Andrew B. Nace
Three Lincoln Centre
Suite 1700
5430 LBJ Freeway
Dallas, Texas 75240-2694
(972) 233-1700
|
Neel Lemon
Bill Howell
Baker Botts L.L.P.
2001 Ross Avenue, Suite 1100
Dallas, TX 75201
(214) 953-6500
|
|
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THIS TRANSACTION, PASSED ON THE MERITS OR THE FAIRNESS OF THE TRANSACTION OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
|
|
a.
|
o
|
The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14-C or Rule 13e-3(c) under the Securities Exchange Act of 1934 (the “Act”).
|
|
b.
|
o
|
The filing of a registration statement under the Securities Act of 1933.
|
|
c.
|
o
|
A tender offer.
|
|
d.
|
þ
|
None of the above.
|
·
|
On April 23, 2013, Contran filed an amendment to Schedule 13D pursuant to which it indicated that it was considering completing a “short-form” merger with KCI. The closing price per share of KCI on April 22, 2013 (the day before the amendment to Schedule 13D was filed) was $8.25 per share, and the merger consideration represents a 9% premium to such price. The closing price per share of KCI common stock from January 1, 2013 to April 22, 2013 ranged from $6.60 to $8.39. The merger consideration represents a 20% premium to the average closing price of $7.50 during such period;
|
·
|
The merger consideration is greater than the range of closing prices per share of KCI common stock during 2012, which closing prices ranged from a high of $7.95 and a low of $6.03;
|
·
|
The merger consideration is within the $7.69 to $10.76 per share range of values of KCI common stock based on a financial analysis prepared by Contran and Merger Sub using selected valuation methodologies;
|
·
|
The merger consideration is equal to the $9.00 per share price Contran paid to acquire an aggregate of 287,606 shares of KCI common stock in a series of privately negotiated transactions with unaffiliated KCI stockholders between April 17, 2013 and April 22, 2013, which price per share was a premium of 9% to the closing market price on April 22, 2013 (the day before the amendment to Schedule 13D was filed reporting the purchase of the 287,606 shares) ), and which shares were acquired in an arms’ length transaction with sophisticated parties, with the knowledge that Contran’s ownership of KCI would increase to more than 90%, thus permitting Contran to complete the merger under Delaware General Corporation Law;
|
·
|
The merger consideration is substantially in excess of the $0.21 estimated liquidation value per common share of KCI, based on an analysis prepared by Contran and Merger Sub;
|
·
|
The KCI common stock trades on the OTC Market’s OTCQB (Symbol: KYCN), and the daily trading volumes are nominal. Therefore, shares of KCI common stock have limited liquidity. From January 1, 2013 to April 22, 2013, the average daily trading volume of shares of KCI common stock was approximately 1,260 shares per day, and there were several days on which KCI shares were not traded at all;
|
·
|
The merger will enable the holders of KCI stock other than Contran and Merger Sub to realize a cash value for their shares, which would otherwise be difficult to achieve, given the illiquidity of the market; and
|
·
|
The holders of KCI stock other than Contran and Merger Sub will be entitled to exercise appraisal rights and demand “fair value” for their shares as determined by the Delaware Court of Chancery, which may be determined to be equal to, more than or less than the amount of the merger consideration to which the stockholders are entitled in the merger.
|
·
|
KCI will become a wholly-owned subsidiary of Contran;
|
·
|
KCI will no longer be subject to the reporting requirements of the Securities Exchange Act of 1934, and KCI will no longer be traded on any securities exchange or automated quotation system;
|
·
|
Only Contran and its stockholders will have the opportunity to participate in the future earnings and growth, if any, of KCI. Similarly, only Contran and its stockholders will face the risk of losses generated by KCI’s operations or the decline in value of KCI; and
|
·
|
Subject to the proper exercise of statutory appraisal rights, each share of KCI common stock held by persons other than Contran and Merger Sub as of the effective date of the merger will be converted into the right to receive $9.00 cash, without interest.
|
·
|
agreed they would not, directly or indirectly, purchase any Shares until after August 16, 2016;
|
·
|
granted KCI and Contran and their respective officers, directors, employees and other affiliates a general release; and
|
·
|
agreed to disgorge to KCI short-swing profits under Section 16(b) of the Securities Exchange Act of 1934, as amended, in the aggregate amount of $105,715.48.
|
·
|
the fact that the trading volume of the Shares is very low, which indicates limited liquidity to the public stockholders;
|
·
|
the decrease in costs, particularly those associated with being a public company, that the Filing Persons anticipate could result in savings of at least approximately $400,000 per year, including costs associated with maintaining a transfer agent and maintaining a board of directors that includes independent members, audit fees and legal fees;
|
·
|
the reduction in the amount of public information available to competitors about KCI’s businesses that would result from the termination of KCI’s obligations under the reporting requirements of the Securities and Exchange Act of 1934;
|
·
|
the elimination of burdens on KCI’s management associated with public reporting and other tasks resulting from KCI’s public company status, including, for example, the dedication of time by and resources of KCI’s management to stockholder inquiries and investor and public relations;
|
·
|
the greater flexibility that KCI’s management would have to focus on long-term business goals, as opposed to quarterly earnings;
|
·
|
the lack of interest by institutional investors in companies with a limited public float; and
|
·
|
the fact that the Merger will afford the holders of Shares other than the Filing Persons the opportunity to receive cash for their shares at a price considered fair by the boards of directors of Contran and Merger Sub (or, in the alternative, the right for such stockholders to seek an appraisal of the fair value of such shares in accordance with Section 262 of the DGCL).
|
|
Effects
|
·
|
an individual who is a citizen or resident of the United States;
|
·
|
a corporation or other entity taxable as a corporation that is created or organized in or under the laws of the United States or any state (including the District of Columbia);
|
·
|
an estate the income of which is subject to United States federal income tax regardless of its source; or
|
·
|
a trust, in general, if a court within the United States is able to exercise primary supervision over the administration of the trust, and one or more United States persons (within the meaning of the Internal Revenue Code) have the authority to control all substantial decisions of the trust.
|
·
|
an analysis of comparable company multiples of revenue (“REVENUE”), earnings before interest and taxes (“EBIT”), earnings before interest, taxes, depreciation, and amortization (“EBITDA”) for each of fiscal year 2011 (“FY 2011”), fiscal year 2012 (“FY 2012”), 12 months ended March 31, 2013 (“LTM”), estimated fiscal year 2013 (“FY 2013E”), and estimated fiscal 2014 (“FY 2014E”);
|
·
|
an analysis of multiples, indicated by precedent transactions, of LTM REVENUE, in precedent transactions in which the target’s business has been deemed by the Filing Persons to be similar to KCI’s business; and
|
·
|
a discounted cash flow analysis to determine the implied value of KCI by calculating the present value of the estimated future cash flows and terminal value of KCI.
|
·
|
Commercial Metals Company
|
·
|
Nucor Corporation
|
·
|
Steel Dynamics, Inc.
|
·
|
Gibralter Steel Corp.
|
·
|
Leggett & Platt Inc.
|
·
|
Insteel Industries Inc.
|
·
|
Gerdau SA
|
·
|
the ratio of the enterprise value, defined as market capitalization plus total debt and minority interest less cash and cash equivalents, to FY 2011 REVENUE, EBIT and EBITDA;
|
·
|
the ratio of the enterprise value, defined as market capitalization plus total debt and minority interest less cash and cash equivalents, to FY 2012 REVENUE, EBIT and EBITDA;
|
·
|
the ratio of the enterprise value, defined as market capitalization plus total debt and minority interest less cash and cash equivalents, to LTM REVENUE, EBIT and EBITDA;
|
·
|
the ratio of the enterprise value, defined as market capitalization plus total debt and minority interest less cash and cash equivalents, to FY 2013E REVENUE, EBIT and EBITDA; and
|
·
|
the ratio of the enterprise value, defined as market capitalization plus total debt and minority interest less cash and cash equivalents, to FY 2014E REVENUE, EBIT and EBITDA.
|
·
|
Indiana Steel and Tube, Inc.
|
·
|
Sarwaja Timur Sdn Bhd.
|
·
|
Nippon Metal Industry Co. Ltd.
|
·
|
Skyline Steel LLC.
|
·
|
Lakeside Steel
|
·
|
Star Shine Steel Products Sdn. Bhd.
|
·
|
On March 8, 2011, Contran purchased an aggregate of approximately 1.6 million Shares at a price of $6.50 per share pursuant to a tender offer;
|
·
|
On August 16, 2011, Contran purchased an aggregate of approximately 1.55 million Shares at a price per share of $9.43 in a privately negotiated transaction with unaffiliated KCI stockholders. Under the agreement for the August 2011 purchase, the sellers agreed to provide Contran and KCI with other consideration, including a release of claims, a standstill and a disgorgement of profits. For these reasons, the Filing Persons believe the $9.43 purchase price reflected a premium to the fair value of the Shares. On August 22, 2011, the first full trading day following the date when Contran filed an amendment on Schedule 13D disclosing this purchase and the additional consideration that the selling stockholders gave to KCI and Contran, the closing market price of KCI was $8.00 per share; and
|
·
|
During January 2013, Contran purchased an aggregate of 2,975 Shares at a weighted average cash price of $6.66 per share.
|
·
|
Approval of security holders. Because the Merger is being effected as a short-form merger under Section 253 of the DGCL, it does not require approval by the stockholders of KCI other than the Filing Persons.
|
·
|
Approval of the board of directors of KCI. Because the Merger is being effected as a short-form merger under Section 253 of the DGCL, it does not require approval by the board of directors of KCI, and the board of directors of KCI has therefore not approved or disapproved the Merger.
|
·
|
Unaffiliated representative. Because the approval of the KCI board of directors or the KCI stockholders other than the Filing Persons is not required to complete the Merger, neither the board of directors of KCI nor the Filing Persons have retained a representative to act on behalf of the stockholders of KCI other than the Filing Persons, nor has any report been issued by a third party as to the fairness of the Merger Consideration to the stockholders of KCI other than the Filing Persons.
|
·
|
No participation in the future prospects of KCI. Following the consummation of the Merger, the stockholders of KCI other than the Filing Persons will cease to participate in the future earnings or growth, if any, of KCI, or benefit from an increase, if any, in the value of the equity interests of KCI.
|
·
|
Potential conflicts of interest. Because Contran owns 90.4% of KCI immediately prior to the Merger and will own 100% of KCI as a result of the Merger, the interests of the Filing Persons in determining the Merger Consideration could be considered to be in conflict to the interests of the stockholders of KCI other than the Filing Persons.
|
·
|
No inquiry as to potential buyers of KCI. Because the Merger is being effected as a short-form merger under Section 253 of the DGCL, there is no requirement that the Filing Persons seek to determine if there is a buyer for all of KCI that would be willing to pay a price per share in excess of the Merger Consideration. In addition, the Filing Persons believe that seeking to determine if any such buyer exists would only entail substantial time delays and serve as a distraction to the management of KCI, and cause undue uncertainty with KCI’s employees, customers and suppliers.
|
Item 1.
|
Summary Term Sheet. See “Summary Term Sheet” above.
|
Item 2.
|
Subject Company Information.
|
(a)
|
Name and Address. The name of the subject company is Keystone Consolidated Industries, Inc., a Delaware corporation. KCI’s executive offices are located at 5430 LBJ Freeway, Suite 1740, Three Lincoln Centre, Dallas, Texas, and its telephone number is (972) 458-0028.
|
(b)
|
Securities. The class of securities to which this Schedule 13E-3 relates is the common stock, par value $0.01 per share, of KCI, of which 12,101,932 shares were issued and outstanding as of May 9, 2013.
|
(c)
|
Trading Market and Price. The Shares are traded on the OTC Market’s OTCQB under the symbol “KYCN”. The following table sets forth the high and low closing sales prices per Share for each of the periods indicated:
|
Year Ended December 31, 2011
|
High
|
Low
|
||||||
First Quarter
|
$ | 9.19 | $ | 4.70 | ||||
Second Quarter
|
$ | 9.05 | $ | 6.95 | ||||
Third Quarter
|
$ | 10.89 | $ | 7.20 | ||||
Fourth Quarter
|
$ | 8.00 | $ | 6.66 | ||||
Year Ended December 31, 2012
|
||||||||
First Quarter
|
$ | 7.95 | $ | 6.16 | ||||
Second Quarter
|
$ | 7.15 | $ | 6.25 | ||||
Third Quarter
|
$ | 7.00 | $ | 6.03 | ||||
Fourth Quarter
|
$ | 6.90 | $ | 6.26 | ||||
Year Ending December 31, 2013
|
||||||||
First Quarter
|
$ | 7.99 | $ | 6.60 | ||||
Second Quarter (through May 9, 2013)
|
$ | 10.15 | $ | 7.50 |
(d)
|
Dividends. KCI has not paid any dividends during the last two years.
|
(e)
|
Prior Public Offerings. Except for the proposed subscriptions rights offering that was never completed, KCI has not made any public offerings of its common stock during the last two years. See “Background of the Merger” and Item 5 “Past Contacts, Transactions, Negotiations and Agreements - Significant Corporate Events.”
|
(f)
|
Prior Stock Purchases. During the last two years, Contran purchased Shares in the following transactions:
|
·
|
On August 16, 2011, Contran purchased an aggregate of 1,551,022 Shares at a price per share of $9.43 in a privately negotiated transaction with unaffiliated KCI stockholders;
|
·
|
On January 4, 2013, Contran purchased 199 Shares at a price per share of $6.60 on the open market;
|
·
|
On January 15, 2013, Contran purchased 2,500 Shares at a price per share of $6.65 on the open market;
|
·
|
On January 23, 2013, Contran purchased 276 Shares at a price per share of $6.75 on the open market;
|
·
|
On April 17, 2013, Contran purchased an aggregate of 277,923 Shares at a price per share of $9.00, in privately negotiated transactions with unaffiliated KCI stockholders; and
|
·
|
On April 22, 2013, Contran purchased 9,683 Shares at a price per share of $9.00 in a privately negotiated transaction with an unaffiliated KCI stockholder.
|
Under the purchase agreement related to Contran’s August 16, 2011 purchase of an aggregate of 1,551,022 Shares, the selling stockholders, among other things:
|
·
|
agreed they would not, directly or indirectly, purchase any Shares until after August 16, 2016;
|
·
|
granted KCI and Contran and their respective officers, directors, employees and other affiliates a general release; and
|
·
|
agreed to disgorge to KCI short-swing profits under Section 16(b) of the Securities Exchange Act of 1934, as amended, in the aggregate amount of $105,715.48.
|
|
Consequently, the Filing Persons believe that the $9.43 per share price paid by Contran to acquire the 1,551,022 Shares on August 16, 2011 is not directly comparable to the per-share prices Contran paid to acquire the other Shares indicated above, because the selling stockholders in such other purchases did not make the additional agreements and releases that the selling stockholders gave to KCI and Contran under the August 16, 2011 purchases. For these reasons, the Filing Persons believe the $9.43 purchase price reflected a premium to the fair value of the Shares. On August 22, 2011, the first full trading day following the date when Contran filed an amendment on Schedule 13D disclosing this purchase and the additional agreements and releases that the selling stockholders gave to KCI and Contran, the closing market price of KCI was $8.00 per share.
|
Quarterly Period
|
Average Purchase Price
|
Second Quarter 2013
|
$9.00
|
First Quarter 2013
|
$6.66
|
Fourth Quarter 2012
|
N/A
|
Third Quarter 2012
|
N/A
|
Second Quarter 2012
|
N/A
|
First Quarter 2012
|
N/A
|
Fourth Quarter 2011
|
N/A
|
Third Quarter 2011
|
$9.43
|
Second Quarter 2011
|
N/A
|
Item 3.
|
Identity and Background of Filing Person.
|
|
Contran Corporation
|
(a)
|
Name and Address. Contran Corporation is a Delaware corporation. Contran’s principal business address is Three Lincoln Centre, Suite 1700, 5430 LBJ Freeway Dallas, Texas 75240-2694, and its principal business number is (972) 233-1700. Contran currently owns 90.4% of the outstanding Shares of KCI.
|
(b)
|
Business and Background of Entity. Contran is a holding company that holds majority and minority interests both directly and indirectly in a number of operating companies in the chemicals, component products, waste management and steel businesses. Substantially all of Contran’s outstanding voting stock is held by trusts established for the benefit of certain children and grandchildren of Harold C. Simmons (for which Mr. Simmons is the sole trustee) or is held directly by Mr. Simmons or other persons or entities related to Mr. Simmons. These Contran family trusts in the aggregate own a controlling interest in Contran. As sole trustee of the trusts, Mr. Simmons has the power to vote and direct the disposition of shares of Contran held by the trusts, but Mr. Simmons has no pecuniary interest in shares of Contran held by the trusts, and Mr. Simmons disclaims beneficial ownership of any Contran shares held by the trusts, and any Shares held by Contran or Merger Sub.
|
(c)
|
Business and Background of Natural Persons. The name, business address, position with Contran, principal occupation, five-year employment history and citizenship of each of the directors and executive officers of Contran, together with the names, principal businesses and addresses of any corporation or other organizations in which such principal occupations are conducted, are set forth on Schedule I hereto.
|
|
KYCN Acquisition Corporation
|
(a)
|
Name and Address. Merger Sub is a Delaware corporation and a wholly-owned subsidiary of Contran. Merger Sub’s principal business address is Three Lincoln Centre, Suite 1700, 5430 LBJ Freeway Dallas, Texas 75240-2694, and its principal business number is (972) 233-1700. Immediately prior to the Effective Date, Contran will contribute the Shares it owns to Merger Sub, as a result of which Merger Sub will own 90.4% of the outstanding Shares of KCI.
|
(b)
|
Business and Background of Entity. Merger Sub was formed for the sole purpose of acquiring all of the Shares held by Contran and, following such acquisition, merging with and into KCI. Following completion of the Merger, Merger Sub will cease to be in existence.
|
(c)
|
Business and Background of Natural Persons. The name, business address, position with Merger Sub, principal occupation, five-year employment history and citizenship of each of the directors and executive officers of Merger Sub, together with the names, principal businesses and addresses of any corporation or other organizations in which such principal occupations are conducted, are set forth on Schedule I hereto.
|
Item 4.
|
Terms of the Transaction.
|
(a)
|
Material Terms. Contran owns 10,937,982 Shares, representing in the aggregate approximately 90.4% of the Shares outstanding. Immediately prior to the Effective Date, Contran will contribute those Shares to Merger Sub. On the Effective Date, Merger Sub will merge with and into KCI pursuant to Section 253 of the DGCL, with KCI to be the surviving corporation. In compliance with Section 253 of the DGCL, the boards of directors of Contran and Merger Sub have approved the Merger and Contran will file a certificate of ownership and merger with the Secretary of State of Delaware. On the Effective Date:
|
·
|
each Share issued and outstanding immediately prior to the Effective Date will be cancelled and extinguished and each Share held (other than Shares held by the Filing Persons or stockholders, if any, who properly exercise their statutory appraisal rights under the DGCL) will be converted into and become a right to receive the Merger Consideration; and
|
·
|
each share of Merger Sub’s capital stock issued and outstanding immediately prior to the Effective Date will be converted into one validly issued, fully paid, and nonassessable share of common stock of KCI as the surviving corporation of the Merger. As a result of the Merger, Contran will own all of the outstanding equity interests in KCI.
|
|
Material Federal Tax Considerations. For a discussion of the material federal tax considerations of the Merger, please see “Certain U.S. Federal Income Tax Considerations” beginning on page 8 of this Schedule 13E-3.
|
(c)
|
All stockholders of KCI other than the Filing Persons will be treated as described above under “Material Terms” of this Item 4.
|
(d)
|
Appraisal Rights. Under the DGCL, record holders of Shares who follow the procedures set forth in Section 262 will be entitled to have their Shares appraised by the Court of Chancery of the State of Delaware and to receive payment of the fair value of the Shares, together with interest, if any, as determined by such court. The fair value as determined by the Delaware court is exclusive of any element of value arising from the accomplishment or expectation of the Merger. The following is a summary of Section 262 of the DGCL. A copy of the full text of Section 262 is attached hereto as Exhibit F.
|
|
Notice of the Effective Date and the availability of appraisal rights under Section 262 (the “Merger Notice”) will be mailed to record holders of the Shares by KCI as of the Effective Date, as the surviving corporation in the Merger, within 10 calendar days after the Effective Date and should be carefully reviewed by the public stockholders. Any stockholder entitled to appraisal rights will have the right, within 20 days after the date of mailing of the Merger Notice, to demand in writing from KCI an appraisal of his or her Shares. Such demand will be sufficient if it reasonably informs KCI of the identity of the stockholder and that the stockholder intends to demand an appraisal of the fair value of his or her Shares. Failure to make such a timely demand would foreclose a stockholder’s right to appraisal. Only a holder of record of Shares is entitled to assert appraisal rights for the Shares registered in that holder’s name. A demand for appraisal should be executed by or on behalf of the holder of record fully and correctly, as the holder’s name appears on the stock certificates. Holders of Shares who hold their shares in brokerage accounts or other nominee forms and wish to exercise appraisal rights should consult with their brokers to determine the appropriate procedures for the making of a demand for appraisal by such nominee. All written demands for appraisal of Shares should be sent or delivered to the attention of KCI’s corporate secretary, at KCI’s offices at 5430 LBJ Freeway, Suite 1740, Three Lincoln Centre, Dallas, Texas 75240. If the Shares are owned of record in a fiduciary capacity, such as by a trustee, guardian, or custodian, execution of the demand should be made in that capacity, and if the Shares are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand should be executed by or on behalf of all joint owners. An authorized agent, including one or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, the agent is agent for such owner or owners. A record holder such as a broker holding Shares as nominee for several beneficial owners may exercise appraisal rights with respect to the Shares held for one or more beneficial owners while not exercising such rights with respect to the Shares held for other beneficial owners; in such case, the written demand should set forth the number of Shares as to which appraisal is sought and where no number of Shares is expressly mentioned the demand will be presumed to cover all Shares held in the name of the record owner.
|
|
Within 120 calendar days after the Effective Date, KCI, or any stockholder entitled to appraisal rights under Section 262 and who has complied with the foregoing procedures, may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery demanding a determination of the fair value of the Shares of all such stockholders. Contran is not under any obligation, and has no present intention, to cause KCI to file a petition with respect to the appraisal of the fair value of the Shares. Accordingly, it is the obligation of the stockholders to initiate all necessary action to perfect their appraisal rights within the time frame prescribed in Section 262. If a stockholder files a petition, a copy of such petition must be served on KCI. Within 120 calendar days after the Effective Date, any stockholder of record who has complied with the requirements for exercise of appraisal rights, assuming that appraisal rights are available, will be entitled, upon written request, to receive from KCI a statement setting forth the aggregate number of Shares with respect to which demands for appraisal have been received and the aggregate number of holders of such Shares. Such statement must be mailed within 10 calendar days after a written request therefor has been received by KCI or within 10 calendar days after the expiration of the period for the delivery of demands for appraisal, whichever is later. If a petition for an appraisal is timely filed and a copy is served upon KCI, KCI will then be obligated within 20 days to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded an appraisal of their Shares and with whom agreements as to the value of such Shares have not been reached. After notice to those stockholders as required by the Court, the Delaware Court of Chancery is empowered to conduct a hearing on the petition to determine those stockholders who have complied with Section 262 and who have become entitled to appraisal rights. After a hearing on such petition, the Delaware Court of Chancery will determine the stockholders entitled to appraisal rights and will appraise the fair value of the Shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid upon the amount determined to be the fair value. Holders considering seeking appraisal should be aware that the fair value of their Shares as determined under Section 262 could be more than, the same as, or less than the amount per Share that they would otherwise receive if they did not seek appraisal of their Shares. The Delaware Supreme Court has stated that “proof of value by any techniques or methods that are generally considered acceptable in the financial community and otherwise admissible in court” should be considered in the appraisal proceedings. In addition, Delaware courts have decided that the statutory appraisal remedy, depending on factual circumstances, may or may not be a dissenter’s exclusive remedy. The Court will also determine the amount of interest, if any, to be paid upon the amounts to be received by persons whose Shares have been appraised. The costs of the action may be determined by the Court and taxed upon the parties as the Court deems equitable. The Court may also order that all or a portion of the expenses incurred by any holder of Shares in connection with an appraisal, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts used in the appraisal proceeding, be charged pro rata against the value of all the Shares entitled to appraisal. The Court may require stockholders who have demanded an appraisal and who hold Shares represented by certificates to submit their certificates to the Court for notation thereon of the pendency of the appraisal proceedings. If any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.
|
|
Any stockholder who has duly demanded an appraisal in compliance with Section 262 will not, after the Effective Date, be entitled to vote the Shares subject to such demand for any purpose or be entitled to the payment of dividends or other distributions on those Shares (except dividends or other distributions payable to holders of record of Shares as of a date prior to the Effective Date). If any stockholder who demands appraisal of Shares under Section 262 fails to perfect, or effectively withdraws or loses, the right to appraisal, as provided in the DGCL, the Shares of such holder will be converted into the right to receive the Merger Consideration per Share, without interest. A stockholder will fail to perfect, or effectively lose, the right to appraisal if no petition is filed within 120 calendar days after the Effective Date. A stockholder may withdraw a demand for appraisal by delivering to KCI a written withdrawal of the demand for appraisal and acceptance of the Merger Consideration, except that any such attempt to withdraw made more than 60 calendar days after the Effective Date will require the written approval of KCI. Once a petition for appraisal has been filed, such appraisal proceeding may not be dismissed as to any stockholder without the approval of the Court.
|
|
The full text of Section 262 of the DGCL is attached hereto as Exhibit F. STOCKHOLDERS ARE URGED TO READ EXHIBIT F IN ITS ENTIRETY SINCE FAILURE TO COMPLY WITH THE PROCEDURES SET FORTH THEREIN WILL RESULT IN THE LOSS OF APPRAISAL RIGHTS.
|
(e)
|
The Filing Persons do not intend to grant stockholders other than the Filing Persons special access to KCI’s records in connection with the Merger. None of the Filing Persons intends to obtain counsel to or appraisal services for stockholders of KCI other than the Filing Persons.
|
(f)
|
Eligibility for Listing or Trading. Not applicable.
|
Item 5.
|
Past Contacts, Transactions, Negotiations and Agreements.
|
(a)
|
Transactions. KCI may be deemed to be controlled by Mr. Harold C. Simmons. See Item 3 “Identity and Background of Filing Person - Contran Corporation.” Corporations that may be deemed to be controlled by or affiliated with Mr. Simmons sometimes engage in (a) intercorporate transactions such as guarantees, management and expense sharing arrangements, shared fee arrangements, joint ventures, partnerships, loans, options, advances of funds on open account, and sales, leases and exchanges of assets, including securities issued by both related and unrelated parties, and (b) common investment and acquisition strategies, business combinations, reorganizations, recapitalizations, securities repurchases, and purchases and sales (and other acquisitions and dispositions) of subsidiaries, divisions or other business units, which transactions have involved both related and unrelated parties and have included transactions which resulted in the acquisition by one related party of a publicly-held minority equity interest in another related party.
|
|
Under the terms of an intercorporate services agreement (the “ISA”) entered into between KCI and Contran, employees of Contran provide certain management, tax planning, legal, financial and administrative services on a fee basis to KCI. Such charges are based upon estimates of the time devoted by the employees of Contran to KCI’s affairs and the compensation of such persons. Because of the large number of companies affiliated with Contran, Contran believes KCI benefits from cost savings and economies of scale gained by not having certain management, legal, financial and administrative staffs duplicated at each entity, thus allowing certain individuals to provide services to multiple companies but only be compensated by one entity. During 2011 and 2012 the ISA fees charged to KCI by Contran aggregated approximately $2.1 million and $2.5 million, respectively.
|
|
Tall Pines Insurance Company (“Tall Pines”) and EWI RE, Inc. (“EWI”) provide for or broker certain insurance policies for Contran and certain of its subsidiaries and affiliates, including KCI. Tall Pines is an indirect subsidiary of Valhi, Inc., a majority-owned subsidiary of Contran. EWI is a wholly-owned subsidiary of NL Industries, Inc., a publically-held company which is majority owned by Valhi, Inc. Consistent with insurance industry practices, Tall Pines and EWI receive commissions from the insurance and reinsurance underwriters and/or assess fees for the policies they provide or broker. KCI paid Tall Pines and EWI $4.2 million in 2011 and $5.4 million in 2012 for insurance, reinsurance premiums paid to third parties and commissions. Tall Pines purchases reinsurance from third-party insurance carriers with an A.M. Best Company rating of generally at least A-(Excellent) for substantially all of the risks it underwrites.
|
|
Contran and certain of its subsidiaries and affiliates, including KCI, purchase certain insurance policies as a group, with the costs of the jointly-owned policies being apportioned among the participating companies. With respect to certain of such policies, it is possible that unusually large losses incurred by one or more insureds during a given policy period could leave the other participating companies without adequate coverage under that policy for the balance of the policy period. As a result, Contran and certain of its subsidiaries and affiliates, including KCI, have entered into a loss sharing agreement under which any uninsured loss is shared by those entities who have submitted claims under the relevant policy. Contran believes the benefits in the form of reduced premiums and broader coverage associated with the group coverage for such policies justifies the risk associated with the potential for any uninsured loss.
|
|
In August 2011, KCI became a member of Contran’s consolidated U.S. federal income tax group (the “Contran Tax Group”). KCI also files consolidated income tax returns with Contran in various U.S. state jurisdictions. As a member of the Contran Tax Group, KCI is a party to a tax sharing agreement with Contran which provides that, beginning in August 2011, KCI computes its tax provision for U.S. income taxes on a separate-company basis using the tax elections made by Contran. Pursuant to the tax sharing agreement, KCI makes payments to, or receives payments from, Contran in amounts KCI would have paid to or received from the U.S. Internal Revenue Service or the applicable state tax authority had KCI not been a member of the Contran Tax Group for all periods after August 2011. KCI made net payments to Contran for income taxes of $.2 million and $9.4 million in 2011 and 2012, respectively.
|
(b)
|
Significant Corporate Events. In February 2011, Contran commenced a tender offer with respect to KCI’s common stock. Contran sought to purchase a sufficient number of shares of common stock in the tender offer to include KCI in the Contran consolidated tax group in order to achieve certain income tax efficiencies. At the time, Contran held approximately 61.7% of the outstanding KCI common stock. On March 8, 2011, Contran completed the tender offer and purchased approximately 1.6 million Shares at a price per share of $6.50, increasing its ownership to approximately 75.2%. Such 75.2% ownership was 4.8% less than the 80% ownership threshold necessary for KCI to become a member of the Contran tax group. Subsequent to the closing of the tender offer, KCI proposed a rights offering, which if completed according to its proposed terms would have had the effect of increasing Contran’s ownership of KCI stock above 80%. However, prior to commencing the rights offering, on August 16, 2011 Contran reached agreement with certain unaffiliated KCI stockholders and purchased an aggregate of 1,551,022 Shares in a private transaction, increasing its ownership interest in KCI to approximately 88%. The registration statement for the rights offering was withdrawn in August 2011, and the rights offering was never consummated. See Item 2 for more details regarding the August 16, 2011 purchase of such KCI Shares.
|
(c)
|
Negotiations or Contacts. There have been no negotiations or material contacts that occurred during the last two years concerning the matters referred to in paragraph (b) of this Item 5 between (i) any affiliates of KCI or (ii) KCI or any of its affiliates and any person not affiliated with KCI who would have a direct interest in such matters.
|
(e)
|
Agreements Involving the Subject Company’s Securities. There are no agreements, arrangements or understandings between the Filing Persons and any other person with respect to any securities of KCI.
|
Item 6.
|
Purpose of the Transaction and Plans or Proposals.
|
(b)
|
Use of Securities Acquired. The Shares acquired in the Merger from stockholders other than the Filing Persons will be cancelled.
|
(c)
|
Plans. It is currently expected that, following the consummation of the Merger, the business and operations of KCI will, except as set forth in this Schedule 13E−3, be conducted by KCI substantially as they currently are being conducted before completion of the Merger. The Filing Persons intend to continue to evaluate the business and operations of KCI with a view to maximizing KCI’s potential, and it will take such actions as it deems appropriate under the circumstances and market conditions then existing.
|
|
The Filing Persons intend to cause KCI to terminate the registration of the Shares under Section 12(g)(4) of the Exchange Act following the Merger, which would result in the suspension of KCI’s duty to file reports pursuant to the Exchange Act. For additional information see Item 4 “Terms of the Transaction” and “Purposes, Alternatives, Reasons, and Effects of the Merger—Effects.” The Filing Persons do not currently have any commitment or agreement and are not currently negotiating for the sale of any of KCI’s businesses. Additionally, the Filing Persons do not currently contemplate any material change in the composition of KCI’s current management, except that the Filing Persons will appoint a new Board of Directors for KCI, all of whom will be members of Contran’s management. Except as described in this Schedule 13E-3, KCI has not, and the Filing Persons have not, as of the date of this Schedule 13E−3, approved any specific plans or proposals for:
|
·
|
any extraordinary corporate transaction involving KCI after the completion of the Merger;
|
·
|
any sale or transfer of a material amount of assets currently held by KCI after the completion of the Merger;
|
·
|
any change in the Board of Directors or management of KCI;
|
·
|
any material change in KCI’s dividend rate or policy, or indebtedness or capitalization; or
|
·
|
any other material change in KCI’s corporate structure or business.
|
Item 7.
|
Purposes, Alternatives, Reasons and Effects.
|
|
See “Special Factors - Purposes, Alternatives, Reasons and Effects of the Merger” beginning on page 10 of this Schedule 13E-3.
|
Item 8.
|
Fairness of the Transaction.
|
|
See “Fairness of the Merger” beginning on page 14 of this Schedule 13E-3.
|
Item 9.
|
Reports, Opinions, Appraisals and Certain Negotiations.
|
|
Neither KCI nor any of its affiliates, including the Filing Persons, has received any report, opinion or appraisal from an outside party that is materially related to the Merger.
|
Item 10.
|
Source and Amounts of Funds or Other Consideration.
|
(a)
|
Source of Funds. The total amount of funds required by Merger Sub to pay the Merger Consideration to all holders of Shares other than the Filing Persons, and to pay related fees and expenses, is estimated to be approximately $10.6 million including $100,000 of fees and expenses. Contran will contribute the necessary funds to Merger Sub immediately prior to the effective date of the Merger from cash on hand.
|
(b)
|
Conditions. There are no conditions to the Merger, including any conditions related to financing.
|
(c)
|
Expenses. Neither of the Filing Persons will pay any fees or commissions to any broker or dealer in connection with the Merger. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Filing Persons for customary mailing and handling expenses incurred by them in forwarding materials to their customers. The Paying Agent will receive reasonable and customary compensation for its services and will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection with the Merger.
|
|
The following is an estimate of the fees and expenses to be incurred by the Filing Persons in connection with the Merger:
|
Fees
|
||||
Legal Fees and Expenses
|
$ | 50,000 | ||
Filing
|
$ | 1,428 | ||
Printing and Mailing
|
$ | 10,000 | ||
Paying Agent
|
$ | 30,000 | ||
Miscellaneous
|
$ | 8,572 | ||
Total
|
$ | 100,000 |
(d)
|
Borrowed Funds. None of the funds necessary for the completion of the Merger will be borrowed.
|
Item 11.
|
Interest in Securities of the Subject Company.
|
(a)
|
Securities Ownership. As of May 9, 2013, there were outstanding 12,101,932 Shares, of which 10,937,982, or 90.4%, were beneficially owned by Contran. Immediately prior to the consummation of the Merger, Contran intends to contribute the 10,937,982 Shares to Merger Sub.
|
(b)
|
Securities Transactions. Contran will contribute 10,937,98 Shares to Merger Sub prior to the Merger. Other than the purchases described in Item 5(e), there were no transactions in the Shares effected during the past 60 days by the Filing Persons or, to the best knowledge of the Filing Persons, the directors and executive officers of any of the Filing Persons.
|
Item 12.
|
The Solicitation or Recommendation.
|
|
Not Applicable.
|
Item 13.
|
Financial Information.
|
(a)
|
Financial Information. The audited consolidated financial statements of KCI as of December 31, 2011 and 2012, and for the two fiscal years in the period ended December 31, 2012, are incorporated herein by reference to the Consolidated Financial Statements of KCI included as Item 8 to KCI’s Annual Report on Form 10−K for its fiscal year ended December 31, 2012 (the “Form 10−K”), as filed by KCI with the SEC on March 14, 2013. The unaudited consolidated financial statements of KCI as of March 31, 2013, and for the interim periods ended March 31, 2012 and 2013, are incorporated herein by reference to Item 1 of KCI’s Quarterly Report on Form 10−Q for the quarter ended March 31, 2013 (the “Form 10−Q”), as filed by KCI with the SEC on May 14, 2013. The Form 10−K and the Form 10−Q are referred to as the “Company Reports.”
|
|
The Company Reports are available for inspection and copying at the Commission’s public reference facilities at 100 F Street Street, N. E ., Washington, D.C. 20549. Copies may be obtained at prescribed rates from the Commission’s principal office at 100 F Street, N. E ., Washington, D.C. 20549. The Commission also maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission at http://www.sec.gov.”
|
|
KCI’s ratio of earnings to fixed charges was 24.57 to 1.00 and 16.87 to 1.00 for the years ended December 31, 2011 and December 31, 2012, respectively, and was 22.25 to 1.00 and 21.26 to 1.00 for the three months ended March 31, 2012 and March 31, 2013, respectively. KCI’s book value per share as of March 31, 2013 was $15.32.
|
(b)
|
Pro Forma Information. Not applicable.
|
(c)
|
Summary Information. Set forth below is certain selected consolidated financial information with respect to KCI, which is not reported on by KCI’s independent registered public accounting firm. Such selected consolidated financial data has been excerpted or derived by the Filing Persons from the audited consolidated financial statements of KCI (and other information regarding KCI) contained in the Form 10-K and the unaudited financial statements of KCI (and other information regarding KCI) contained in a preliminary earnings release issued by KCI on May 10, 2013. More comprehensive financial information is included in the Company Reports and in other documents filed by KCI with the Commission, and the following financial information is qualified in its entirety by reference to the Company Reports and other documents and all of the financial information (including any related notes and schedules) contained therein or incorporated by reference therein. The selected financial information should be read in conjunction with the consolidated financial statements, related notes, and other financial information incorporated by reference herein.
|
Years ended
December 31,
|
Three months ended
March 31,
|
|||||||||||||||
2011
|
2012
|
2012
|
2013
|
|||||||||||||
(In thousands, except per share and per ton amounts)
|
||||||||||||||||
Statement of Operations Data:
|
||||||||||||||||
Net sales
|
$ | 563,985 | $ | 547,657 | $ | 153,293 | $ | 142,774 | ||||||||
Gross margin
|
43,970 | 44,878 | 16,073 | 12,561 | ||||||||||||
Operating income
|
51,568 | 33,898 | 12,326 | 11,162 | ||||||||||||
Defined benefit pension credit
|
24,388 | 6,858 | 1,899 | 3,696 | ||||||||||||
OPEB credit
|
5,799 | 6,075 | 1,577 | 1,674 | ||||||||||||
Operating income before pension and OPEB(1)
|
21,381 | 20,965 | 8,850 | 5,792 | ||||||||||||
Provision for income taxes
|
20,838 | 11,943 | 4,424 | 4,225 | ||||||||||||
Net income
|
$ | 30,211 | $ | 20,224 | $ | 7,265 | $ | 6,667 | ||||||||
Basic and diluted income per share
|
$ | 2.50 | $ | 1.67 | $ | .60 | $ | .55 | ||||||||
Basic and diluted weighted average shares outstanding
|
12,102 | 12,102 | 12,102 | 12,102 | ||||||||||||
Other Operating Data:
|
||||||||||||||||
Shipments (000 tons):
|
||||||||||||||||
Wire rod
|
409 | 382 | 100 | 96 | ||||||||||||
Fabricated wire products
|
78 | 89 | 29 | 31 | ||||||||||||
Industrial wire
|
60 | 66 | 17 | 17 | ||||||||||||
Wire mesh
|
53 | 55 | 12 | 11 | ||||||||||||
Bar
|
27 | 25 | 6 | 7 | ||||||||||||
Coiled rebar
|
10 | 6 | * | 2 | ||||||||||||
Total
|
637 | 623 | 164 | 164 | ||||||||||||
*less than 1,000 tons
|
||||||||||||||||
Per-ton selling prices:
|
||||||||||||||||
Wire rod
|
$ | 737 | $ | 706 | $ | 745 | $ | 677 | ||||||||
Fabricated wire products
|
1,317 | 1,298 | 1,336 | 1,299 | ||||||||||||
Industrial wire
|
1,009 | 994 | 1,032 | 957 | ||||||||||||
Wire mesh
|
1,004 | 1,041 | 1,047 | 1,023 | ||||||||||||
Bar
|
1,030 | 1,043 | 1,068 | 943 | ||||||||||||
Coiled rebar
|
742 | 701 | 793 | 701 | ||||||||||||
Weighted average of all products in total
|
868 | 864 | 914 | 860 | ||||||||||||
Average per-ton ferrous scrap cost of goods sold
|
$ | 373 | $ | 364 | $ | 382 | $ | 332 | ||||||||
Other Financial Data:
|
||||||||||||||||
Capital expenditures
|
$ | 16,479 | $ | 14,096 | $ | 2,307 | $ | 2,559 | ||||||||
Depreciation and amortization
|
11,234 | 11,406 | 2,875 | 2,899 |
Years ended
December 31,
|
Three months ended
March 31,
|
|||||||||||||||
2011
|
2012
|
2012
|
2013
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Balance Sheet Data:
|
||||||||||||||||
Working capital
|
$ | 78,742 | $ | 91,403 | $ | 86,315 | $ | 96,633 | ||||||||
Current assets
|
161,770 | 162,780 | 185,422 | 182,823 | ||||||||||||
Property, plant and equipment, net
|
93,003 | 93,712 | 91,417 | 92,787 | ||||||||||||
Total noncurrent assets
|
166,177 | 198,049 | 171,273 | 205,345 | ||||||||||||
Total assets
|
327,947 | 360,829 | 356,695 | 388,168 | ||||||||||||
Current liabilities
|
83,028 | 71,377 | 99,107 | 86,190 | ||||||||||||
Total debt
|
34,614 | 35,434 | 53,475 | 48,258 | ||||||||||||
Total noncurrent liabilities
|
92,791 | 112,049 | 96,6140 | 116,541 | ||||||||||||
Stockholders’ equity
|
152,128 | 177,403 | 160,978 | 185,437 | ||||||||||||
(1)
|
Because pension and other postretirement benefit (“OPEB”) expense or credits are unrelated to the operating activities of KCI’s businesses, KCI measures and evaluates the performance of its businesses using operating income before pension and OPEB credit or expense. As such, KCI believes the presentation of operating income before pension and OPEB credit or expense provides more useful information to investors. Operating income before pension and OPEB credit or expense is a non-GAAP measure of profitability that is not in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and it should not be considered in isolation or as a substitute for a measure prepared in accordance with GAAP. A reconciliation of operating income as reported (which reflects the impact of the change in accounting discussed above) to operating income adjusted for pension and OPEB expense or credit is set forth in the following table.
|
Years ended
December 31,
|
Three months ended
March 31,
|
|||||||||||||||
2011
|
2012
|
2012
|
2013
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Operating income as reported
|
$ | 51,568 | $ | 33,898 | $ | 12,326 | $ | 11,162 | ||||||||
Defined benefit pension credit
|
(24,388 | ) | (6,858 | ) | (1,899 | ) | (3,696 | ) | ||||||||
OPEB credit
|
(5,799 | ) | (6,075 | ) | (1,577 | ) | (1,674 | ) | ||||||||
Operating income before pension/OPEB
|
$ | 21,381 | $ | 20,965 | $ | 8,850 | $ | 5,792 |
Item 14.
|
Persons/Assets, Retained, Employed, Compensated or Used.
|
(a)
|
Solicitations or Recommendations. There are no persons or classes of persons who are directly or indirectly employed, retained, or to be compensated to make solicitations or recommendations in connection with the Merger.
|
(b)
|
Employees and Corporate Assets. No employees or corporate assets of KCI will be used by the Filing Persons in connection with the Merger.
|
Item 15.
|
Additional Information.
|
|
None.
|
Item 16.
|
Exhibits.
|
(a1)
|
Letter from Contran to KCI Stockholders - Transmittal letter for original Schedule 13E-3 Transaction Statement
|
(a2)
|
Press release issued by Contran on May 10, 2013
|
(a3)
|
Form of Letter from Contran to KCI Stockholders – Transmittal letter for amended and restated Schedule 13E-3 Transaction Statement
|
(b)
|
None
|
(c)
|
Financial Analysis of KCI prepared by Contran and Merger Sub
|
(d)
|
None
|
(f)
|
Section 262 of the Delaware General Corporation Law
|
(g)
|
None
|
Exhibit
|
Description
|
(a1)
|
Letter from Contran to KCI Stockholders - Transmittal letter for original Schedule 13E-3 Transaction Statement
|
(a2)
|
Press release issued by Contran on May 10, 2013
|
(a3)
|
Form of Letter from Contran to KCI Stockholders – Transmittal letter for amended and restated Schedule 13E-3 Transaction Statement
|
(b)
|
None
|
(c)
|
Financial Analysis of KCI prepared by Contran and Merger Sub
|
(d)
|
None
|
(f)
|
Section 262 of the Delaware General Corporation Law
|
(g)
|
None
|
Name
|
Present Principal Occupation
|
Robert D. Graham
|
Vice president of Merger Sub. For other information regarding Mr. Graham, see description above.
|
William J. Lindquist
|
Senior vice president of Merger Sub. For other information regarding Mr. Lindquist, see description above.
|
A. Andrew R. Louis
|
Secretary of Merger Sub. For other information regarding Mr. Louis, see description above.
|
Kelly D. Luttmer
|
Vice president and global tax director of Merger Sub. For other information regarding Ms. Luttmer, see description above.
|
Andrew B. Nace
|
Vice president and general counsel of Merger Sub.
|
Bobby D. O’Brien
|
Sole director of Merger Sub. Vice president and chief financial officer of Merger Sub. For other information regarding Mr. O’Brien, see description above.
|
John A. St. Wrba
|
Vice president and treasurer of Merger Sub. For other information regarding Mr. St. Wrba, see description above.
|
Gregory M. Swalwell
|
Vice president and controller of Merger Sub. For other information regarding Mr. Swalwell, see description above.
|
Steven L. Watson
|
President of Merger Sub. For other information regarding Mr. Watson, see description above.
|
;J($?J(O0"N7_X@?S:OM_X:
M>SZ'_A7!.>#V_M/`QG(/J3[5]=>+?^"&?Q/U/]A63]GWPW\:?A1\,_`]Y#9V
MOB*^\&?!7^R]:\8Q6\"QL;Z8:NXD>4(AD=8DDE*E&)B=UD)23IS?=)?<1!*3
MIP?V&_Q=S^7/XY?%?5_CM\8O%/C;7IEFUSQ?JUUK6H2+]UI[F5II,#L-SG`[
M#BOU(_X)&_M,^`/A?_P0&_;"\(ZY\0?!_AOQIXE6[71]$U#6;6WU+50^GQ1_
MZ+;2.))BV73,8.,>M?1`_P"#'#S?F/[3[#/&/^%<_P#WTI3_`,&-^!_R=`?E
M_P"J<_\`WTJ834:+H_S*WY/]#:I/FKJ?9GI_QE_X*1?`_P`2?$[]B?Q-I?Q'
M^&T6J^-O&-GXW^(DA\061_L"YC\,IIY6_828MMBR!`)B#OC8CBN!_9O_`."A
M7P8\)?\`!>3]KRSU[XG>"-,\%?&;0;.PT+Q@=52[T:2YAL8(_+-RD@MPK"64
MDM(F'MP@D0MALT?\&._P`G0-G'_1.?_OI2O_P8X%NO[4!^;C_DG/\`]]*'
M&,JG,_[Z_P#`E'_Y$RC%.E[/MR+_`,`;?ZG)?L[:'\%_^"?7_!%G]K3X4WG[
M1WP,^('Q.\56$MY';^&/$\5S:W2R6ZI;6UG))Y;7<_R%Y!"'",RH HK
MU7P;^T3\,?C1_P`$V=!\,^-/%'P?U#XGZ;XM\4:Y?/\`$-/&4FH0'48[$QW5
ME+HZ&U:>6:*4N;PM'N2`L/O5E_L+_M.>%?V9/V/]1UBX^+ND77C*34FTU?AY
MK4&N30V7A][BUNK];$Q6KV(U&_DM(H=TLB1I#$Y=C(\1@=/J_)%5'HO\3_0Y
M3Q=\!_AEX(^)VE>"M7_93_:YTOQAKD!N].T"[^(%I!J6H1`.?.AA/A7?-$0C
MA60$?NW-9>M^"?@KH'PHTGQWJ7[./[4-CX(U^:2UTOQ'/\3+&+2M1EB)5X[>
MY/A;RY&!5EP"2I4@X*G'V-I7_!5KX6_"+_@H)\--4T'XD6FL>"EOO&5UXJ\2
MQ>&;C]WIVLZI>:A:Z?&+FU%[&Z,T/G+`I0&1U261'ES\L^)/CAX)@_X)277A
M&?XO:IXQ\::U>:)-:>'I=*O%N]`%C)J*-8SS7(EM6TV"&=I[8V,L4GFZA*)H
M0`-L:NES/N53CRU5'R?Y,X7P9>_LY^/_`!-IVC>'_@7^T;K6N:K((+*PL?BQ
MI=U=7 ((_B!X@?Q7K5H;77XW
MEU&:V21B;I%LXXD2VT]&CD9#`WF1[(UD%Q+$9?JS5_$=CH5_:Q7EW:VTVI/Y
M5K'-(D;7+!6?:H9AG:JL^.N/QK'^$GQL\'_'OPH=9\#>+/#?C'1?M#VO]H:-
MJ<6I6QF3[\321,R[EZ$9RI!!Y&*`-GX=Z\OBGP#HNI1ZEINM1ZA8PW*:AIZ%
M+2_#H&$\*EW*QN#N52[X#`;FQD[-1VA5K9&7.UAN&3T!YJ2@`KY"^.WCW5O#
MG_!1GP=I>EZYH]QJFJBU6/29_'>J6=Y#IOSF[=/#JQ?8;Z!465SJ,DRM"[+&
M%+1HDGU[7G?B7]J#X:^&OC=I_P`-]3^(G@?3?B!K$:2V7AFYUVV@UB^1MS*8
MK8N)G!6*4_*N,`]:`/FG_A+]'U+]JSXF:M?_`!FL=2T+5M$99=(T/Q!J\.H>
M!M)>T@`U9XC?O;1PRR(3'=06$159FE6[9`XK"^&?[8^N>!/AAX+M=`\4>"-=
MT6Z>:34-8GU^\\5VOAS3_P"T=L>HOJTDD 9OMXMK*WF2`)M()/-`'RC\.O
MVI=;^#7PZ\$Z'X;\=>"/&_AV8-)>^,;B\U76K6SLS=C_`(GSW%QJ=Y.^FR.\
MMG&DUY\DL1D,YMHY1#]W6B-';1JVW6R'#2PV^?-DC#`Y*C&0:H>+/VB?`?@OXH
M:?X*U;QUX/T;QCK%H^HV6AWFKV]OJ5U:H&9YUMF<2M$JPS9D`PNTYZ$T`?&7
MP-_:&\3?L^_`!1X=^(7@KXXZU>:G=-=7]MJ6M:Q!>RBUQ<26_P!HU+4;BWBT
M^4![J%#ADE$<,,-P\4$GWKX`UB/Q#X&T>_BU+3-:CO+*&==0TY=MG?!D!\Z$
M;Y,1OG [MKF*5)E$G"R(JLP(Y_.O3*
MX;XT_&+2?@7H,>KZU%K%Q;7FH6FG0QZ9I4M]*);B:.!798D
&+B.5]1\KP5J
M6ORZDP9%%LMW:S1V^D[=V\W-]NB;.U1D&@#4U_\`9L\2>+OB-8:F_C#3K'0+
MA;>_UFRM?#N+^\U.VA,<%U#<33.L48W(Q@D@E+-$GS[3(LGDNA_\$L--T[X?
M7WAG^T/A[HMKK.JC6[FU\(?#^WT&SDFAC9;%A#]HF&0S2R7`D+"[+M'^YA::
M-^T^.'[5/B?X/?M/Z;HLUM\(I>0V\4=NO@W4+C[9),Q4W#:_YRZ=8K"Q`>
MVN(VE=5\Q6PXQS_PM_;SU+P_\,YM=^(EO)JPDU1;&.Z\/^%[O1UM9)8PUK;2
M65[*O$/C;P?JGBCPG&+*PETCP7<6-D^FR,[W:RQW&HW=Q
M-?2R.7^VFY)4L<(1/<>?]16`(LX]W+;?F/J>^>!SGV'T%?+O[,G_``4'7XIZ
MYIOA#6M!\6W?C6:Y%O'=+X1F\,V>LPQQJUSJ4-GJ%PUW:V\)F@C>.Y83EY8=
MB2)*CM]1V0VVJ_CZ^OOC\^]`$M1L=KM]<@#J>,5)7F_[27Q"\3?#/P4FI^&=
M+T;5I_[1LK:[35;V2VM[:UEN(XYY041R[)&[%8\#>Q`W#;A@#@5_8M_LS]L*
M^^+$
-/[.W7CMI]M;^,I
M=)FUFYANHXGCL[2WD']NW2L#$=.F`B`FDD.Z14B?RG3/VV?#?AGXP>++SX)?
M%72?B5=_:KJPUWPCK/C&\\4:M<3PO,+C5+2RCO)?[,L;,AQ)$EJBW*H3$N1:
MFY`/T,\)Z1#X?\,:?86KW$EK96Z00-/