-----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, FDS5rYwddpeA86vhliA1Wh0zDphEsoRMjACu4oqfJmh8s1gcNuT0iiinFlWd49AM VPI0+bdAtH0uPBkwsow4LA== 0000950131-98-001600.txt : 19980311 0000950131-98-001600.hdr.sgml : 19980311 ACCESSION NUMBER: 0000950131-98-001600 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980223 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980310 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ITT EDUCATIONAL SERVICES INC CENTRAL INDEX KEY: 0000922475 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 362061311 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13144 FILM NUMBER: 98561632 BUSINESS ADDRESS: STREET 1: 5975 CASTLE CREEK PKWY N DR STREET 2: PO BOX 50466 CITY: INDIANAPOLIS STATE: IN ZIP: 46250 BUSINESS PHONE: 3175944289 MAIL ADDRESS: STREET 1: 5975 CASTLE CREEK PKWY N DR STREET 2: P O BOX 50466 CITY: INDIANAPOLIS STATE: IN ZIP: 46250-0466 8-K 1 FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (Date of earliest event reported): February 23, 1998 ITT EDUCATIONAL SERVICES, INC. (Exact name of registrant as specified in its charter) Delaware 1-13144 36-2061311 (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) file number) Identification No.) 5975 Castle Creek Parkway N. Drive P.O. Box 50466 Indianapolis, Indiana 46250-0466 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (317) 594-9499 ITEM 1. CHANGES IN CONTROL OF REGISTRANT. On February 23, 1998, Starwood Hotels & Resorts (formerly Starwood Hotels & Resorts Trust or Starwood Lodging Trust), a Maryland real estate investment trust ("Starwood Trust"), and Starwood Hotels & Resorts Worldwide, Inc. (formerly Starwood Lodging Corporation), a Maryland corporation ("Starwood, Inc." and, together with Starwood Trust, "Starwood Hotels"), completed the acquisition of ITT Corporation, a Nevada corporation ("ITT"), in accordance with the Amended and Restated Agreement and Plan of Merger dated as of November 12, 1997 (the "Merger Agreement") among Starwood, Inc., Chess Acquisition Corp., a Nevada corporation and a subsidiary of Starwood, Inc. ("Chess"), Starwood Trust and ITT. Pursuant to the terms of the Merger Agreement, Chess was merged with and into ITT (the "Merger") and ITT became a subsidiary of Starwood, Inc. Under the terms of the Merger Agreement, each outstanding share of common stock, no par value, of ITT ("ITT Common Stock"), together with the associated right to purchase shares of Series A Participating Cumulative Preferred Stock of ITT (the "Rights" and, together with the ITT Common Stock, "ITT Shares"), other than those that were converted into cash pursuant to a cash election by the holder (and other than ITT Shares owned directly or indirectly by ITT or Starwood Hotels, which shares were cancelled), was converted into 1.543 Paired Shares of Starwood Hotels, each such Paired Share consisting of one share of common stock, par value $.01 per share, of Starwood, Inc. and one share of beneficial interest, par value $.01 per share, of Starwood Trust. Pursuant to cash election procedures, 35,195,664 ITT Shares, representing approximately 30% of the outstanding ITT Shares, were converted into $85 in cash per share. In addition, each ITT Share was converted into additional cash consideration in the amount of $.37493151, which amount represents the interest that would have accrued (without compounding) on $85 at an annual rate of 7% during the period from and including January 31, 1998 to but excluding the date of the closing (February 23, 1998). The aggregate value of the acquisition of ITT in cash, Paired Shares and assumed debt was approximately $14.6 billion. Starwood Hotels borrowed the cash portion of the consideration under a $3.1 billion credit facility co-administered by Bankers Trust Company and The Chase Manhattan Bank and co-syndicated by Lehman Commercial Paper Inc. and Bank of Montreal and a $2.5 billion senior secured increasing rate note facility arranged by Lehman Commercial Paper Inc., co-syndicated by BT Alex. Brown Incorporated and Chase Securities, Inc. and for which NationsBank, N.A. serves as documentation agent. As a result of the Merger, Starwood, Inc. also acquired control of ITT Educational Services, Inc. (the "Company"). ITT holds 22,500,000 shares, or 83.3%, of the Company's outstanding common stock (the "Common Stock"), and 4,499,952 shares, or 16.7%, of the outstanding Common Stock are owned by the general public. At the time the Merger was consummated, four of the ten members of the Board of Directors of the Company (i.e., Bette B. Anderson, Robert A. Bowman, Richard S. Ward and Margita E. White) resigned effective February 23, 1998. On February 25, 1998, the remaining members of the Board of Directors of the Company elected Tony Coelho, Robin Josephs, Merrick R. Kleeman and Barry S. Sternlicht to fill the vacancies caused by such resignations and to serve as Directors for terms expiring at the 2000, 1999, 2000 and 1998 Annual Meeting of Stockholders, respectively, and until such Director's successor is duly elected and qualified. Starwood, Inc. has previously announced that it is exploring a range of disposition strategies for the Company. To that end, on February 13, 1998, the Company filed with the Securities and Exchange Commission a registration statement on Form S-3 (the "Registration Statement") for an underwritten public offering of 11,000,000 shares of the -2- Common Stock held by ITT. The Registration Statement also covers an additional 1,650,000 shares of the Common Stock held by ITT to cover over-allotments, if any. The ownership and operation of educational institutions in the United States are subject to extensive federal and state laws and regulations, including laws and regulations relating to a change in control of the Company. In this regard, the Company must obtain certain approvals under the applicable laws, regulations and standards of the U.S. Department of Education ("DOE"), the accrediting commissions that accredit the Company's ITT Technical Institutes (the "Accrediting Commissions") and the state education authorities that regulate the Company's ITT Technical Institutes (the "SEAs") relating to the change in control caused by the Merger. The Company obtained all prior approvals required by the DOE, the Accrediting Commissions and the SEAs necessitated by the Merger and is now in the process of obtaining any approvals required by such authorities after the Merger. The Company believes that the proposed public offering and any future dispositions by ITT of a significant portion of its shares of Common Stock might cause a change in control of the Company or its ITT Technical Institutes to occur under the regulations of the DOE, most of the SEAs and the Accrediting Commissions, requiring the Company to obtain certain approvals from these authorities before and after the disposition. For a more complete discussion of the effects of a change in control of the Company, reference is made to "Item 1. Business -- Change in Control." in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial statements of businesses acquired. Not applicable. (b) Pro forma financial information. Not applicable. (c) Exhibits. The exhibits set forth in the Index to Exhibits on page S-2 are incorporated herein by reference. -3- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ITT Educational Services, Inc. Date: March 10, 1998 By: /s/ Clark D. Elwood ---------------------------------------- Clark D. Elwood Senior Vice President, General Counsel & Secretary S-1 INDEX TO EXHIBITS
Exhibit No. Description - --------------------------------------------------------------------------- 99.1 Text of a Press Release issued by the Company dated March 9, 1998. 99.2 (1) Credit Agreement (the "Credit Agreement") dated as of February 23, 1998 among Starwood Hotels & Resorts, SLT Realty Limited Partnership, Starwood Hotels & Resorts Worldwide, Inc., Chess Acquisition Corp. (and ITT Corporation as its successor by merger), certain additional borrowers, various lenders, Bankers Trust Company and The Chase Manhattan Bank, as Administrative Agents, and Lehman Commercial Paper Inc. and Bank of Montreal, as Syndication Agents. 99.3 (2) First Amendment dated as of March 3, 1998 among Starwood Hotels & Resorts, SLT Realty Limited Partnership, Starwood Hotels & Resorts Worldwide, Inc., ITT Corporation, the lenders party to the Credit Agreement, Bankers Trust Company and The Chase Manhattan Bank, as Administrative Agents, and Lehman Commercial Paper Inc. and Bank of Montreal, as Syndication Agents, and the new lenders. 99.4 (3) Senior Secured Increasing Rate Note Agreement dated as of February 23, 1998 by and among Starwood Hotels & Resorts Worldwide, Inc., Starwood Hotels & Resorts, the Guarantors named therein and the Lenders named therein.
- ---------- (1) The copy of this exhibit filed as Exhibit 10.1 to Starwood Hotels & Resorts Worldwide, Inc.'s and Starwood Hotels & Resorts' Joint Current Report on Form 8-K dated February 23, 1998 is incorporated herein by reference. (2) The copy of this exhibit filed as Exhibit 10.2 to Starwood Hotels & Resorts Worldwide, Inc.'s and Starwood Hotels & Resorts' Joint Current Report on Form 8-K dated February 23, 1998 is incorporated herein by reference. (3) The copy of this exhibit filed as Exhibit 10.3 to Starwood Hotels & Resorts Worldwide, Inc.'s and Starwood Hotels & Resort's Joint Current Report on Form 8-K dated February 23, 1998 is incorporated herein by reference. S-2 EX-99.1 2 PRESS RELEASE Exhibit 99.1 FOR FURTHER INFORMATION CONTACT: AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD: - -------------- -------------------------------- Edward Hartigan George Zagoudis Janine Warell Darcy Bretz Senior Vice President General Information Analyst Contact Media Contact (317) 594-9499 x207 (312) 640-6663 (312) 640-6775 (312) 640-6756 FOR IMMEDIATE RELEASE MARCH 9, 1998 ITT EDUCATIONAL SERVICES, INC. ANNOUNCES CHANGES ON ITS BOARD OF DIRECTORS Indianapolis, IN, March 9, 1998 -- ITT Educational Services, Inc., (NYSE: ESI) a leading proprietary provider of technology-oriented postsecondary degree programs, today reported that four new directors have been elected to fill the vacancies caused by the resignation of four of the ten members of its Board of Directors. On February 25, 1998, the ESI Board of Directors elected Tony Coelho, Robin Josephs, Merrick R. Kleeman and Barry S. Sternlicht as directors of ESI with terms expiring at the 2000, 1999, 2000 and 1998 Annual Meeting of Stockholders, respectively, to fill the vacancies caused by the resignation of Bette B. Anderson, Robert A. Bowman, Margita E. White and Richard S. Ward that were effective February 23, 1998. Each of the ESI directors who resigned was an officer and/or director of ITT Corporation ("ITT") prior to the merger of Chess Acquisition Corp. with and into ITT, pursuant to which ITT became a wholly-owned subsidiary of Starwood Hotels & Resorts Worldwide, Inc. ("Starwood, Inc."). ITT holds 22,500,000 shares, or 83.3%, of the outstanding ESI common stock. Mr. Coelho, former Congressman and Majority Whip of the U.S. House of Representatives, is a director of several public companies and provides consulting services. Ms. Josephs, a former vice president of Goldman Sachs, is an advisor to various real estate entities. Mr. Kleeman is a managing director of Starwood Capital Group, L.L.C. ("Starwood Capital"). Mr. Sternlicht is chairman of the board of directors of Starwood, Inc. and chairman and chief executive officer of Starwood Hotels & Resorts, a real estate investment trust whose shares are paired with those of Starwood, Inc., and founder and general manager of Starwood Capital. "I am very grateful for the dedicated service ESI received from its former directors," said Rene R. Champagne, chairman, president and chief executive officer of ESI. "I look forward to the contributions of the newly elected directors." "ESI's past performance and future growth plans have been presented in periodic reports filed with the Securities and Exchange Commission," said Champagne," and in the recently filed registration statement for an underwritten public offering of 11 million shares of ESI common stock by ITT. These changes in the membership of ESI's Board are not expected to materially affect ESI's publicly announced plans." ITT Educational Services, Inc. operates 62 ITT Technical Institutes in 27 states which provide career-focused programs in fields of technology to more than 24,000 students. Curriculum offerings, leading primarily to associate's and bachelor's degrees are designed to help students begin to prepare for career opportunities in various fields of technology, including electronics, computer- aided drafting, industrial design, automated manufacturing, chemical technology, telecommunications and other areas. Four and one-half million shares, or 16.7 percent, of the Company's outstanding common stock are traded on the New York Stock Exchange under the symbol ESI. ITT Corporation owns the remaining 83.3 percent of the common stock. Except for the historical information contained herein, the matters discussed in this press release are forward looking statements that involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: business conditions and growth in the postsecondary education industry and in the general economy; changes in federal and state governmental regulations with respect to education and accreditation standards, or the interpretation or enforcement thereof, including, but not limited to, the level of government funding for, and the Company's eligibility to participate in, student financial aid programs utilized by the Company's students; the results of the Company's appeal in Eldredge, et al. v. ITT Educational Services, Inc., et al. and the results of any related litigation; effects of any change in ownership of the Company resulting in a change in control of the Company, including, but not limited to, the consequences of such changes on the accreditation and federal and state regulation of the institutes; receptivity of students and employers to the Company's existing program offerings and new curricula; loss of lender access to the Company's students for student loans; a substantial increase in the shares of Common Stock available for sale in the market if some or all of ITT Corporation's Common Stock holdings are divested; and other risks and uncertainties detailed from time to time in the Company's filings with the Securities and Exchange Commission. For more information on ITT Educational Services, Inc. via facsimile at no cost, simply dial 1-800-PRO-INFO and enter the company code ESI. -----END PRIVACY-ENHANCED MESSAGE-----