<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13E-3/A
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
CHAPARRAL STEEL COMPANY
(Name of the Issuer)
TEXAS INDUSTRIES, INC., TEXAS INDUSTRIES ACQUISITION INC.
AND
CHAPARRAL STEEL COMPANY
(Name of Persons Filing Statement)
<TABLE>
<C> <C>
COMMON SHARES, $.10 PAR VALUE 159422104
(Title of Class of Securities) (Cusip Number of Class of Securities)
</TABLE>
ROBERT C. MOORE, ESQ.
VICE PRESIDENT -- GENERAL COUNSEL AND SECRETARY
TEXAS INDUSTRIES, INC.
1341 W. MOCKINGBIRD LANE
7TH FLOOR
DALLAS, TEXAS 75247
(972) 647-6740
(Name, address and telephone number of person authorized to receive notices
and communications on behalf of the persons filing statement.)
Copies To:
<TABLE>
<C> <C>
DAN BUSBEE, ESQ. JOHN D. CAPERS, JR., ESQ.
LOCKE PURNELL RAIN HARRELL KING & SPALDING
2200 ROSS AVENUE, SUITE 2200 191 PEACHTREE STREET
DALLAS, TEXAS 75201 ATLANTA, GEORGIA 30303-1763
(214) 740-8000 (404) 572-4600
</TABLE>
a. [X] The filing of solicitation materials or an information statement subject
to Regulation 14A [17 CFR 240.14a-1 to 240.14b-1], Regulation 14C [17 CRF
240.14c-1 to 240.14c-101] or Rule 13e-3(c) [240.13e-3 (c)] under the
Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [X]
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION AMOUNT OF
VALUATION* FILING FEE**
----------- ------------
<C> <C>
$76,300,000 $15,260
</TABLE>
- ---------------
* Assumes 4,453,963 Common Shares, par value $.10 per share, of Chaparral
Steel Company (the "Common Shares") will be converted into the right to
receive $15.50 per share in cash. Includes options to purchase Common Shares
having a net cash value of $7,263,574.
** The amount of the filing fee, calculated in accordance with 240.0-11 of the
Securities Exchange Act of 1934 equals 1/50th of one percent of the
transaction value.
[X] Check box if any part of the fee is offset as proved Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: $15,260
Form or Registration No.: Schedule 14A
Filing Party: Chaparral Steel Company
Date Filed: September 9, 1997
================================================================================
<PAGE> 2
INTRODUCTION
This Schedule 13E-3 Transaction Statement is being filed by Texas
Industries, Inc., a Delaware corporation ("TXI"), TXI Acquisition Inc., a
Delaware corporation and wholly-owned subsidiary of TXI ("TXI Acquisition"), and
Chaparral Steel Company, a Delaware corporation (the "Company"), and is being
filed in connection with an Agreement and Plan of Merger, dated as of July 30,
1997 ("the Merger Agreement") among TXI, TXI Acquisition and the Company.
The following cross-reference sheet is supplied pursuant to general
instruction F to 13E-3 and shows the location in the preliminary proxy statement
filed by the Company with the Securities and Exchange Commission
contemporaneously herewith (including all annexes and schedules thereto
("Preliminary Proxy Statement") of the information required to be included in
response to the items of this Transaction Statement. The information in the
Preliminary Proxy Statement, a copy of which is attached hereto as Exhibit d, is
incorporated by reference and the responses to each item are qualified in their
entirety by the information contained in the Preliminary Proxy Statement.
CROSS-REFERENCE SHEET SHOWING
LOCATION IN PRELIMINARY PROXY STATEMENT
OF INFORMATION REQUIRED BY ITEMS IN SCHEDULE 13E-3
<TABLE>
<CAPTION>
SECTION 13E-3 ITEM LOCATION IN PRELIMINARY PROXY STATEMENT
------------------ ---------------------------------------
<S> <C>
1. Issuer and Class of Security Subject to the
Transaction
Item 1(a)....................................... Cover Page and "The Parties"
Item 1(b)....................................... Cover Page and "Introduction-Record Date;
Quorum; Required Vote"
Item 1(c)....................................... "Market Prices and Dividends"
Item 1(d)....................................... "Market Prices and Dividends"
Item 1(e)....................................... Not Applicable
Item 1(f)....................................... Quarterly Periods
2. Identity and Background
Items 2(a) - (d) and (g)........................ Cover Page; "Introduction General;"
"-- The Special Meeting;" "The Parties;"
and "Management of TXI, TXI Acquisition
and the Company"
Items 2(e) and (f).............................. Not Applicable
3. Past Contacts, Transactions or Negotiations
Item 3(a)(1).................................... "Special Factors -- Interests of Certain
Persons in the Merger"
Item 3(a)(2) and (b)............................ "Special Factors -- Background of the
Merger" and "-- Certain Litigation"
4. Terms of Transaction
Item 4(a)....................................... "Introduction -- Record Date; Quorum;
Required Vote;" "Special
Factors -- Interests of Certain Persons
in the Merger;" and "The Merger"
Item 4(b)....................................... "Introduction -- Record Date; Quorum;
Required Vote;" "Special
Factors -- Interests of Certain Persons
in the Merger;" and "The
Merger -- General -- Treatment of Shares
in the Merger"
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
SECTION 13E-3 ITEM LOCATION IN PRELIMINARY PROXY STATEMENT
------------------ ---------------------------------------
<S> <C>
5. Plans or Proposals of the Issuer or Affiliate
Items 5(a) - (g)................................ "Special Factors -- Background of the
Merger;" "-- Purpose and Structure of
the Merger;" "-- Plans for the Company
After the Merger;" and "-- Interests of
Certain Persons in the Merger"
6. Source and Amounts of Funds or Other Consideration
Item 6(a)....................................... "The Merger -- Payment for Public Shares;
Sources of Funds"
Item 6(b)....................................... "Special Factors -- Fees and Expenses"
Item 6(c) and (d)............................... "The Merger -- Payment for Public Shares;
Sources of Funds"
7. Purpose(s), Alternatives, Reasons and Effects
Items 7(a) and (c).............................. "Special Factors -- Background of the
Merger;" "-- Purpose and Structure of
the Merger;" and "-- Recommendation of
the Special Committee and Board of
Directors of the Company; Fairness of
the Merger"
Item 7(b)....................................... "Special Factors -- Background of the
Merger;" "-- Purpose and Structure of
the Merger;" and "-- Recommendation of
the Special Committee and Board of
Directors of the Company; Fairness of
the Merger"
Item 7(d)....................................... "Special Factors -- Background of the
Merger;" "-- Purpose and Structure of
the Merger;" "-- Plans for the Company
After the Merger;" "-- Certain Effects
of the Merger;" "-- Certain U.S. Federal
Income Tax Consequences;" and "The
Merger -- Accounting Treatment"
8. Fairness of the Transaction
Item 8(a)....................................... "Special Factors -- Recommendation of the
Special Committee and Board of Directors
of the Company; Fairness of the Merger"
Item 8(b)....................................... "Special Factors -- Background of the
Merger;" "-- Recommendation of the
Special Committee and Board of Directors
of the Company; Fairness of the Merger;"
"-- Purpose and Structure of the
Merger"; "-- Opinion of Robinson-
Humphrey"; Summary of Financial
Analyses; "-- TXI's Financial Advisor"
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
SECTION 13E-3 ITEM LOCATION IN PRELIMINARY PROXY STATEMENT
------------------ ---------------------------------------
<S> <C>
Item 8(c)....................................... "Introduction -- Record Date; Quorum;
Required Vote;" "Special
Factors -- Recommendation of the Special
Committee and Board of Directors of the
Company; Fairness of the Merger;" and
"The Merger -- General -- Conditions to
the Merger; Amendment, Waiver and
Termination"
Item 8(d)....................................... "Special Factors -- Background of the
Merger;" "-- Recommendation of the
Special Committee and Board of Directors
of the Company; Fairness of the Merger;"
and "-- Opinion of Robinson-Humphrey;
Summary of Financial Analyses"
Item 8(e)....................................... "Special Factors -- Background of the
Merger;" "-- Recommendation of the
Special Committee and Board of Directors
of the Company; Fairness of the Merger"
Item 8(f)....................................... Not Applicable
9. Reports, Opinions, Appraisals and Certain
Negotiations
Items 9(a) - (c)................................ "Special Factors -- Background of the
Merger;" "-- Opinion of Robinson-
Humphrey; Summary of Financial
Analyses"; "-- TXI's Financial Advisor;"
and Exhibits (b)(1), (b)(2) and (b)(3)
10. Interest in Securities of the Issuer
Item 10(a)...................................... "Introduction -- Record Date; Quorum;
Required Vote"; "Special
Factors -- Interests of Certain Persons
in the Merger;" and "Ownership of Common
Shares"
Item 10(b)...................................... Not Applicable
11. Contracts, Arrangements or Understandings with
Respect to
the Issuer's Securities......................... "Special Factors -- Interests of Certain
Persons in the Merger;" "The Merger;"
Annex A to the Preliminary Proxy
Statement
12. Present Intention and Recommendation of Certain
Persons with Regard to the Transaction
Items 12(a) - (b)............................... "Introduction -- The Special Meeting;"
"-- Record Date; Quorum; Required Vote;"
"Special Factors -- Recommendation of
the Special Committee and Board of
Directors of the Company; Fairness of
the Merger;" and "-- Interests of
Certain Persons in the Merger"
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
SECTION 13E-3 ITEM LOCATION IN PRELIMINARY PROXY STATEMENT
------------------ ---------------------------------------
<S> <C>
13. Other Provisions of the Transaction
Item 13(a)...................................... "The Merger -- Appraisal Rights" and Annex
B to the Preliminary Proxy Statement
Item 13(b) and (c).............................. Not Applicable
14. Financial Information
Item 14(a)...................................... "Selected Consolidated Financial Data of
the Company;" "Incorporation of Certain
Documents by Reference;" Exhibits (g)(1)
and (g)(2)
Item 14(b)...................................... Not Applicable
15. Persons and Assets Employed, Retained or Utilized
Item 15(a)...................................... "Introduction -- Solicitation of Proxies"
Item 15(b)...................................... "Introduction -- Solicitation of Proxies;"
"Special Factors -- Background of the
Merger;" "-- Opinion of
Robinson-Humphrey; Summary of Financial
Analyses;" "TXI's Financial Advisor;"
and "-- Fees and Expenses"
16. Additional Information............................. Preliminary Proxy Statement in its
entirety
17. Material to be Filed as Exhibits................... Separately filed with this Schedule 13E-3
</TABLE>
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION
(a) The name of the issuer of the class of equity security subject to the
Rule 13e-3 transaction is Chaparral Steel Company and the address of its
principle executive offices is 300 Ward Road, Midlothian, Texas 76065-9651.
(b) The relevant information set forth on the Cover Page of the Preliminary
Proxy Statement and under the caption "Introduction -- Record Date; Quorum and
Required Vote" is incorporated here and by reference.
(c) The relevant information set forth under the caption "Market Prices and
Dividends" is incorporated herein by reference.
(d) The relevant information set forth under the caption "Market Prices and
Dividends" is incorporated herein by reference.
(e) Not Applicable.
(f)
5
<PAGE> 6
<TABLE>
<CAPTION>
AMOUNT OF COMMON RANGE OF AVERAGE
QUARTERLY PERIODS(1) SHARES PURCHASED PRICES PAID PURCHASE PRICE
-------------------- ---------------- -------------- --------------
<S> <C> <C> <C>
FISCAL 1996 (ENDED MAY 31, 1996)
First Quarter................................... 0 -- --
Second Quarter.................................. 651,800 $9.50 -- $10.00 $ 9.77
Third Quarter................................... 0 -- --
Fourth Quarter(2)............................... 454,700 $13.375 $13.375
FISCAL 1997 (ENDED MAY 31, 1997)
First Quarter(2)................................ 349,100 $10.75 $10.75
Second Quarter.................................. 0 -- --
Third Quarter................................... 0 -- --
Fourth Quarter.................................. 0 -- --
</TABLE>
- ---------------
(1) The information set forth in this table reflects purchases of the Common
Shares made by the Company since the commencement of the Company's second
full fiscal year preceding the date of this Schedule 13E-3.
(2) Only one purchase transaction occurred during such quarterly period.
ITEM 2. IDENTITY AND BACKGROUND
(a) - (d) and (g). This Transaction Statement is being filed by TXI, TXI
Acquisition and the Company (the Company being the issuer.) The following
information set forth on the Cover Page of the Preliminary Proxy Statement and
set forth under the captions "Introduction -- General," "-- The Special
Meeting," "The Parties" and "Management of TXI, TXI Acquisition and the Company"
is incorporated herein by reference.
(e) and (f). During the last 5 years, none of TXI, TXI Acquisition and the
Company or, to the best of the knowledge of TXI, TXI Acquisition or the Company,
any of the persons listed under the caption "Management of TXI, TXI Acquisition
and the Company" (i) has been convicted in a criminal proceeding (excluding
traffic violations or some other misdemeanors), or (ii) was or is a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining further violations of, or prohibiting activates subject
to, federal or state securities laws or finding any violations of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a)(1). The relevant information set forth under the caption "Special
Factors -- Interests of Certain Persons in the Merger" is incorporated herein by
reference.
(a)(2) and (b). The relevant information set forth under the captions
"Special Factors -- Background of the Merger" and "-- Certain Litigation" is
incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The relevant information set forth under the captions
"Introduction -- Record Date; Quorum; Required Vote," "Special
Factors -- Interests of Certain Persons in the Merger" and "The Merger" are
incorporated herein by reference.
(b) The relevant information set forth under the captions
"Introduction -- Record Date; Quorum; Required Vote," "Special
Factors -- Interests of Certain Persons in the Merger" and "The Merger --
General -- Treatment of Shares in the Merger" is incorporated herein by
reference.
6
<PAGE> 7
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) - (g) The relevant information set forth under the captions "Special
Factors -- Background of the Merger," "-- Purpose and Structure of the Merger,"
"-- Plans for the Company After the Merger" and "-- Interests of Certain Persons
in the Merger" is incorporated herein by reference.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The relevant information set forth under the captions "The
Merger -- Payment for Public Shares; Sources of Funds" is incorporated herein by
reference.
(b) The relevant information set forth under the caption "Special
Factors -- Fees and Expenses" is incorporated herein by reference.
(c) and (d) The relevant information set forth under the caption "The
Merger -- Payment for Public Shares; Sources of Funds" is incorporated herein by
reference.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a) and (c). The relevant information set forth under the captions "Special
Factors -- Background of the Merger," "-- Purpose and Structure of the Merger"
and "-- Recommendation of the Special Committee and Board of Directors of the
Company; Fairness of the Merger" is incorporated herein by reference.
(b) The relevant information set forth under the caption "Special
Factors -- Background of the Merger," "-- Purpose and Structure of the Merger"
and "-- Recommendation of the Special Committee and Board of Directors of the
Company; Fairness of the Merger" is incorporated herein by reference.
(d) The relevant information set forth under the captions "Special
Factors -- Background of the Merger," "-- Purpose and Structure of the Merger,"
"-- Plans for the Company After the Merger," "-- Certain Effects of the Merger,"
"-- Certain U.S. Federal Income Tax Consequences" and "The Merger -- Accounting
Treatment" is incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) The relevant information set forth under the captions "Special
Factors -- Recommendation of the Special Committee and Board of Directors of the
Company; Fairness of the Merger" is incorporated herein by reference.
(b) The relevant information set forth under the captions "Special
Factors -- Background of the Merger," "-- Recommendation of the Special
Committee and Board of Directors of the Company; Fairness of the Merger,"
"-- Purpose and Structure of the Merger," "-- Opinion of Robinson-Humphrey;
Summary of Financial Analyses" and "-- TXI's Financial Advisor" is incorporated
herein by reference.
(c) The relevant information set forth under the captions
"Introduction -- Record Date; Quorum; Required Vote," "Special
Factors -- Recommendation of the Special Committee and Board of Directors of the
Company; Fairness of the Merger" and "The Merger -- General -- Conditions to the
Merger; Amendment, Waiver and Termination" is incorporated herein by reference.
(d) The relevant information set forth under the caption "Special
Factors -- Background of the Merger," "-- Recommendation of the Special
Committee and Board of Directors of the Company; Fairness of the Merger" and
"Opinion of Robinson-Humphrey; Summary of Financial Analyses" is incorporated
herein by reference.
(e) The relevant information set forth under the captions "Special
Factors -- Background of the Merger," "-- Recommendation of the Special
Committee and Board of Directors of the Company; Fairness of the Merger" is
incorporated herein by reference.
(f) Not Applicable.
7
<PAGE> 8
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS
(a) - (c) The relevant information set forth under the captions "Special
Factors -- Background of the Merger," "-- Opinion of Robinson-Humphrey; Summary
of Financial Analyses," "-- TXI's Financial Advisor" and Exhibits (b)(1), (b)(2)
and (b)(3) to this Transaction Statement is incorporated herein by reference.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) The relevant information set forth under the captions
"Introduction -- Record Date; Quorum; Required Vote," "Special
Factors -- Interests of Certain Persons in the Merger" and "Ownership of Common
Shares" is incorporated herein by reference.
(b) Not applicable.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES
The relevant information set forth under the captions "Special
Factors -- Interests of Certain Persons in the Merger," "The Merger" and Annex A
to the Preliminary Proxy Statement is incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
(a) and (b). The relevant information set forth under the captions
"Introduction -- The Special Meeting," "-- Record Date; Quorum; Required Vote,"
"Special Factors -- Recommendation of the Special Committee and Board of
Directors of the Company; Fairness of the Merger" and "Interests of Certain
Persons in the Merger" is incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The relevant information set forth under the caption "The
Merger -- Appraisal Rights" and in Annex B to the Preliminary Proxy Statement is
incorporated herein by reference.
(b) and (c). Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) The relevant information set forth under the caption "Selected
Consolidated Financial Data of the Company" in the Preliminary Proxy Statement
is incorporated herein by reference. Pursuant to Instruction D and Instruction F
to Schedule 13E-3, the following are incorporated by reference:
(i) The "Consolidated Financial Statements" from the Company's Annual
Report on Form 10-K for the fiscal year ended May 31, 1997 (a copy of which
is filed as Exhibit (g)(1) to this Transaction Statement);
(ii) the Company's Annual Report on Form 10-K/A for the fiscal year
ended May 31, 1997 (a copy of which is filed as Exhibit (g)(1) to this
Transaction Statement);
(iii) Part I, "Financial Information," Item 1, "Consolidated Financial
Statements" from the Company's Quarterly Report on Form 10-Q for the period
ended August 31, 1997 (a copy of which is filed as Exhibit (g)(2) to this
Transaction Statement); and
(iv) the Company's Quarterly Report on Form 10-Q/A for the period
ended August 31, 1997 (a copy of which is filed as Exhibit (g)(2) to this
Transaction Statement).
(b) Not applicable.
8
<PAGE> 9
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) and (b). The relevant information set forth under the captions
"Introduction -- Solicitation of Proxies", "Special Factors -- Background of the
Merger", "-- Opinion of Robinson-Humphrey; Summary of Financial Analyses,"
"TXI's Financial Advisor" and "Fees and Expenses" is incorporated herein by
reference.
ITEM 16. ADDITIONAL INFORMATION.
The information set forth in the Preliminary Proxy Statement is
incorporated herein by reference in its entirety.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
(a) -- Not Applicable.
(b)(1) -- Fairness Opinion of The Robinson-Humphrey Company, Inc.
(incorporated by reference to Annex C to the Preliminary
Proxy Statement).
(b)(2)* -- Presentation materials provided to the Special Committee
of the Board of Directors of the Company by The
Robinson-Humphrey Company, Inc. on June 20, 1997.
(b)(3)* -- Presentation materials provided to the Special Committee
of the Board of Directors of the Company by The
Robinson-Humphrey Company, Inc. on July 29, 1997.
(b)(4) -- Presentation materials provided to the Board of Directors
of Texas Industries, Inc. by SBC Warburg Dillon Read on
May 22, 1997.
(c) -- Agreement and Plan of Merger dated as of July 30, 1997
among Chaparral Steel Company, Texas Industries, Inc. and
TXI Acquisition Inc. (incorporated by reference to Annex
C to the Preliminary Proxy Statement).
(d) -- The Preliminary Proxy Statement (incorporated by
reference to the Preliminary Proxy Statement).
(e) -- Dissenters' Rights (incorporated by reference to Annex B
to the Preliminary Proxy Statement).
(f) -- Not Applicable.
(g)(1) -- Consolidated Financial Statements (incorporated by
reference from the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 1997, as amended by the
Company's Annual Report on Form 10-K/A for the Fiscal
year ended May 31, 1997).
(g)(2) -- Part I, "Financial Information," Item 1, "Consolidated
Financial Statements" (incorporated by reference from the
Company's Quarterly Report on Form 10-Q for the period
ended August 31, 1997, as amended by the Company's
Quarterly Report on Form 10-Q/A for the period ended
August 31, 1997).
</TABLE>
- ---------------
* Previously Filed.
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Transaction Statement is true, complete
and correct.
TEXAS INDUSTRIES, INC.
By: /s/ ROBERT D. ROGERS
----------------------------------
Title: President
----------------------------------
Date: November 28, 1997
9
<PAGE> 10
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Transaction Statement is true, complete
and correct.
TXI ACQUISITION INC.
By: /s/ ROBERT D. ROGERS
----------------------------------
Title: President
----------------------------------
Date: November 28, 1997
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Transaction Statement is true, complete
and correct.
CHAPARRAL STEEL COMPANY
By: /s/ GORDON E. FORWARD
----------------------------------
Title: President
----------------------------------
Date: November 28, 1997
10
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
(a) -- Not Applicable.
(b)(1) -- Fairness Opinion of The Robinson-Humphrey Company, Inc.
(incorporated by reference to Annex C to the Preliminary
Proxy Statement).
(b)(2)* -- Presentation materials provided to the Special Committee
of the Board of Directors of the Company by The
Robinson-Humphrey Company, Inc. on June 20, 1997.
(b)(3)* -- Presentation materials provided to the Special Committee
of the Board of Directors of the Company by The
Robinson-Humphrey Company, Inc. on July 29, 1997.
(b)(4) -- Presentation materials provided to the Board of Directors
of Texas Industries, Inc. on May 22, 1997.
(c) -- Agreement and Plan of Merger dated as of July 30, 1997
among Chaparral Steel Company, Texas Industries, Inc. and
TXI Acquisition Inc. (incorporated by reference to Annex
C to the Preliminary Proxy Statement).
(d) -- The Preliminary Proxy Statement (incorporated by
reference to the Preliminary Proxy Statement).
(e) -- Dissenters' Rights (incorporated by reference to Annex B
to the Preliminary Proxy Statement).
(f) -- Not Applicable.
(g)(1) -- Consolidated Financial Statements (incorporated by
reference from the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 1997, as amended by the
Company's Annual Report on Form 10-K/A for the fiscal
year ended May 31, 1997).
(g)(2) -- Part I, "Financial Information," Item 1, "Consolidated
Financial Statements" (incorporated by reference from the
Company's Quarterly Report on Form 10-Q for the period
ended August 31, 1997, as amended by the Company's
Quarterly Report on Form 10-Q/A for the period ended
August 31, 1997).
</TABLE>
- ---------------
* Previously Filed.
<PAGE> 1
Exhibit (b)(4)
Project CAN / Exhibit 13E13
================================================================================
EXTREMELY CONFIDENTIAL
PROJECT CAN
TIN PURCHASE OF CAN MINORITY PUBLIC STAKE
DILLON, READ & CO. INC.
MAY 22, 1997
<PAGE> 2
Project CAN
================================================================================
The accompanying material was compiled on a confidential basis for use by the
Board of Directors of TIN (the "Company") in evaluating the proposal described
therein and not with a view to public disclosures or filing thereof under the
Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Federal
Securities Laws"). This material was prepared for the Company for the specific
use by specific persons and was not prepared to conform with any disclosure
standards under the Federal Securities Laws. Neither the Company nor Dillon,
Read & Co. Inc. ("Dillon Read") nor any of their representative officers,
directors, employees, affiliates, advisors, agents or representatives warrants
the accuracy or completeness of any of the material set forth herein. Nothing
contained in the accompanying material is, or shall be relied upon as, a
promise or representation as to the past or the future.
It should be understood that any estimates, valuations and/or projections
contained in the accompanying material were prepared or derived from
information supplied by the Company without any independent verification
thereof by Dillon Read. Accordingly, no representation or warranty can be or is
made by Dillon Read as to the accuracy or achievability of any such valuations,
estimates and/or projections.
DILLON READ
<PAGE> 3
Project CAN
================================================================================
TABLE OF CONTENTS
Overview of Current Situation . . . . . . . . . . . . . . . . . . . .A
Preliminary Valuation Discussion . . . . . . . . . . . . . . . . . . .B
Discussion of Minority Buy-In Transactions . . . . . . . . . . . . . .C
Pro Forma Impact of Buy-In . . . . . . . . . . . . . . . . . . . . . .D
Timing and Process . . . . . . . . . . . . . . . . . . . . . . . . . .E
Exhibits
Detailed Comparable Steel Company Analysis . . . . . . . . . .1
Shareholder Profile Summary . . . . . . . . . . . . . . . . .2
DILLON READ
<PAGE> 4
Project CAN
================================================================================
TIN PURCHASE OF CAN MINORITY PUBLIC STAKE
OVERVIEW OF CURRENT SITUATION . . . . . . . . . . . A
DILLON READ
<PAGE> 5
Project CAN / A - 1
================================================================================
OVERVIEW OF CURRENT SITUATION
o TIN HAS INFORMED DILLON READ THAT IT IS CONSIDERING
THE REPURCHASE OF THE 15% OF CAN THAT IT DOES NOT
CURRENTLY OWN
o DILLON READ UNDERSTANDS THIS COURSE OF ACTION
- Eliminates management distractions related to
governance, IR, etc.
- Simplifies cash flow and accounting
- If financed properly, can be modestly
accretive to TIN
- Little benefit to valuation for either Company
under current structure
o DILLON READ IS WILLING TO ASSIST TIN IN EVALUATING
AND EXECUTING A BUY-IN INCLUDING:
- Presentation to Board on valuation of CAN
- Review process of buy-in with Board
- Negotiate on behalf of TIN Board
- Assist TIN in formulating communication
- Assist in drafting of disclosure documents
including proxy statement
- Render opinion to TIN Board
DILLON READ
<PAGE> 6
Project CAN / A - 2
================================================================================
OVERVIEW OF PROCESS
o DILLON READ EXPECTS THE CONTEMPLATED TRANSACTION WILL BE
STRAIGHTFORWARD AND LIKELY COMPLETED IN APPROXIMATELY FOUR
MONTHS FROM ANNOUNCEMENT OF OFFER:
Day of May 22 Presentation to TIN
Board of Directors Offer made
to CAN's Board Public
announcement made
Week of July 14 Agreement reached
Week of July 21 File proxy statement with SEC
Week of August 18 Mail proxy materials to
shareholders
Week of September 15 Hold special shareholders meeting
Close merger
DILLON READ
<PAGE> 7
Project CAN / A - 3
================================================================================
OVERVIEW OF STRATEGIC RATIONALE
o TIN HAS DELIVERED SUBSTANTIAL SHARE APPRECIATION TO INVESTORS
WHILE CAN HAS TRAILED TIN OVER THE LAST FIVE YEARS. DESPITE A
RECENT PULLBACK IN THE STOCK RELATED TO THE ANNOUNCEMENT OF
CAN EAST, TIN HAS STILL DELIVERED SUPERIOR RETURNS TO
INVESTORS.
[CHART]
DILLON READ
<PAGE> 8
Project CAN / A - 4
================================================================================
REASONS FOR BUY-IN
o CURRENT CONFIGURATION (85% OWNERSHIP) DOES NOT APPEAR TO
ENHANCE:
- Valuation
- Credit standing
- Capital raising capabilities
o BUY-IN STREAMLINES TIN CREDIT PROFILE:
- Ability to consolidate debt at holding company level
- Capture of 100% of cash flow from CAN that is
substantially greater than amount TIN receives in
dividends
- Cash flows of TIN could be available to CAN
o ELIMINATES MINORITY INTEREST ACCOUNTING FROM CONSOLIDATED
FINANCIAL STATEMENTS
DILLON READ
<PAGE> 9
Project CAN / A - 5
================================================================================
TRANSACTION IMPLICATIONS - INVESTOR PERSPECTIVE
o ELIMINATION OF PURE "STEEL" PLAY OPPORTUNITY
- Current illiquidity makes CAN a difficult investment
for institutions
- Many current investors own the stock based upon
financial or technical play and not as a "Steel"
company
- Potential loss of steel analyst coverage
o BUY-IN INCREASES STEEL PROFILE OF TIN
o CAPITAL EXPENDED TO FUND BUY-IN
DILLON READ
<PAGE> 10
Project CAN / A - 6
================================================================================
TRANSACTION IMPLICATIONS - FINANCIAL
o TIN MAY INCUR ADDITIONAL GOODWILL FROM THE TRANSACTION
- Purchase price may exceed minority share book value
in CAN
o DEPENDING ON SOURCE AND COST OF FUNDS USED, TRANSACTIONS CAN
BE MODESTLY ACCRETIVE TO TIN EARNINGS PER SHARE
o GIVEN PRIOR CONSIDERATIONS, TRANSACTIONS WILL LIKELY HAVE
LITTLE OTHER IMPACT ON FINANCIAL STATEMENTS
DILLON READ
<PAGE> 11
Project CAN
================================================================================
TIN PURCHASE OF CAN MINORITY PUBLIC STAKE
OVERVIEW OF CURRENT SITUATION . . . . . . . . . . . A
PRELIMINARY VALUATION DISCUSSION . . . . . . . . . B
DILLON READ
<PAGE> 12
Project CAN / B - 1
================================================================================
CURRENT STOCK PRICE
o CURRENTLY, CAN IS VALUED ON AN EQUITY BASIS AS FOLLOWS:
------------------------------------------------
(in millions, except per share data)
Stock Price (5/8/97) $12.00
Shares Outstanding 28.4
Total Equity Market Capitalization $340.6
------------------------------------------------
o SINCE ITS IPO ON JULY 7, 1988, CAN HAS TRADED IN A RANGE OF
$16.75 TO $6.00 PER SHARE
[GRAPH]
DILLON READ
<PAGE> 13
Project CAN / B - 2
================================================================================
COMPARABLE STEEL COMPANY OVERVIEW
o IN EVALUATING THE PROSPECTS OF STEEL COMPANIES, INVESTORS TEND
TO VALUE COMPANIES BASED UPON:
- Company prospects for growth
- Price (and business) cycle of steel products in
respective markets
- Cost structure
- Individual characteristics of each company
o OTHER FACTORS ALSO IMPACT A STOCK'S VALUE:
- Wall Street sponsorship (research coverage)
- Public float and average trading volume
- Aggregate equity market capitalization
<TABLE>
<CAPTION>
(dollars in millions)
# of Equity Public Float as a LTM Avg. Daily Equity Market
Research Analysts % of Total Float Trading Volume 1 Capitalization
----------------- ----------------- ---------------- --------------
<S> <C> <C> <C> <C>
Tier I
Commercial Metals 13 85% 18,123 $430
Steel of West Virginia 4 91 10,633 52
Kentucky Electric 4 92 6,130 20
NS Group 9 66 16,236 78
Tier II
Birmingham Steel 17 95 89,566 $441
Oregon Steel 15 91 97,059 437
NW Steel & Wire 5 51 30,791 71
CAN 9 15% 9,600 $341
Rank 5/8 8/8 7/8 4/8
Note 1: Average daily trading volumes have been reduced by 50% to eliminate double counting where appropriate.
</TABLE>
DILLON READ
<PAGE> 14
Project CAN / B - 3
================================================================================
COMPARABLE STEEL COMPANY ANALYSIS -- STOCK PRICE PERFORMANCE
o can HAS A HISTORY OF LAGGING PERFORMANCE COMPARED TO ITS PEERS
[CHART ]
DILLON READ
<PAGE> 15
Project CAN / B - 4
================================================================================
COMPARABLE STEEL COMPANY ANALYSIS -- FORWARD P/E MULTIPLES
o ON A FORWARD EARNINGS BASIS, CAN CONSISTENTLY TRADES AT A
DISCOUNT
[GRAPH]
Note 1: Steel Index is comprised of Birmingham Steel, Oregon Steel,
Commercial Metals, Steel of West Virginia.
Note 2: P/E is defined as price at end of each month divided by EPS
1 yr. forward.
DILLON READ
<PAGE> 16
Project CAN / B - 5
================================================================================
COMPARABLE STEEL COMPANY ANALYSIS
o BASED ON FUTURE EARNINGS ESTIMATES, CAN IS REASONABLY VALUED
COMPARED TO ITS PEERS
IMPLIED EQUITY VALUE
(dollars in millions)
ACTUAL IMPLIED EQUITY VALUE IMPLIED EQUITY
EQUITY TIER 1 TIER 2
VALUE CY98 MULTIPLE CY98 MULTIPLE
------ -------------------- --------------
$341 $323 $370
DILLON READ
<PAGE> 17
Project CAN
================================================================================
TIN PURCHASE OF CAN MINORITY PUBLIC STAKE
OVERVIEW OF CURRENT SITUATION . . . . . . . . . . . . . . . . . . . . . . . . A
PRELIMINARY VALUATION DISCUSSION . . . . . . . . . . . . . . . . . . . . . . B
DISCUSSION OF MINORITY BUY-IN TRANSACTIONS . . . . . . . . . . . . . . . . . C
DILLON READ
<PAGE> 18
Project CAN / C - 1
================================================================================
MINORITY BUY-IN OVERVIEW
o MINORITY SHAREHOLDERS ARE NOT ENTITLED TO A CONTROL PREMIUM.
o UNDER DELAWARE LAW, TIN COULD EFFECT A NON-PREMIUM MERGER WITH CAN.
- Appraisal rights would be available to dissenting CAN shareholders.
o HOWEVER, PREMIUMS TO ACQUIRE REMAINING INTERESTS HAVE AVERAGED 22%, ONE
DAY PRIOR TO ANNOUNCEMENT, AND 32% FOUR WEEKS PRIOR TO ANNOUNCEMENT.
DILLON READ
<PAGE> 19
Project CAN / C - 2
================================================================================
AVERAGE PREMIUMS PAID FOR MINORITY BUY-IN TRANSACTIONS
=========================================================================
AVERAGE PREMIUMS PAID OVER TARGET STOCK PRICE BEFORE DATE OF ANNOUNCEMENT
<TABLE>
<CAPTION>
Acquisition of Remaining Interest(1)
----------------------------------------------------------------------
Average Premium
---------------------------------------------
One Day Four Weeks
Prior to Announcement Prior to Announcement Number of Transactions
--------------------------------------------- ----------------------
<S> <C> <C> <C>
1992 23.6% 21.7% 4
1993 24.6 35.1 3
1994 20.6 22.8 7
1995 28.2 34.1 7
1996 14.1 47.7 5
1997(2) NA NA 0
'92 - 96 22.2% 32.3%
- --------------------------------------------------------------------------------
</TABLE>
Note 1: Transaction values at $10MM or greater.
Note 2: Year to date.
DILLON READ
<PAGE> 20
Project CAN
================================================================================
TIN PURCHASE OF CAN MINORITY PUBLIC STAKE
OVERVIEW OF CURRENT SITUATION . . . . . . . . . . . . . . . . . . . . A
PRELIMINARY VALUATION DISCUSSION . . . . . . . . . . . . . . . . . . B
DISCUSSION OF MINORITY BUY-IN TRANSACTIONS . . . . . . . . . . . . . C
PRO FORMA IMPACT OF BUY-IN . . . . . . . . . . . . . . . . . . . . . D
DILLON READ
<PAGE> 21
Project CAN / D - 1
================================================================================
PRO FORMA IMPACT OF BUY-IN - BALANCE SHEET
========================================================================
Balance Sheet Data
(dollars in millions)
<TABLE>
<CAPTION>
TIN Pro Forma
2/28/97 Acq. Adjust. 2/28/97
------- ------------ ---------
<S> <C> <C> <C>
Cash $ 4.0 $ 0.0 $ 4.0
Current 321.7 321.7
PPE, net 397.1 397.1
Other assets 101.5 101.5
Acquisition-related goodwill -- 17.6 17.6
------ ------
Total Assets $824.3 17.6 $841.9
Current liabilities $ 86.5 $ 86.5
Other liabilities 79.2 79.2
Total debt 198.2 -- 198.2
Debt acquisitions-related -- 52.8 52.8
------ ------
Total debt 198.2 52.8 251.0
Minority interest 35.3 (35.3) 0.0
Common stock 425.2 -- 425.2
------ ------
Total Liabilities & Equity $824.3 $841.9
- --------------------------------------------------------------------------------
</TABLE>
Note 1: Assumes a transaction price based upon closing stock price of $12.00.
Source: Company available documents.
DILLON READ
<PAGE> 22
Project CAN / D - 2
================================================================================
PRO FORMA IMPACT OF BUY-IN - INCOME STATEMENT
========================================================================
Income Statement Data
(dollars in millions)
<TABLE>
<CAPTION>
TIN
TIN Pro Forma
LTM 2/28/97 Acq. Adjust. LTM 2/28/97
----------- ------------ -----------
<S> <C> <C>
EBIT $140.0 $140.0
Interest expense 19.1 19.1
------ ------
EBT 120.9 120.9
Tax expense 41.0 41.0
Minority interest (6.6) (6.6)
------ ------
Pre-acquisition net income 73.3 73.3
Acquisition-related adjustments
Less: Goodwill -- $0.5 0.5
Plus: Minority interest -- 6.6 6.6
Less: Interest expense -- 3.4 3.4
------ ------
Pro-forma net income -- $ 75.9
EPS
Pre-Acquisition EPS $ 3.29 $ 3.27
Pro Forma EPS -- 3.41
Shares Outstanding
Fully-diluted shares outstanding 22.3 22.3
Acquisition-related shares issued -- --
------ ------
Pro forma shares outstanding 22.3 22.3
</TABLE>
- --------------------
Note 1: Assumes a transaction price based upon closing stock price of $12.00
as if it had occurred at the beginning of the period.
DILLON READ
<PAGE> 23
Project CAN
================================================================================
TIN PURCHASE OF CAN MINORITY PUBLIC STAKE
OVERVIEW OF CURRENT SITUATION . . . . . . . . . . . . . . . . . . . . A
PRELIMINARY VALUATION DISCUSSION . . . . . . . . . . . . . . . . . . B
DISCUSSION OF MINORITY BUY-IN TRANSACTIONS . . . . . . . . . . . . . C
PRO FORMA IMPACT OF BUY-IN . . . . . . . . . . . . . . . . . . . . . D
TIMING AND PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . E
DILLON READ
<PAGE> 24
Project CAN / E - I
================================================================================
ILLUSTRATIVE MINORITY BUY-IN PROCESS
TIN'S BOARD ACTION
o TIN BOARD VOTES TO BUY-OUT MINORITY SHAREHOLDERS
- After consulting with outside advisors
o TIN SENDS A LETTER TO BOARD OF CAN STATING:
- TIN intention
- Price offered
- Form of consideration (cash; stock; combination; other)
- Requesting CAN Board establish special committee
o PUBLIC ANNOUNCEMENT OF OFFER BY CAN AND TIN
DILLON READ
<PAGE> 25
Project CAN / E - 2
================================================================================
ILLUSTRATIVE MINORITY BUY-IN PROCESS
CAN BOARD ACTION
o FULL BOARD ESTABLISHES SPECIAL COMMITTEE OF DISINTERESTED DIRECTORS
- Should not be employees of TIN or CAN
- Should not be directors of TIN
- Should not have long-standing commercial relationship with TIN
(consultant; lawyer; advisor; supplier)
o PUBLIC ANNOUNCEMENT OF ESTABLISHMENT OF SPECIAL COMMITTEE (SIMULTANEOUS
WITH ANNOUNCEMENT OF OFFER)
o CAN BOARD WILL LIKELY ACT IN ACCORDANCE WITH SPECIAL COMMITTEE
DILLON READ
<PAGE> 26
Project CAN / E - 3
================================================================================
ILLUSTRATIVE MINORITY BUY-IN PROCESS
SPECIAL COMMITTEE'S ACTION
o HAS FIDUCIARY OBLIGATION TO PROTECT THE INTERESTS OF MINORITY
SHAREHOLDERS
- Must review and analyze TIN's offer as to adequacy and fairness
- Must exercise due consideration and care
- Must recommend to full CAN Board accepting or rejecting TIN's offer
o HAS PRACTICAL OBLIGATION TO ATTEMPT TO NEGOTIATE BEST PRICE
- Enters into negotiations with TIN and its advisors
- CAN should have no obligation to sell
o HIRES ADVISORS TO HELP MEET BOTH OBLIGATIONS
- Legal
- Financial
DILLON READ
<PAGE> 27
Project CAN / E - 4
================================================================================
ILLUSTRATIVE MINORITY BUY-IN PROCESS
NEGOTIATE PRICE
o SPECIAL COMMITTEE AND ITS ADVISORS WILL ANALYZE PRICE WITH REGARD TO:
- CAN DCF valuation
- Public market for similar businesses/assets
- Comparable company analysis
- And anything else that can justify a higher price
o MINORITY SHAREHOLDERS ARE NOT ENTITLED TO A VOTING CONTROL PREMIUM
o TIN AND ITS ADVISORS WILL DO SIMILAR ANALYSIS
o THE TWO SIDES WILL NEGOTIATE OVER PRICE AND TERMS
o BEGIN DRAFTING OF PROXY AND SCHEDULE 13E-3
- Include 13e-3 "going private" disclosure
- Will file after negotiated price is accepted
DILLON READ
<PAGE> 28
Project CAN / E - 5
================================================================================
ILLUSTRATIVE MINORITY BUY-IN PROCESS
NEGOTIATIONS COMPLETE
o OPINIONS RENDERED
- From Special Committee's advisors to Special Committee
- From TIN'S advisors to TIN'S Board
o SPECIAL COMMITTEE MAKES RECOMMENDATIONS TO CAN BOARD
o CAN BOARD MAKES DECISION IN RESPECT TO OFFER
o JOINT ANNOUNCEMENT
DILLON READ
<PAGE> 29
Project CAN / E - 6
================================================================================
ILLUSTRATIVE MINORITY BUY-IN PROCESS
EFFECT REPURCHASE
o PROCESS
- CAN files proxy statement; respond to SEC comments
- CAN mails proxy materials to shareholders
- CAN holds shareholder meeting
DILLON READ
<PAGE> 30
Project CAN / E - 7
================================================================================
ILLUSTRATIVE SUMMARY TIMETABLE OF PROCESS
- ---------- ---------- ---------- ----------- --------------
May 1997 June 1997 July 1997 August 1997 September 1997
[Calendar] [Calendar] [Calendar] [Calendar] [Calendar]
- ---------- ---------- ---------- ----------- --------------
TIN TIN
CAN CAN
DILLON READ DR
Outside Advisors OA
Company Counsel CC
Accountants ACCT
<TABLE>
<CAPTION>
Date Task Responsibility
- ------------------------------ -------------------------------------------------------- --------------
<S> <C> <C>
Day of May 22 o TIN hires DILLON READ to review process TIN
o TIN Board reviews buy-out of CAN minority shareholders TIN, DR
o DILLON READ advises TIN Board on recommendations for
execution of transaction TIN, DR
o TIN Board decides to proceed with offer TIN
o TIN Board makes offer to CAN TIN
o TIN files revised 13-D TIN, CC
o TIN and CAN notify NYSE TIN, CAN
o Public announcement of offer by CAN and TIN TIN, CAN
o CAN forms special committee CAN, CC
Weeks of May 26 and June 2 o CAN hires financial and legal advisors TIN, CAN
Weeks of June 9 through July 7 o CAN enters into negotiations with TIN
through respective advisors TIN, CAN, DR, CC, OA
o Advisors for TIN and CAN perform supporting analysis TIN, CAN, DR, OA
Week of July 14 o CAN accepts negotiated offer CAN, OA, CC
o Advisors render fairness opinions DR, OA
o TIN and CAN sign Merger Agreement;
Joint public announcement All Parties
Week of July 21 o File proxy statement circular with SEC All Parties
o TIN and CAN make fourth quarter and fiscal
year-end announcements TIN, CAN, CC, ACCT
Week of August 18 o Respond to SEC comments and mail proxy statement All Parties
Week of September 16 o Special shareholder meeting and vote CAN
o Close Merger All Parties
</TABLE>
DILLON READ
<PAGE> 31
Project CAN
================================================================================
TIN PURCHASE OF CAN MINORITY PUBLIC STAKE
<TABLE>
<S> <C> <C>
EXHIBITS
- --------
DETAILED STEEL COMPARABLE COMPANY ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
</TABLE>
DILLON READ
<PAGE> 32
Project CAN / Exhibit 1 - 1
================================================================================
COMPARABLE STEEL COMPANY ANALYSIS
<TABLE>
<CAPTION>
Tier I Product Location
- ------------------------ ----------------------------------------------------- -----------------------------------------
<S> <C> <C>
Commercial Metals Manufactures reinforcing and structural steel, steel Steel mini-mills located in Seguin,
warehousing, joist manufacturing, fence post Texas; Birmingham, Alabama; Cayce,
manufacturing, and railcar repair and rebuilding. South Carolina; and Magnolia,
Company also processes recycled steel. Arkansas.
Steel of West Virginia Custom designs and manufactures finished steel products Steel mini-mill and steel
(billets). Billets are reheated to form engineered shapes fabrication facility in West
known as specialty steel sections. Virginia as well as steel
fabrication facility in
Tennessee.
Kentucky Electric A manufacturer of SBQ Flats for the leaf-spring Operations are located near
suspension, cold drawn bar conversion and truck Ashland, Kentucky.
trailer support beams.
NS Group Produces a diverse group of specialty steel products which Manufactures seamless OCTG, line
include seamless and welded tubular goods primarily used pipe products and SBQ products
in oil and natural gas drilling and production operations. at facilities located in Koppel and
Also produces special bar quality products, primarily used Ambridge, Pennsylvania and Baytow,
in the manufacture of heavy industrial equipment; and hot Texas.
rolled coils, which are sold to service centers and other
manufacturers for further processing.
Tier II
- ------------------------
Birmingham Steel Produces steel reinforcing bar and merchant products. Mini-mills are located in Alabama,
Also specializes in manufacturing steel rod and wire from Illinois, Mississippi, and
semi-finished billets. Washington. Operates its steel
distribution facilities in Florida
and Texas.
Oregon Steel Manufactures and markets specialty and commodity steel Operates two steel mini-mills and
products. four finishing facilities in the
western U.S. and Canada.
Northwestern Steel and Produces structural steel products such as wide flange Operations are located in Sterling
Wire Co. beams, light structural shapes and merchants bars. Also and Rock Falls, Illinois; Houston,
produces rod and wire products including nails, concrete Texas; and Hickman, Kentucky.
reinforcing mesh, and residential and agricultural
fencing.
</TABLE>
DILLON READ
<PAGE> 33
Project CAN / Exhibit 1 - 2
================================================================================
COMPARABLE STEEL COMPANY ANALYSIS
================================================================================
Operating Data
<TABLE>
<CAPTION>
LTM LTM Gross LTM EBIT LTM EBITDA LTM Net Income Average Return
Revenues Margin Margin Margin Margin on Equity
-------- ---------- -------- ---------- ----------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Tier I
Commercial Metals $2,248.8 10.7% 3.8% 5.7% 2.0% 12.9%
Steel of West Virginia 95.3 10.5 5.8 13.0 2.5 4.9
Kentucky Electric 102.3 12.8 6.3 7.4 3.6 10.4
NS Group 425.3 10.6 5.3 9.7 NM NM
- ---------------------------------------------------------------------------------------------------------------------------------
Average 11.2% 5.3% 9.0% 2.7% 9.4%
- ---------------------------------------------------------------------------------------------------------------------------------
Tier II
Birmingham Steel $ 871.4 7.9% 4.0% 8.6% 1.6% 3.1%
Oregon Steel 772.8 13.2 7.4 11.1 3.2 6.9
Northwestern Steel
& Wire 639.1 4.9 3.0 7.3 1.5 9.5
- ---------------------------------------------------------------------------------------------------------------------------------
Average 8.7% 4.8% 9.0% 2.1% 6.5%
- ---------------------------------------------------------------------------------------------------------------------------------
CAN $ 596.5 15.9% 11.2% 16.9% 6.6% 12.5%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: Publicly available documents.
DILLON READ
<PAGE> 34
Project CAN / Exhibit 1 - 3
================================================================================
COMPARABLE STEEL COMPANY ANALYSIS
================================================================================
Trading Statistics
<TABLE>
<CAPTION>
Multiples of Enterprise Value Multiples of Stock Price
------------------------------- -------------------------------------------
LTM LTM LTM LTM CY 1997 CY 1998 % EPS
Sales EBITDA EBIT E.P.S. E.P.S. E.P.S. CY1997/CY1998
------ ------ --------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tier I
Commercial Metals 0.3x 4.8x 7.1x 9.8X 10.7x 9.1x 17.5%
Steel of West Virginia 0.7 5.3 12.0 21.4 15.4 12.3 25.0
Kentucky Electric 0.5 6.6 7.8 5.7 NM 5.9 15.0%
NS Group 0.5 5.2 9.7 NM NM NA NM
- -------------------------------------------------------------------------------------------------------------
Average Tier I(1) 0.4x 5.5x 8.2x 9.8x 10.7x 9.1x 16.3%
- -------------------------------------------------------------------------------------------------------------
Tier II
Birmingham Steel 1.0x 12.2x 26.3x 30.3x 13.8x 9.4x 46.3%
Oregon Steel 1.1 9.4 14.2 16.1 15.4 11.3 36.0
Northwestern Steel
& Wire 0.4 5.8 14.1 8.0 NM 18.8 NM
- -------------------------------------------------------------------------------------------------------------
Average Tier II(l) 0.8x 7.6x 14.2x 12.1x 14.6x 10.4x 41.1%
CAN 0.7x 4.0x 5.9x 9.0x 9.1x 9.6x (5.3%)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
Note 1: Excludes Steel of West Virginia from all averages, Birmingham from all
TM averages and Northwestern Steel & Wire and Kentucky Electric from
projected CY 1997 and CY 1998 earnings averages.
Source: Publicly available documents; forecasts provided by Zacks, Nelson's and
First Call and stock prices as of May 8, 1997.
DILLON READ
<PAGE> 35
Project CAN
================================================================================
TIN PURCHASE OF CAN MINORITY PUBLIC STAKE
<TABLE>
<S> <C> <C>
EXHIBITS
- --------
DETAILED COMPARABLE STEEL COMPANY ANALYSIS . . . . . . 1
SHAREHOLDER PROFILE SUMMARY . . . . . . . . . . . . . 2
</TABLE>
DILLON READ
<PAGE> 36
Project CAN / Exhibit 2 - 1
================================================================================
SHAREHOLDER PROFILE
===============================================================================
<TABLE>
<CAPTION>
CAN % of Total TIN
Institution Shares Held Minority Position Shares Held
- ----------- ----------- ----------------- -----------
<S> <C> <C> <C>
Dimensional Fund Advisors 1,026,399 23.8% 666,486
First Manhattan Co. 728,275 16.9 148,000
Wilshire Assoc. Inc. 209,362 4.9
Barclays Bank Pic 169,104 3.9 591,468
Private Capital Management 122,700 2.9 355,600
Mellon Bank Corporation 106,839 2.5 148,108
Zweig/Glaser Advisers 82,800 1.9 99,000
Lighthouse Capital 77,900 1.8
ANB Investment 73,100 1.7 76,904
Brandywine Asset Mgmt 31,900 0.7 88,400
--------- ---- ---------
Total 2,628,379 61.0% 2,173,966
========= ==== =========
</TABLE>
Note: Shaded area indicates overlapping ownership with TIN shareholders.
Source: CDA/Spectrum as of December 31, 1996.
DILLON READ
