-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VbYeGOV/YNhJhDc6AB/BRNOPSCFWNX1hL0uhEnahMjnDz2zxVNy/GupGevuZyWJu XlMGR/tuZkvTM1w66++kVw== 0000950123-97-002034.txt : 19970311 0000950123-97-002034.hdr.sgml : 19970311 ACCESSION NUMBER: 0000950123-97-002034 CONFORMED SUBMISSION TYPE: SC 14D9/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19970310 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CONRAIL INC CENTRAL INDEX KEY: 0000897732 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 232728514 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-42777 FILM NUMBER: 97553231 BUSINESS ADDRESS: STREET 1: TWO COMMERCE SQ STREET 2: P O BOX 41417 CITY: PHILADELPHIA STATE: PA ZIP: 19101-1417 BUSINESS PHONE: 2152094434 MAIL ADDRESS: STREET 1: P.O. BOX 41429 STREET 2: 2001 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19101-1429 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CONRAIL INC CENTRAL INDEX KEY: 0000897732 STANDARD INDUSTRIAL CLASSIFICATION: RAILROADS, LINE-HAUL OPERATING [4011] IRS NUMBER: 232728514 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9/A BUSINESS ADDRESS: STREET 1: TWO COMMERCE SQ STREET 2: P O BOX 41417 CITY: PHILADELPHIA STATE: PA ZIP: 19101-1417 BUSINESS PHONE: 2152094434 MAIL ADDRESS: STREET 1: P.O. BOX 41429 STREET 2: 2001 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19101-1429 SC 14D9/A 1 AMENDMENT NO. 12 TO SCHEDULE 14D-9 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 12 TO SCHEDULE 14D-9 SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ CONRAIL INC. (NAME OF SUBJECT COMPANY) ------------------------ CONRAIL INC. (NAME OF PERSON(S) FILING STATEMENT) ------------------------ COMMON STOCK, PAR VALUE $1.00 PER SHARE (INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS) (TITLE OF CLASS OF SECURITIES) 208368 10 0 (CUSIP NUMBER OF CLASS OF SECURITIES) ------------------------ SERIES A ESOP CONVERTIBLE JUNIOR PREFERRED STOCK, WITHOUT PAR VALUE (INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS) (TITLE OF CLASS OF SECURITIES) N/A (CUSIP NUMBER OF CLASS OF SECURITIES) ------------------------ JAMES D. MCGEEHAN CORPORATE SECRETARY CONRAIL INC. 2001 MARKET STREET TWO COMMERCE SQUARE PHILADELPHIA, PENNSYLVANIA 19101 (215) 209-4000 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT) With a copy to: ROBERT A. KINDLER, ESQ. CRAVATH, SWAINE & MOORE WORLDWIDE PLAZA 825 EIGHTH AVENUE NEW YORK, NEW YORK 10019 (212) 474-1000 ================================================================================ 2 INTRODUCTION Conrail Inc. ("Conrail") hereby amends and supplements its Solicitation/Recommendation Statement on Schedule 14D-9, originally filed on December 6, 1996 and amended on December 12, 1996, December 20, 1996, January 3, 1997, January 10, 1997, January 14, 1997, January 16, 1997, January 21, 1997, January 28, 1997, February 3, 1997 and February 12, 1997 (as amended, the "Schedule 14D-9"), with respect to an offer by Green Acquisition Corp., a wholly owned subsidiary of CSX Corporation ("CSX") to purchase all the outstanding Shares. Capitalized terms not defined herein have the meanings assigned thereto in the Schedule 14D-9. ITEM 2. TENDER OFFER OF THE BIDDER. Item 2 of the Schedule 14D-9 is hereby amended and supplemented as follows: On March 7, 1997, Conrail, CSX and Purchaser entered into a Third Amendment (the "Third Amendment") to the Merger Agreement. Pursuant to the Merger Agreement (as so amended), (i) the price per Share offered in the Offer has been increased from $110 to $115, net to the seller in cash, without interest, and the number of Shares sought pursuant to the Offer has been increased to all outstanding Shares and the expiration date of the Offer has been extended to 5:00 p.m., New York City time, on Friday April 18, 1997 (subject to further extension to June 2, 1997 without the consent of Conrail and whether or not all the conditions have then been satisfied), (ii) the consideration paid per Share in the Merger for all remaining outstanding Shares following consummation of the Offer has been increased to $115 in cash and (iii) the conditions to the Offer relating to Subchapter E becoming inapplicable to Conrail and relating pending governmental actions or proceedings have been deleted, and a condition has been added that a minimum number of Shares are tendered to the Offer which, together with the Shares already owned by CSX and Purchaser, represents more than a majority of the outstanding Shares on a fully diluted basis (the "Minimum Condition"). In addition, neither the Offer nor the Merger is subject to CSX's having obtained financing. The Third Amendment also provides that CSX will have sole control over the STB approval process and will be free to conduct by itself discussions with other railroads, including Norfolk, relating to competitive issues raised by the CSX Transactions, and to enter into any resulting agreement. It is anticipated that CSX and Norfolk will negotiate an appropriate division of Conrail's assets; however, neither the Offer nor the Merger is conditioned on CSX's reaching an agreement with Norfolk. The Third Amendment states that Conrail will cooperate with CSX in pursuing the foregoing, including by amending the Merger Agreement to facilitate an arrangement or agreement with Norfolk, such as an agreement pursuant to which Norfolk would join the Offer and buy a portion of the Shares; provided that any such amendment will not change the form or amount of the consideration to be paid in the Offer or the Merger or otherwise adversely affect the benefits to be received by Conrail shareholders or employees under the Merger Agreement or delay or adversely affect the CSX Transactions. Pursuant to the Third Amendment, three members of Conrail's board of directors approved by CSX shall be invited to join the CSX Board of Directors and a transition team will be established, the leadership of which will include senior executive officers of CSX and Conrail to ensure the orderly operation of Conrail during the STB approval process and an orderly transition thereafter. Although the headquarters of the combined company will no longer be located in Philadelphia, CSX has stated that it intends, following STB approval, to maintain Conrail's Juniata locomotive shops at Altoona, Pennsylvania, Conrail's Sam Ray car shops at Hollidaysburg, Pennsylvania, Conrail's Pittsburgh service center and a major operating presence in Philadelphia (including the headquarters of the surviving corporation). Pursuant to the Third Amendment, Conrail's option to purchase 43,090,773 shares of CSX Stock has been cancelled, and Conrail's right to receive a termination fee in the event of the termination of the Merger Agreement in connection with certain takeover proposals for CSX has been eliminated. The Conrail Stock Option Agreement and the right of CSX to receive a termination fee remain intact. Under the Third Amendment, Conrail and CSX agreed to reduce from December 31, 1998 to December 31, 1997 the period of time during which the Conrail Board is prohibited from (i) withdrawing or 3 modifying, or publicly proposing to withdraw or modify, its approval or recommendation of the CSX Transactions, in a manner adverse to CSX, (ii) approving or recommending, or publicly proposing to approve or recommend, any competing proposal or (iii) causing Conrail to enter into any agreement related to any such competing proposal. Under the Merger Agreement as amended, Conrail may terminate the Merger Agreement in the event that after June 2, 1997, CSX and Purchaser fail to consummate the Offer for any reason other than the non-occurrence of any condition to the Offer. In the event that CSX and Purchaser fail to consummate the Offer under such circumstances, Conrail will be entitled to exercise any additional remedies it may have. Under the Merger Agreement as amended, CSX has the right to unilaterally increase the price offered in the Offer (without making any change in the consideration per Share payable in the Merger), subject to the obligation to cause the Offer to remain open for 10 business days following the date any such change is publicly announced. Pursuant to the Merger Agreement, however, CSX cannot change the consideration payable in the Merger without the consent of Conrail. The terms and conditions of the Offer and the Merger Agreement are described under the captions "TERMS OF THE OFFER; PRORATION; EXPIRATION DATE" and "MERGER AGREEMENT; OTHER AGREEMENTS" in the Offer to Purchase, as supplemented by the Supplement to the Offer to Purchase dated March 7, 1997 (the "Supplement"), a copy which is filed as Exhibit (a)(30) hereto and is incorporated herein by reference. The foregoing summary description is qualified in its entirety by reference to the Offer to Purchase and its supplements filed as Exhibits (a)(1), (a)(11) and (a)(30) hereto. ITEM 3. IDENTITY AND BACKGROUND. Item 3 is hereby amended and supplemented as follows: (b)(2) Certain Executive Compensation and Other Employee-Related Matters in Connection with the Merger. Effects of Merger on Employee Benefit and Stock Plans. CSX shall cause the Surviving Corporation to honor all obligations under employment agreements and employee benefit plans, programs and policies and arrangements of Conrail in accordance with the terms of the Merger Agreement and, after the date of STB approval, to provide benefits to those Conrail employees transferred to Parent or another entity on a basis no less favorable in the aggregate than those provided to similarly situated employees of such entity. The Surviving Corporation will provide severance or supplemental retirement benefits to non-union employees (other than executive level employees) who are terminated within three years of STB approval equal to between 6 months and 24 months of salary (depending upon an employee's service). Medical coverage will also be continued for these employees for specified periods. The Surviving Corporation will also establish a stay bonus program that provides a lump sum cash payment to non-union employees who remain employed until the date of STB approval with additional payments made to those employees who remain employed for up to six months thereafter. In accordance with the Merger Agreement, all holders of outstanding stock options will receive a payment equal to the spread between the option price and the Amended Second Offer Price multiplied by the number of shares of Conrail Common Stock subject to the option. In addition, the Merger Agreement permits Conrail to accelerate the vesting of any non-vested grants of performance shares. Executive Agreements. Following the date of STB approval, Mr. LeVan will no longer be employed by the Surviving Corporation. Conrail and CSX have agreed that CSX shall pay Mr. LeVan on the date of STB approval, in lieu of any stay bonus and severance or termination benefits, a lump sum equal to the economic value of the LeVan Agreement (as reasonably determined by the parties in good faith). Conrail executives (other than Mr. LeVan) will be paid the value of their "change of control" contracts in accordance with the terms thereof if their employment with the Surviving Corporation terminates under certain circumstances after the close of the Amended Second Offer or if they remained employed by the Surviving Corporation until May 31, 1998. 2 4 ITEM 4. THE SOLICITATION OR RECOMMENDATION. Item 4 is hereby amended and supplemented as follows: (a) Recommendation of the Board of Directors. At meetings held on March 3, 1997 and March 7, 1997, the Conrail Board, including the disinterested members of the Conrail Board, determined that the terms of the Merger Agreement (as amended) are in the best interests of Conrail and its constituencies. ACCORDINGLY, THE CONRAIL BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF CONRAIL TENDER THEIR SHARES PURSUANT TO THE OFFER. The Conrail Board recommends that shareholders tender their Shares pursuant to the Offer because it has determined that the CSX Transactions are in the best interests of Conrail and its constituencies. Although the Conrail Board would have preferred for Conrail's system to remain intact, the CSX Transactions represent the best possible transactions under the circumstances as they developed. Not only is the value to be received by Conrail's shareholders pursuant to the terms of the CSX Transactions unprecedented as compared to other comparable railroad business combinations, but the CSX Transactions provide the opportunity for shareholders to receive such consideration within 90 days with no regulatory risk. The Merger Agreement also provides protection in the form of stay bonuses and enhanced severance arrangements for Conrail employees not protected by collective bargaining agreements, and states that CSX intends to make a substantial commitment to preserving operations in Pennsylvania. Copies of two press releases announcing the Conrail Board's actions over the last week, and a letter to the shareholders of Conrail communicating the Conrail Board's recommendations are filed as Exhibits (a)(29), (a)(31) and (a)(32) hereto, respectively, and are incorporated herein by reference. (b)(1) Background. The information contained under the caption "BACKGROUND OF THE OFFER SINCE DECEMBER 19, 1996; CONTACTS WITH THE COMPANY" in the Supplement is incorporated herein by reference. (2) Reasons for Recommendation. In making the determinations and recommendations set forth above in Section (a) of this Item 4, the Conrail Board considered a number of factors, including, without limitation, the following: (i) The historical and recent market prices of the Shares and the fact that the Offer and the Merger will enable shareholders to realize an extraordinary premium over the prices at which the Shares traded prior to execution of the Merger Agreement. (ii) The receipt by the Conrail Board of fairness opinions of Lazard Freres & Co. LLC ("Lazard Freres") and Morgan Stanley & Co. Incorporated ("Morgan Stanley"), dated March 7, 1997, to the effect that the consideration to be received by Conrail's shareholders in the Offer and the Merger, taken together, is fair to such shareholders from a financial point of view. In rendering their respective fairness opinions, based on the factors described therein and at the request of counsel for the Conrail Board, neither Lazard Freres nor Morgan Stanley addressed the relative merits of the CSX Transactions, including Section 4.2(b) of the Merger Agreement, the Proposed Norfolk Transactions or any alternative potential transactions (copies of such opinions setting forth assumptions made and matters considered by Lazard Freres and Morgan Stanley are filed as Exhibits (a)(33) and (a)(34), respectively, and should be read in their entirety). 3 5 (iii) The view of the Conrail Board that the CSX Transactions provide extraordinary value to Conrail shareholders within 90 days with no regulatory risk, and that the Offer is not conditioned on CSX's obtaining financing or reaching an agreement with Norfolk. (iv) The view of the Conrail Board that the Merger Agreement provides adequate protections for Conrail's employees and for local communities in Pennsylvania. (v) The fact that several of the conditions to the Norfolk Offer can only be satisfied if the Conrail Board takes certain actions, which as described above the Conrail Board agreed not to take until after November 30, 1997 and thereafter only if certain conditions are satisfied. ITEM 9. MATERIALS TO BE FILED AS EXHIBITS. Item 9 of the Schedule 14D-9 is hereby amended and supplemented by adding the following text thereto: (a)(29) Text of press release issued by Conrail dated March 3, 1997. +(a)(30) Supplement to the Offer to Purchase dated March 7, 1997 (incorporated by reference to Exhibit (a)(32) to the CSX 14D-1). (a)(31) Text of press release issued by Conrail dated March 7, 1997. +(a)(32) Letter to shareholders dated March 7, 1997. +(a)(33) Opinion of Lazard Freres & Co. LLC dated March 7, 1997. +(a)(34) Opinion of Morgan Stanley & Co. Incorporated dated March 7, 1997. (c)(14) Third Amendment dated as of March 7, 1997 to the Agreement and Plan of Merger (incorporated by reference to Exhibit (c)(12) to the CSX 14D-1). (c)(15) Form of Amended and Restated Voting Trust Agreement (incorporated by reference to Exhibit (c)(13) to the CSX 14D-1).
- --------------- + Included in materials mailed to shareholders of Conrail. 4 6 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. CONRAIL INC. By /s/ JOHN A. MCKELVEY ------------------------------------ Name: John A. McKelvey Title: Senior Vice President -- Finance Dated as of March 7, 1997 7 EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE NO. - --------- ------------------------------------------------------------------------ -------- *(a)(1) Offer to Purchase dated December 6, 1996 (incorporated by reference to Exhibit (a)(1) to CSX's and Purchaser's Tender Offer Statement on Schedule 14D-1 dated December 6, 1996, as amended (the "CSX 14D-1")).... *(a)(2) Letter of Transmittal (incorporated by reference to Exhibit (a)(2) to the CSX 14D-1).......................................................... *(a)(3) Text of press release issued by CSX dated December 6, 1996 (incorporated by reference to Exhibit (a)(7) to the CSX 14D-1)........................ *(a)(4) Letter to shareholders of Conrail dated December 6, 1996................ *(a)(5) Form of Summary Advertisement dated December 6, 1996 (incorporated by reference to Exhibit (a)(5) to the CSX 14D-1)........................... *(a)(6) Opinion of Lazard Freres & Co. LLC (incorporated by reference to Exhibit (a)(14) to the Solicitation/ Recommendation Statement on Schedule 14D-9 of Conrail dated October 16, 1996, as amended, relating to the First Offer (the "First 14D-9")).............................................. *(a)(7) Opinion of Morgan Stanley & Co. Incorporated (incorporated by reference to Exhibit (a)(15) to the First 14D-9).................................. *(a)(8) Text of press release issued by Conrail and CSX dated December 10, 1996.................................................................... *(a)(9) Opinion of Lazard Freres & Co. LLC dated December 18, 1996.............. *(a)(10) Opinion of Morgan Stanley & Co. Incorporated dated December 18, 1996.... *(a)(11) Supplement to the Offer to Purchase dated December 19, 1996 (incorporated by reference to Exhibit (a)(15) to the CSX 14D-1)......... *(a)(12) Text of press release issued by CSX and Conrail dated December 19, 1996.................................................................... *(a)(13) Text of press release issued by Conrail dated December 20, 1996......... *(a)(14) Text of advertisement published by Conrail and CSX on December 10, 1996.................................................................... *(a)(15) Text of advertisement published by Conrail and CSX on December 12, 1996.................................................................... *(a)(16) Text of joint press release issued by Conrail and CSX dated January 9, 1997.................................................................... *(a)(17) Text of joint press release issued by Conrail and CSX dated January 13, 1997.................................................................... *(a)(18) Text of joint press release issued by Conrail and CSX dated January 15, 1997.................................................................... *(a)(19) Text of press release issued by Conrail dated January 19, 1997.......... *(a)(20) Text of press release issued by Conrail dated January 22, 1997 (incorporated by reference to Exhibit (a)(26) to the Norfolk 14D-9)..... *(a)(21) Text of press release issued by Conrail dated January 23, 1997 (incorporated by reference to Exhibit (a)(27) to the Norfolk 14D-9)..... *(a)(22) Text of press release issued by Conrail dated January 28, 1997 (incorporated by reference to Exhibit (a)(24) to the Norfolk 14 D-9).... *(a)(23) Text of joint advertisement published by Conrail and CSX on January 29, 1997.................................................................... *(a)(24) Text of press release issued by Conrail on January 31, 1997............. *(a)(25) Text of joint press release issued by Conrail, CSX and Norfolk on January 31, 1997........................................................ *(a)(26) Text of press release issued by Norfolk dated February 10, 1997......... *(a)(27) Text of press release issued by Conrail dated February 10, 1997......... *(a)(28) Text of press release issued by CSX dated February 14, 1997............. (a)(29) Text of press release issued by Conrail dated March 3, 1997............. (a)(30) Supplement to the Offer to Purchase dated March 7, 1997 (incorporated by reference to Exhibit (a)(32) to the CSX 14D-1).......................... (a)(31) Text of press release issued by Conrail dated March 7, 1997............. (a)(32) Letter to shareholders dated March 7, 1997..............................
8
EXHIBIT DESCRIPTION PAGE NO. - --------- ------------------------------------------------------------------------ -------- (a)(33) Opinion of Lazard Freres & Co. LLC dated March 7, 1997.................. (a)(34) Opinion of Morgan Stanley & Co. Incorporated dated March 7, 1997........ *(c)(1) Agreement and Plan of Merger dated as of October 14, 1996 (incorporated by reference to Exhibit (c)(1) to CSX's and Purchaser's Tender Offer Statement on Schedule 14D-1 dated October 16, 1996, as amended, relating to the First Offer (the "First CSX 14D-1"))............................. *(c)(2) First Amendment to Agreement and Plan of Merger dated as of November 5, 1996 (incorporated by reference to Exhibit (c)(7) to the First CSX 14D-1).................................................................. *(c)(3) Conrail Stock Option Agreement dated as of October 14, 1996 (incorporated by reference to Exhibit (c)(2) to the First CSX 14D-1).... *(c)(4) CSX Stock Option Agreement dated as of October 14, 1996 (incorporated by reference to Exhibit (c)(3) to the First CSX 14D-1)..................... *(c)(5) Voting Trust Agreement dated as of October 15, 1996 (incorporated by reference to Exhibit (c)(4) to the First CSX 14D-1)..................... *(c)(6) Employment Agreement of Mr. LeVan dated as of October 14, 1996 (incorporated by reference to Exhibit (c)(5) to the First 14D-9)........ *(c)(7) Change of Control Agreement of Mr. LeVan dated as of October 14, 1996 (incorporated by reference to Exhibit (c)(6) to the First 14D-9)........ *(c)(8) Answer and Defenses of Conrail, CSX and the individual defendants to Second Amended Complaint, and Counterclaim of Conrail and CSX in Norfolk Southern et al. v. Conrail Inc. et al., filed on December 5, 1996, in the United States District Court for the Eastern District of Pennsylvania (incorporated by reference to Exhibit (c)(8) to the Solicitation/ Recommendation Statement on Schedule 14D-9 of Conrail dated November 6, 1996, as amended, relating to the Norfolk Offer)...... *(c)(9) Pages 4-5 and 9-14 of Conrail's Proxy Statement dated April 3, 1996 (incorporated by reference to Exhibit (c)(7) to the First 14D-9)........ *(c)(10) Second Amendment to Agreement and Plan of Merger dated as of December 18, 1996 (incorporated by reference to Exhibit (c)(6) to the 14D-1)..... *(c)(11) Form of Amended and Restated Voting Trust Agreement (incorporated by reference to Exhibit (c)(7) to the 14D-1)............................... *(c)(12) Text of opinion of Judge Donald VanArtsdalen of the United States District Court for the Eastern District of Pennsylvania as delivered from the bench on January 9, 1997....................................... *(c)(13) Text of STB Decision No. 5 of STB Finance Docket No. 33220 dated January 8, 1997................................................................. (c)(14) Third Amendment dated as of March 7, 1997 to the Agreement and Plan of Merger (incorporated by reference to Exhibit (c)(12) to the CSX 14D-1).................................................................. (c)(15) Form of Amended and Restated Voting Trust Agreement (incorporated by reference to Exhibit (c)(13) to the CSX 14D-1)..........................
- --------------- * Previously filed EX-99.A.29 2 PRESS RELEASE DATED MARCH 3, 1997 1 EXHIBIT (a) (29) Conrail Board Acts on Stay Bonuses, Enhanced Severance Packages In Event Of Acquisition Of Company PHILADELPHIA, March 3, 1997 - Conrail (NYSE:CRR) announced today that its Board of Directors has taken action with respect to stay bonuses and enhanced severance packages to protect Conrail employees not covered by collective bargaining agreements in the event of an acquisition of the Company. The Board was mindful that employees covered by collective bargaining agreements may qualify for up to six years' protection under federal law. While the Board expressed its disappointment that recent events indicate that all the strategic goals reflected in the Merger Agreement with CSX may not be attainable, the Board expressed confidence that the final resolution will be beneficial to all the Company's constituencies. In light of these developments, the Board also authorized its management and representatives to negotiate amendments to the CSX merger agreement that would assure that the Conrail shareholders receive $115 in cash per share at the earliest possible date. Conrail, with corporate headquarters in Philadelphia, operates an 11,000 mile rail freight network in 12 Northeastern and Midwestern states, the District of Columbia, and the Province of Quebec. Contact: Craig MacQueen of Conrail Corporate Communications, (215) 209-4594, or Dan Katcher/Joelle Frank of Abernathy MacGregor Group, (212) 371-5999. Conrail releases are archived on the World Wide Web: http://www.conrail.com. EX-99.A.31 3 PRESS RELEASE DATED MARCH 7, 1997 1 EXHIBIT (a)(31) FOR IMMEDIATE RELEASE CONTACTS: Conrail Inc. Abernathy MacGregor Group Craig R. MacQueen Joele Frank/Dan Katcher (215) 209-4594 (212) 371-5999 CONRAIL SHAREHOLDERS TO RECEIVE $115 IN CASH PER SHARE UNDER AMENDED CSX-CONRAIL MERGER AGREEMENT Philadelphia, PA (March 7, 1997) -- Conrail Inc. (NYSE:CRR) announced today that Conrail and CSX Corporation (NYSE:CSX) have amended their merger agreement to increase the consideration to $115 in cash per Conrail share for all remaining outstanding shares of Conrail's common and ESOP preferred stock. Under the terms of the amended merger agreement (and subject to the terms and conditions thereof), Conrail shareholders will receive, no later than June 2, 1997, $115 in cash per Conrail share through a CSX tender offer. All the Conrail stock acquired by CSX in the tender offer would be placed in a voting trust pending the outcome of the Surface Transportation Board's proceeding. David M. LeVan, chairman, president and chief executive officer of Conrail, said "Our amended merger agreement with CSX provides unprecedented value to Conrail shareholders and provides that they will be paid in under 90 days without regulatory risk. We have also worked to fully protect the Conrail employees who have made this railroad great. Stay bonuses and enhanced severance arrangements have been implemented to protect those Conrail employees not covered by collective bargaining agreements. In addition, we have received assurances from CSX that there will be a substantial commitment to Pennsylvania. CSX intends to have a major operating presence in Philadelphia and intends to maintain Conrail's Pittsburgh service center and the shops at Altoona and Hollidaysburg." "Conrail's board and management would have preferred for the Conrail system to remain intact. However, under the circumstances as they developed, we have succeeded in negotiating the best possible transaction for all of Conrail's constituencies," Mr. LeVan concluded. Under the amended agreement, senior members of the management of Conrail and CSX will lead a team to ensure an orderly process throughout the transition period. Three of Conrail's directors will also be invited to join the CSX board. 2 It is anticipated that CSX and Norfolk Southern will negotiate an appropriate division of Conrail's assets; however, the CSX-Conrail amended agreement is not conditioned upon CSX reaching agreement with Norfolk Southern. The amended agreement is also not subject to financing. Conrail, with corporate headquarters in Philadelphia, PA, operates an 11,000-mile rail freight network in 12 northeastern and midwestern states, the District of Columbia, and the Province of Quebec. Conrail's home page can be reached at http://www.CONRAIL.COM. EX-99.A.32 4 LETTER TO SHAREHOLDERS DATED MARCH 7, 1997 1 [CONRAIL LOGO] EXHIBIT (a)(32) March 7, 1997 Dear Shareholders: Conrail Inc. and CSX Corporation have agreed to modify our merger agreement to provide that Conrail shareholders will receive $115 in cash for each outstanding share of Conrail common stock and ESOP preferred stock. Pursuant to the amended agreement, CSX will amend its tender offer to offer to pay $115 in cash for each outstanding share, and will provide that the tender offer will expire no later than June 2, 1997. Following consummation of the CSX tender offer, CSX will consummate the merger in which Conrail's shareholders will receive $115 in cash for each remaining Conrail share. Our amended merger agreement provides unprecedented value to Conrail shareholders and provides that they will be paid in under 90 days without regulatory risk. We have also worked to fully protect the Conrail employees who have made this railroad great. Stay bonuses and enhanced severance arrangements have been implemented to protect those Conrail employees not covered by collective bargaining agreements. In addition, we have received assurances from CSX that there will be a substantial commitment to Pennsylvania. CSX intends to have a major operating presence in Philadelphia and intends to maintain Conrail's Pittsburgh service center and the shops at Altoona and Hollidaysburg. Conrail's board and management would have preferred for the Conrail system to remain intact. However, under the circumstances as they developed, we have succeeded in negotiating the best possible transaction for all of Conrail's constituencies. Under the amended agreement, senior members of Conrail and CSX will lead a team to ensure an orderly process throughout the transition period. Three of Conrail's directors will also be invited to join the CSX board. It is anticipated that CSX and Norfolk Southern will negotiate an appropriate division of Conrail's assets; however, the CSX-Conrail amended agreement is not conditioned upon CSX reaching agreement with Norfolk Southern nor is it subject to financing. YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE CSX TENDER OFFER AND MERGER AND RECOMMENDS THAT CONRAIL SHAREHOLDERS ACCEPT THE CSX TENDER OFFER AND TENDER THEIR SHARES IN SUCH OFFER. The enclosed Supplement to the Offer to Purchase prepared by CSX and the Amendment to the Schedule 14D-9 prepared by Conrail describe the terms of the revised CSX tender offer. I urge you to consider all such information carefully. Sincerely, /s/ David M. LeVan DAVID M. LEVAN Chairman, President and Chief Executive Officer EX-99.A.33 5 OPINION OF LAZARD FRERES & CO. DATED MARCH 7, 1997 1 Exhibit (a)(33) LAZARD FRERES & CO. LLC 30 ROCKEFELLER PLAZA NEW YORK, N.Y. 10020 - ---------------------------------------------------- TELEPHONE (212) 632-6000 FACSIMILE (212) 632-6060 NEW YORK March 7, 1997 The Board of Directors Conrail Inc. 2001 Market Street Philadelphia, PA 19103 Dear Members of the Board: You have requested our opinion as to the fairness, from a financial point of view, to the holders of shares of Common Stock, par value $1 per share ("Common Stock"), and of Series A ESOP Convertible Preferred Stock (such Preferred Stock together with the Common Stock is referred to as the "Shares") of Conrail Inc. (the "Company") of the consideration to be received in a series of transactions (collectively, the "Transactions") pursuant to the Agreement and Plan of Merger among the Company, CSX Corporation ("CSX") and Green Acquisition Corp. ("Tender Sub"), dated as of October 14, 1996, as amended as of November 5, 1996 and as of December 18, 1996 and as further amended as of March 7, 1997 (collectively the "Merger Agreement"). Pursuant to the Merger Agreement, on November 21, 1996, Tender Sub accepted for payment pursuant to an offer to purchase 19.9% of the outstanding Shares at a price of $110.00 per share net in cash. The terms of the Merger Agreement provide, among other things, that (i) Tender Sub will offer to purchase (the "Offer") and, if certain conditions are satisfied, accept for payment, each outstanding Share at a price of $115.00 per share net in cash (the "Offer Consideration") and (ii) following consummation of the Offer, subject to, among other things, the favorable required vote of holders of Shares (if necessary), pursuant to the Merger (as defined in the Merger Agreement), each remaining outstanding Share (other than Shares owned by the Company as treasury stock or owned by CSX, Tender Sub or any other subsidiary of CSX and other than Shares held by holders who properly exercise and perfect dissenter's rights, if any) will be converted into the right to receive $115.00 per share net in cash (the "Merger Consideration" and, together with the Offer Consideration, the "Consideration"). In connection with the rendering of this opinion, we have: (i) Reviewed the terms and conditions of the Merger Agreement and the financial terms of the Transactions, all as set forth in the Merger Agreement, and the option agreement dated October 14, 1996 between Company and CSX (the "Option Agreement") pursuant to which CSX was granted the right to purchase shares of Common Stock (the "Option Shares"); (ii) Analyzed certain historical business and financial information relating to the Company and CSX; (iii) Reviewed certain financial forecasts and other data provided to us by the Company and CSX relating to the businesses of the Company and CSX, respectively, including the most recent business plan for the Company prepared by the Company's senior management, in the form furnished to us; (iv) Conducted discussions with members of the senior managements of the Company and CSX with respect to the businesses and prospects of the Company and CSX, respectively, the strategic objectives of each and possible benefits which might be realized following the Merger; (v) Reviewed public information with respect to certain other companies in the lines of businesses we believe to be generally comparable in whole or in part to the businesses of the Company and CSX and reviewed the financial terms of certain other business combinations involving companies in lines of 2 businesses we believe to be generally comparable in whole or in part to the businesses of the Company and CSX that have recently been effected; (vi) Reviewed the historical stock prices and trading volumes of Common Stock and CSX Common Stock; and (vii) Conducted such other financial studies, analyses and investigations as we deemed appropriate. We have relied upon the accuracy and completeness of the foregoing financial and other information and have not assumed any responsibility for independent verification of such information or any independent valuation or appraisal of any of the assets of the Company or CSX nor have we been furnished with any such appraisals. With respect to financial forecasts, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of managements of the Company and CSX as to the future financial performance of the Company and CSX, respectively. We assume no responsibility for and express no view as to such forecasts or the assumptions on which they are based. Our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof. In rendering our opinion, we have assumed that the Transactions will be consummated substantially on the terms described in the Merger Agreement, without any waiver of any material terms or conditions by any party thereto. We were not requested to, and did not, solicit third party offers to acquire all or any part of the Company. We are acting as financial advisor to the Company's Board of Directors in connection with the Transactions and will receive fees for such services, a substantial portion of which fees are contingent upon the consummation of the Transactions. Our Firm has in the past provided and is currently providing investment banking and financial advisory services to the Company and has received customary fees for rendering such services. Our Firm has in the past also provided investment banking and financial advisory services to CSX and has received customary fees for rendering such services. Our engagement and the opinion expressed herein are for the benefit of the Company's Board of Directors and our opinion is rendered in connection with its consideration of the Transactions. This opinion is not intended to and does not constitute a recommendation to any holder of Shares as to whether such holder should tender Shares pursuant to the Offer or vote to approve the Merger Agreement and the transactions contemplated thereby. It is understood that, except for inclusion of this letter in its entirety in a proxy statement or tender offer recommendation statement on Schedule 14D-9 from the Company to holders of Shares relating to the Transactions, this letter may not be disclosed or otherwise referred to without our prior written consent, except as may otherwise be required by law or by a court of competent jurisdiction. As you know, on February 12, 1997, Norfolk Southern Corporation commenced a tender offer (the "NSC Offer") for all of the outstanding Shares at a price per Share of $115 net in cash. Counsel to the Company has advised the Company's Board of Directors that the fact that the NSC Offer is subject to, among other conditions, the termination of the Merger Agreement and that the Company is currently contractually prohibited from terminating the Merger Agreement pursuant to Section 4.2(b) thereof creates significant legal uncertainty relating to the consummation of the NSC Offer. Accordingly, at your request, in rendering our opinion, we did not address the relative merits of the Transactions, including said Section 4.2(b), the NSC Offer and any alternative potential transactions. Based on and subject to the foregoing, we are of the opinion that, as of the date hereof, the Consideration to be received by the holders of Shares pursuant to the Offer and the Merger, when taken together, is fair to such holders (other than CSX, Tender Sub or any other subsidiary of CSX), from a financial point of view. Very truly yours, LAZARD FRERES & CO. LLC By: /s/ J. ROBERT LOVEJOY ------------------------------------ Managing Director 2 EX-99.A.34 6 OPINION OF MORGAN STANLEY & CO. OF MARCH 7, 1997 1 Exhibit (a)(34) MORGAN STANLEY MORGAN STANLEY & CO. INCORPORATED 1585 BROADWAY NEW YORK, NEW YORK 10036 (212) 761-4000 March 7, 1997 Board of Directors Conrail Inc. 2000 Market Street Philadelphia, PA 19101-1422 Gentlemen and Mesdames: We understand that Conrail Inc. (the "Company"), CSX Corporation ("CSX") and Green Acquisition Corp., a wholly-owned subsidiary of CSX ("Acquisition Sub"), have entered into an Agreement and Plan of Merger, dated as of October 14, 1996 as amended as of November 5, 1996, and as of December 18, 1996 and as further amended as of March 7, 1997 (collectively, the "Merger Agreement"). Pursuant to the Merger Agreement, on November 21, 1996, Acquisition Sub accepted for payment pursuant to an offer to purchase 19.9% of the issued and outstanding shares of common stock, par value $1 per share (the "Company Common Stock"), and Series A ESOP Convertible Junior Preferred Stock (together with the Company Common Stock, the "Shares") of the Company, for $110.00 per share net to the seller in cash. The terms of the Merger Agreement provide, among other things, that: (i) Acquisition Sub will offer to purchase (the "Offer") and, if certain conditions are satisfied, accept for payment each outstanding Share at a price of $115.00 per share net in cash (the "Offer Consideration"); and (ii) following consummation of the Offer, upon the receipt of certain shareholder approvals (if necessary) and satisfaction of other conditions thereto, pursuant to the Merger (as defined in the Merger Agreement and the "Merger" together with the Offer, the "Transaction"), each outstanding share of the Company Common Stock, other than shares held in treasury or held by CSX or its subsidiaries, will be converted into the right to receive $115.00 per share net in cash (the "Merger Consideration," and the Merger Consideration, together with the Offer Consideration, the "Consideration"). You have asked for our opinion as to whether the Consideration to be received by the holders of Shares pursuant to the Offer and the Merger, taken together, is fair from a financial point of view to such holders. For purposes of the opinion set forth herein, we have: (i) reviewed certain publicly-available financial statements and other information of the Company and CSX, respectively; (ii) reviewed certain internal financial statements and other financial and operating data concerning the Company and CSX prepared by the managements of the Company and CSX, respectively; (iii) reviewed certain financial projections for CSX prepared by the management of CSX; (iv) reviewed certain financial projections, including estimates of certain potential benefits of the proposed business combination, prepared by the management of the Company; (v) discussed, on a limited basis, the past and current operations and financial condition and the prospects of the Company and CSX with senior executives of the Company and CSX, respectively; (vi) reviewed the reported prices and trading activity for the Company Common Stock and the CSX Common Stock; (vii) compared the financial performance of the Company and CSX and the prices and trading activity of the Company Common Stock and the CSX Common Stock with that of certain other comparable, publicly-traded companies and their securities; (viii) reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions; 2 (ix) participated in discussions among representatives of the Company, CSX and their financial and legal advisors; (x) reviewed the Merger Agreement and certain related documents; and (xi) performed such other analyses and considered such other factors as we have deemed appropriate. We have assumed and relied upon without independent verification the accuracy and completeness of the information reviewed by us for the purposes of this opinion. With respect to the financial projections, including estimates of certain potential benefits of the proposed business combination, we have assumed that they have been reasonably prepared on bases reflecting the best currently-available estimates and judgment of the future financial performance of the Company and CSX, respectively. We have not made any independent valuation or appraisal of the assets or liabilities of the Company or CSX, nor have we been furnished with any such appraisals. We have assumed that the Offer and the Merger will be consummated substantially in accordance with the terms set forth in the Merger Agreement, without any waiver of any material terms or conditions by any party thereto. Our opinion is necessarily based on economic, market and other conditions in effect on, and the information made available to us as of, the date thereof. In arriving at our opinion, we were not authorized to solicit, and did not solicit, interest from any party with respect to the acquisition of the Company or any of its assets. We have been engaged to provide this opinion to the Board of Directors of the Company in connection with this transaction and will receive a fee for our services. In the past, Morgan Stanley & Co. Incorporated and its affiliates have provided financial advisory and financing services for the Company and CSX and have received fees for the rendering of these services. It is understood that this letter is for the information of the Board of Directors of the Company and may not be used for any other purpose without our prior written consent, except that this opinion may be included in its entirety in any filing made by the Company with the Securities and Exchange Commission with respect to the Offer and the Merger. In addition, we express no opinion and make no recommendation as to whether the holders of the Company Common Stock should tender such shares pursuant to the Offer or vote at any shareholders' meeting held in connection with the Merger. As you know, on February 12, 1997, Norfolk Southern Corporation commenced a tender offer (the "NSC Offer") for all of the outstanding Shares at a price per Share of $115 net in cash. Counsel to the Company has advised the Company's Board of Directors that the fact that the NSC Offer is subject to, among other conditions, the termination of the Merger Agreement, and that the Company is currently contractually prohibited from terminating the Merger Agreement pursuant to Section 4.2(b) thereof creates significant legal uncertainty relating to the consummation of the NSC Offer. Accordingly, at your request, in rendering our opinion, we did not address the relative merits of the Transaction, including said Section 4.2(b), the NSC Offer and any alternative potential transaction. Based on the foregoing, we are of the opinion on the date thereof that the Consideration to be received by the holders of Shares pursuant to the Offer and the Merger, taken together, is fair from a financial point of view to such holders (other than CSX, Acquisition Sub or any other subsidiary of CSX). Very truly yours, MORGAN STANLEY & CO., INCORPORATED By: /s/ MAHMOUD A. MAMDANI ------------------------------------ Mahmoud A. Mamdani Managing Director 2 -----END PRIVACY-ENHANCED MESSAGE-----