prospects.
Historical Net Losses of the Company
The Company, on a consolidated basis, had net losses of approximately
$16.9 million, $8.2 million and $2.7 million for the fiscal years ended July 31,
1995, 1996 and 1997, respectively. For the three months ended October 31, 1997,
the Company, on a consolidated basis, had a net loss of approximately $2.2
million. The ability to generate positive net income in the future if the Merger
is not consummated will be dependent upon many factors, including the ability to
obtain new customers and retain existing customers, the degree of competition
encountered by the Company, the level of the Company's capital expenditures and
operating expenses and general economic conditions in any one, or all, of the
Company's market segments. If the Merger is not consummated, no assurance can be
given that the Company will achieve significant profitability or that the
Company will not record additional losses in the future.
Government Regulation
The Company's operations are subject to requirements imposed under
certain federal, state and local environmental and health and safety laws and
regulations, including under the federal Clean Water Act, the Clean Air Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act and regulations promulgated by the
Occupational Safety and Health Administration and comparable state laws,
relating to waste water discharges, air emissions, solid waste management and
disposal practices, work place safety and real property use and ownership.
The Company believes that it is in substantial compliance with such
laws and regulations. No assurance can be given, however, that the Company will
continue to be able to secure, renew and maintain compliance with the terms and
conditions of the required environmental permits and approvals, that other
environmental permits or approvals may not be required for the Company's
operations or that penalties will not be imposed by regulatory entities for any
failure to have secured all required environmental permits or approvals.
Further, no assurance can be given that more stringent statutory or regulatory
environmental or work place safety
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requirements will not be enacted or adopted in the future that could have a
material adverse effect on, or materially restrict the operations of, the
Company.
Risk of International Operations
The Company's international operations (consisting of operations in
Ireland, Belgium and Italy), representing approximately $13.5 million in sales
for the fiscal year ended July 31, 1997, are subject to special risks inherent
in doing business outside the United States, including governmental instability,
war and other international conflicts, civil and labor disturbances,
requirements of local ownership, partial or total expropriation,
nationalization, currency devaluation, foreign exchange controls, and foreign
laws and policies, each of which may limit the movement of assets or funds or
result in the deprivation of contract rights or the taking of property without
fair compensation. Although most of the Company's international revenues are
derived from transactions denominated in United States dollars, the Company has
and likely will continue to conduct some business in currencies other than the
United States dollar. The Company only engages in some limited hedging of
specific transactions to hedge against foreign currency fluctuations.
Accordingly, its profitability has been and will continue to be affected by
fluctuations in foreign exchange rates.
Reliance on Limited Number of Customers
For the fiscal year ended July 31, 1997 approximately (i) 88% of net
sales generated by the Company's garden hose business were to its ten largest
customers, (ii) 50% of net sales generated by the Company's medical tubing
business were to its five largest customers, (iii) 25% of net sales generated by
the Company's medical-grade vinyl compounds business were to its five largest
customers and (iv) 50% of net sales generated by the Company's specialty vinyl
polymers business were to its ten largest customers. The Company expects to
continue to depend on such customers for a significant percentage of its net
sales. Accordingly, there can be no assurance that such customers will continue
to purchase products of the Company at historical levels or, that if such
customers continue to purchase products of the Company, that they will not
significantly change, reduce or delay the amount of products purchased from the
Company. Any such discontinuation, change, reduction or delay could prevent the
Company from achieving positive net income in the future and otherwise could
have a material adverse effect on the results of operations of the Company.
Volatility of Price of the Common Stock
The price at which the Common Stock trades, whether on The Nasdaq
SmallCap Market or otherwise, is and will be determined by many factors
including, among other things, the expectation that completion of the Merger
will be achieved, the ability of the Company to service its debt, investor
perception of the Company and the industries in which the Company operates and
general economic and market conditions. Certain of these factors are beyond the
control of the Company. Developments involving these factors may increase the
volatility of, and otherwise adversely affect, the trading prices of the Common
Stock.
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Dividends on the Common Stock
The Company has not paid any cash dividends in the last three fiscal
years and through the first quarter of fiscal year 1998 and does not anticipate
paying any cash dividends in the foreseeable future. The Company's ability to
pay dividends is subject to the Company's income, receipt of cash flow from
subsidiaries in the form of dividends or similar distributions, financial
condition and capital needs. The ability of the Company's subsidiaries to pay
cash dividends to the Company is restricted by various indentures and credit
agreements. Due to these restrictions in such indentures and credit agreements,
the Company is effectively precluded from currently paying any material cash
dividend and does not anticipate doing so in the foreseeable future.
Applicability of Penny Stock Rules
Regulations under the Exchange Act regulate the trading of so-called
"penny stocks" (the "Penny Stock Rules"), which are generally defined as any
security not listed on a national securities exchange or The Nasdaq Stock
Market, priced at less than $5.00 per share and offered by an issuer with
limited net tangible assets and revenues. The Common Stock is currently exempted
from the majority of the Penny Stock Rules solely by virtue of its listing on
The Nasdaq SmallCap Market. However, equity securities listed on The Nasdaq
SmallCap Market that are priced at less than $5.00 per share are deemed penny
stocks for the limited purpose of Section 15(b)(6) of the Exchange Act. This
provision enables the SEC to prohibit or limit the participation or affiliation
of previously sanctioned persons in or with any offering of penny stocks and
makes it unlawful for any broker-dealer to participate in a distribution of any
penny stock without the consent of the SEC if the broker-dealer is aware of or
should have been aware of the participation of a previously sanctioned person.
As of the date of this Prospectus, the Common Stock is trading at a price below
$5.00 per share and therefore is subject to these trading restrictions. In the
event that the Common Stock is delisted from The Nasdaq SmallCap Market and the
Company fails to meet other relevant criteria so as to fall within the more
comprehensive definition of "penny stock," trading of the Common Stock would be
subject to the full range of the Penny Stock Rules. Under the Penny Stock Rules,
brokers would be required to undertake certain procedures prior to selling a
"penny stock," which may make it more difficult for them to sell the Common
Stock. In the event of a delisting, purchasers of the Common Stock offered
hereby could likewise have difficulty selling their shares in the secondary
trading market.
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THE COMPANY
The Company is a vertically integrated manufacturer of specialty
plastic products. The Company is a leading producer of garden hose, disposable
medical tubing, and precision tubing and gaskets. The Company also produces
plastic materials that are used in various specialized applications, and
high-grade recycled polyethylene terapthalate for packaging and fiber
applications.
The Company's operations consist of two manufacturing categories,
"Plastic Products," with approximately 60% of total sales; and "Plastic
Materials," with approximately 40% of total sales. The Company's major product
lines are listed below, with the manufacturing names in parentheses:
Plastic Products Plastic Materials
Garden Hose (Colorite Plastics) Medical-grade Vinyl Compounds (Colorite
Polymers)
Medical Tubing (Plastron) Specialty Vinyl Polymers (Colorite
Polymers; Cyber-tech Polymers)
Specialty Tubing & Gaskets Recycled Plastics (Pure Tech Plastics)
(Action Technology; American
Gasket & Rubber)
Each of these product lines has its own customer base, competitive
environment, cost and pricing structures, business cycles and related business
strategies.
The Company's principal executive offices are located at 65 Railroad
Avenue, Ridgefield, New Jersey 07657, telephone number (201) 941-6550.
The foregoing description is not complete, and is qualified by
reference to the Incorporated Documents, which purchasers of the Shares are
encouraged to review.
PENDING ACQUISITION OF THE COMPANY
On November 12, 1997, the Company announced that it and PS&T had signed
the Merger Agreement with Tekni-Plex and Sub pursuant to which the Company
would, through the Merger, become a wholly-owned subsidiary of Tekni-Plex. The
Merger Agreement provides that the owner of each share of Common Stock would
receive $3.50 in cash for that share in the Merger. The Merger Agreement and the
Merger will be submitted to the Company's stockholders of record on January 6,
1998 for approval at a special meeting of stockholders scheduled to be held on
February 25, 1998. The Merger Agreement and the Merger have been unanimously
approved, and recommended to stockholders for adoption, by the Company's Board
of Directors.
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Concurrently with the execution of the Merger Agreement, certain
directors and executive officers of the Company entered into a Stockholder and
Voting Option Agreement, dated as of November 11, 1997 (the "Stockholder Voting
Agreement"), with Tekni-Plex pursuant to which such directors and executive
officers, in their capacity as stockholders of the Company, agreed, among other
things, to vote their shares of Common Stock, constituting an aggregate of
approximately 9% of the outstanding shares of Common Stock, in favor of the
Merger and the adoption of the Merger Agreement. In addition, pursuant to the
Stockholder Voting Agreement, such directors and executive officers granted to
Tekni-Plex an irrevocable option (the "Tekni-Plex Option") to purchase such
shares at $3.50 per share within specified time periods after the termination of
the Merger Agreement.
The Merger Agreement contains a number of conditions that must be
satisfied in order for the Merger to occur, including the successful completion
of a consent solicitation and tender offer (the "Debt Offer") for PS&T's 11.25%
Senior Secured Notes due 2003 (the "PS&T Notes"), the receipt of all necessary
governmental and regulatory approvals, and the absence of any changes occurring
prior to the effective time of the Merger that would have a material adverse
significance with respect to the value of the Company and its subsidiaries,
taken as a whole.
The Merger Agreement also requires that the outstanding minority common
stockholders' interest in PS&T be eliminated, either through purchase or a
short-form merger procedure under Delaware law, not later than immediately prior
to completion of the Merger, at a price of $7.00 per share of PS&T Common Stock.
The Merger is further subject to the receipt by Tekni-Plex of
sufficient financing to pay for the shares of outstanding Common Stock, purchase
the PS&T Notes tendered in the Debt Offer, and fund all other cash requirements
of the Merger. Tekni-Plex has received commitments from Morgan Guaranty Trust
Company of New York to provide senior bank financing and subordinated bridge
loans in an aggregate amount that the parties believe will be sufficient to
complete the Merger, subject to a number of conditions.
The Company will not accept for purchase PS&T Notes tendered in the
Debt Offer, will not eliminate the PS&T minority common stockholders' interest
and will not carry out the related transactions, in each case, as and when
required by the Merger Agreement, except contemporaneously with the consummation
of the Merger.
The Merger Agreement is terminable by Tekni-Plex, the Company, or
either of them under various circumstances. In the event the Merger Agreement is
terminated because the Company's Board of Directors withdraws or materially
modifies its approval or recommendation of the Merger or the Merger Agreement or
another person, entity or group acquires beneficial ownership of 50% or more of
the outstanding shares of the Common Stock, the Company is obligated to pay a
fee of $10 million to Tekni-Plex and to reimburse Tekni-Plex for up to $5
million of its expenses in connection with the Merger Agreement and related
transactions. The Company believes that its obligation to pay such fees and
expenses will only arise in the event that a third party submits a higher bid
for (or otherwise acquires control of) the Company. The Company believes that
any such circumstances would likely include the assumption by such third party
of the Company's obligation to pay such fees and expenses to Tekni-Plex in
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connection with such bid or acquisition of control. In the event the Merger
Agreement is terminated as a result of Tekni-Plex having breached its
obligations thereunder or as a result of Tekni-Plex's failure to obtain
sufficient financing to consummate the Merger, in whole or in part, not related
to the Company's actions and, in either case, all of the other conditions set
forth in the Merger Agreement to the obligations of Tekni-Plex and Sub shall
have been satisfied, Tekni-Plex shall pay the out-of-pocket costs and expenses
incurred by the Company and its subsidiaries solely in connection with
Tekni-Plex's proposed issuance and sale of senior subordinated notes. The
Company expects the Merger to be completed in the first quarter of 1998 but
cannot assure that all of the conditions to the Merger will be satisfied.
Concurrently with the execution of the Merger Agreement, Tekni-Plex
purchased a convertible note (the "Convertible Note") issued by the Company in
the amount of $5 million. The loan has assisted the Company and PS&T in meeting
expected cash requirements in the period prior to completion of the Merger. The
Convertible Note bears interest at 13% and is convertible, at any time following
the 60th day after any termination of the Merger Agreement, into a number of
shares of Common Stock sufficient to retire the principal amount of the
Convertible Note plus accrued interest or, in any event, at a base conversion
rate of one share of Common Stock per $2.72 of obligations owed under the
Convertible Note. The Company is required to file a registration statement with
respect to the Common Stock issuable upon conversion of the Convertible Note
promptly following a termination of the Merger Agreement. The Convertible Note
matures on September 30, 1998. The Convertible Note is subject to prepayment by
the Company in cash at any time and contains covenants and events of default
customary for a debt instrument of this type.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders. Each Selling Stockholder is entitled to use
the proceeds he or she receives from the sale of the Shares as he or she sees
fit.
SELLING STOCKHOLDERS
Based upon the best information of the Company as of November 14, 1997,
the following table shows (i) the names of the Selling Stockholders and (ii) the
number of Shares which may be offered by each of them pursuant to this
Prospectus (in some instances, Shares are held of record in "street name" by a
broker-dealer or other third party for the account of the beneficial owners
thereof). Based upon the best information of the Company as of November 14,
1997, the number of shares of Common Stock owned of record by each Selling
Stockholder prior to the Offering is the same as the number of Shares being
offered by such Selling Stockholder as shown under the column captioned "Number
of Shares Being Offered" and, therefore, the number of shares of Common Stock to
be owned by any such Selling Stockholder following the sale of all of such
Selling Stockholder's Shares offered pursuant to this Prospectus will be zero.
The Company cannot predict whether or to what extent any of the Selling
Stockholders will offer or sell Shares.
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Number of Shares
Selling Stockholder Being Offered
- ------------------- -------------
Merrill Lynch............................................ 830,290
Bear Stearns Securities Corp............................. 325,580
First Union National Bank................................ 220,000
Cudd & Co. c/o The Chase Manhattan Bank.................. 206,568
Goldman Sachs & Co....................................... 133,500
Leslie Alexander......................................... 120,000
Sigler & Co. c/o Chase Manhattan Bank.................... 100,000
Umbwad & Co. c/o Trust Department
United Missouri Bank NA.................................. 40,000
Albert Ginsburg.......................................... 33,840
Neuberger & Berman LLC Cust. For
Haussman Holdings........................................ 33,840
Bost & Co. c/o Mellon Bank............................... 25,220
Joseph Manley & Mary M. Manley JTWROS.................... 24,642
Richard Allerton Jr..................................... 21,500
Lewco Securities Corp.................................... 10,000
Manufacturers & Traders Tr. Co........................... 10,000
Roger E. Birk............................................ 10,000
Salkeld & Co., Bankers Trust Co.......................... 9,600
Pitt & Co. c/o Bankers Trust Company..................... 9,000
Alan Green............................................... 8,000
George P. Bischoff Ttee George P. Bischoff Living Trust
U/A DTD 4/10/90.......................................... 7,000
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MLPF & S Cust. FPO Ronald P. Zarnet IRRA
FBO Ronald P. Zarnet..................................... 6,250
Hudd & Co................................................ 5,000
Richard E. Omohundro Jr. and
Ann B. Omohundro JTWROS.................................. 5,000
Smith Barney Inc........................................ 4,500
MLPF & S Cust FPD CE Meyer Jr.
IRRA FBO CE Meyer Jr. ................................... 4,000
Aniello A. Oliviero...................................... 4,000
ML & Co Sav & Inv Plan Vocon Account
FBO Guy G. Rutherfurd Jr................................. 4,000
Richard A. Fenn.......................................... 4,000
Wilma H. Bitterman and Leonard Bitterman
Ttees U/A 3/29/90 By Wilma H. Bitterman................. 4,000
Firstcinco c/o Star Bank NA.............................. 4,000
John A. Frabotta & Penny Lou Frabotta JTWROS............. 2,500
Nancy Bolmeier Fisher.................................... 2,500
A. Stephen Otis Ttee U/A DTD 4/13/93 by A. Stephen
Otis..................................................... 2,500
Lydia Green.............................................. 2,000
Albert J. Schneider & Gladys M. Schneider
Ttees Albert J. Schneider Trust U/A DTD 4/14/83.......... 2,000
Hare & Co. c/o The Bank of New York...................... 200
---
Total.............................. 2,235,030
=========
The Selling Stockholders received the Shares in connection with a
private exchange offer (the "Private Exchange Offer") made by the Company to
exchange two shares of Common Stock for each share of PS&T Common Stock
beneficially owned by "accredited investors" (within the meaning of Rule 501(a)
under the Securities Act) who beneficially owned 1000 or more shares
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of PS&T Common Stock ("Permitted Offerees") as of the date of the Private
Exchange Offer. The Private Exchange Offer expired on June 18, 1997 and was
completed by the Company on June 27, 1997. Since the Shares were issued in the
Private Exchange Offer pursuant to an exemption from registration under the
Securities Act, the Company undertook, for the benefit of the Selling
Stockholders, to prepare and file with the SEC a shelf registration statement
with respect to the Shares.
DESCRIPTION OF COMMON STOCK
General
The Company is authorized by its Certificate of Incorporation, as
amended, to issue (i) 50,000,000 shares of Common Stock, of which 31,240,866
shares were issued and outstanding as of October 31, 1997, and (ii) 1,000,000
shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"), no
shares of which are presently issued and outstanding.
Dividends
The holders of the Common Stock are entitled to receive dividends as
and when declared by the Board of Directors of the Company (the "Board") out of
funds legally available therefor subject to the rights of holders of any series
of Preferred Stock that may be issued and outstanding. The Board must establish
the rights and preferences of each series of Preferred Stock in the resolutions
providing for the issuance thereof.
The Company has not paid any cash dividends in the last three fiscal
years and through the first fiscal quarter of 1998 and does not anticipate
paying any cash dividends in the foreseeable future. The Company's ability to
pay dividends is subject to the Company's income, receipt of cash flow from
subsidiaries in the form of dividends or similar distributions, financial
condition and capital needs. The ability of the Company's subsidiaries to pay
cash dividends to the Company is restricted by various indentures and credit
agreements. Due to these restrictions in such indentures and credit agreements,
the Company is effectively precluded from currently paying any material cash
dividends.
Voting Rights
The holders of the Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. The voting
rights, if any, of any share of Preferred Stock must be established by the Board
in the resolutions providing for the issuance thereof. The holders of the Common
Stock are not entitled to cumulate their votes in electing directors to the
Board. In connection with the signing by the Company of the Merger Agreement,
pursuant to the Stockholder Voting Agreement, officers and directors of the
Company beneficially owning in the aggregate approximately 9% of the outstanding
Common Stock have agreed to vote their shares of Common Stock in favor of the
Merger and the adoption of the Merger Agreement.
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Liquidation, Dissolution or Winding Up
In the event of any liquidation, dissolution or winding up of the
Company, the holders of the Common Stock are entitled to receive pro rata all
assets of the Company, if any, remaining after payment of all debt of the
Company and payment of the full preferential amounts for any series of Preferred
Stock that may be issued and outstanding.
Miscellaneous
The holders of the Common Stock have no preemptive or similar rights to
subscribe for additional securities. There are no redemption or sinking fund
provisions applicable to the Common Stock. The Common Stock currently
outstanding, including the Shares, is validly issued, fully paid and
non-assessable. The Common Stock is quoted on The Nasdaq SmallCap Market and the
Shares have been approved for trading on such market. The American Stock
Transfer & Trust Company is the Transfer Agent and Registrar for the Common
Stock.
PLAN OF DISTRIBUTION
The Shares may be offered for sale by each Selling Stockholder in his
or her discretion, on a delayed or continuous basis, from time to time in
transactions for his or her own account, including transactions on The Nasdaq
SmallCap Market (or any national securities exchange or other organization on
which the Common Stock may then be listed), at market prices prevailing at the
time of sale. Such transactions may be effected by selling the Shares through
broker-dealers, who may receive customary commissions, or in private sales. Each
Selling Stockholder also may pledge Shares as collateral for margin accounts and
such Shares could be resold pursuant to the terms of such accounts. Each Selling
Stockholder and any broker-dealer that participates in the offering of the
Shares may be deemed to be an "underwriter" within the meaning of Section 2(11)
of the Securities Act and a portion of the proceeds of sales and commissions
therefor may be deemed underwriting compensation for purposes of the Securities
Act. The Company will not receive any part of the proceeds from the sale of the
Shares by any Selling Stockholder. The Selling Stockholders are not restricted
as to the price or prices at which they may sell their Shares or as to the
timing or amounts of such sales. Sales of such Shares at less than market prices
may depress the market price of the Common Stock.
LEGALITY OF THE SHARES
The legality of the Shares has been passed upon for the Company by
Winthrop, Stimson, Putnam & Roberts, New York, New York.
13
<PAGE>
EXPERTS
The consolidated financial statements of the Company and its
consolidated subsidiaries, except Styrex Industries, Inc. ("Styrex") for the
year ended July 31, 1995, as of July 31, 1997 and 1996 and for each of the three
years in the period ended July 31, 1997, and the related financial statement
schedule incorporated in this Prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended July 31, 1997, as amended, have been
audited by Deloitte & Touche LLP, independent public accountants, as stated in
their report, which is incorporated herein by reference. The financial
statements of Styrex, for the year ended July 31, 1995 (consolidated with those
of the Company), have been audited by Holtz Rubenstein & Co., LLP, independent
public accountants, as stated in their report incorporated herein by reference.
Such financial statements of the Company and its consolidated subsidiaries are
incorporated herein by reference in reliance upon the respective reports of such
firms given upon their authority as experts in accounting and auditing.
14
<PAGE>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SHARES IN ANY JURISDICTION WHERE, OR TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
Risk Factors................................... 3
The Company.................................... 7
Pending Acquisition of the Company............. 7
Use of Proceeds................................ 9
Selling Stockholders........................... 9
Description of Common Stock.................... 12
Plan of Distribution........................... 13
Legality of the Shares......................... 13
Experts........................................ 14
</TABLE>
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2,235,030 SHARES
PURETEC CORPORATION
COMMON STOCK
($.01 PAR VALUE)
------------------------
PROSPECTUS
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JANUARY 29, 1998
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