-----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, VfAOxB8wOroYpBYg9BdRN9khqciYMSkmulLi6Bl8GSqF/pTHv6IM+vzAv52Rfgo7 Amwoj2LzymNRvxzMyHFQjA== 0000950129-97-005072.txt : 19971201 0000950129-97-005072.hdr.sgml : 19971201 ACCESSION NUMBER: 0000950129-97-005072 CONFORMED SUBMISSION TYPE: SC 13E3/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19971128 SROS: NYSE GROUP MEMBERS: CHAPARRAL STEEL COMPANY GROUP MEMBERS: TEXAS INDUSTRIES ACQUISITION INC GROUP MEMBERS: TEXAS INDUSTRIES INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CHAPARRAL STEEL CO CENTRAL INDEX KEY: 0000833226 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 751424624 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: SC 13E3/A SEC ACT: SEC FILE NUMBER: 005-39716 FILM NUMBER: 97730295 BUSINESS ADDRESS: STREET 1: 300 WARD RD CITY: MIDLOTHIAN STATE: TX ZIP: 76065 BUSINESS PHONE: 2147758241 MAIL ADDRESS: STREET 1: 300 WARD RD CITY: MIDLOTHIAN STATE: TX ZIP: 76065 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TEXAS INDUSTRIES INC CENTRAL INDEX KEY: 0000097472 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 750832210 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: SC 13E3/A BUSINESS ADDRESS: STREET 1: 1341 W MOCKINGBIRD LN STREET 2: STE 700W CITY: DALLAS STATE: TX ZIP: 75247-6913 BUSINESS PHONE: 2146476700 SC 13E3/A 1 AMENDMENT TO SCHEDULE 13E 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13E-3/A Rule 13e-3 Transaction Statement (Pursuant to Section 13(e) of the Securities Exchange Act of 1934) CHAPARRAL STEEL COMPANY (Name of the Issuer) TEXAS INDUSTRIES, INC., TEXAS INDUSTRIES ACQUISITION INC. AND CHAPARRAL STEEL COMPANY (Name of Persons Filing Statement) COMMON SHARES, $.10 PAR VALUE 159422104 (Title of Class of Securities) (Cusip Number of Class of Securities)
ROBERT C. MOORE, ESQ. VICE PRESIDENT -- GENERAL COUNSEL AND SECRETARY TEXAS INDUSTRIES, INC. 1341 W. MOCKINGBIRD LANE 7TH FLOOR DALLAS, TEXAS 75247 (972) 647-6740 (Name, address and telephone number of person authorized to receive notices and communications on behalf of the persons filing statement.) Copies To: DAN BUSBEE, ESQ. JOHN D. CAPERS, JR., ESQ. LOCKE PURNELL RAIN HARRELL KING & SPALDING 2200 ROSS AVENUE, SUITE 2200 191 PEACHTREE STREET DALLAS, TEXAS 75201 ATLANTA, GEORGIA 30303-1763 (214) 740-8000 (404) 572-4600
a. [X] The filing of solicitation materials or an information statement subject to Regulation 14A [17 CFR 240.14a-1 to 240.14b-1], Regulation 14C [17 CRF 240.14c-1 to 240.14c-101] or Rule 13e-3(c) [240.13e-3 (c)] under the Securities Exchange Act of 1934. b. [ ] The filing of a registration statement under the Securities Act of 1933. c. [ ] A tender offer. d. [ ] None of the above. Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: [X] CALCULATION OF FILING FEE
TRANSACTION AMOUNT OF VALUATION* FILING FEE** ----------- ------------ $76,300,000 $15,260
- --------------- * Assumes 4,453,963 Common Shares, par value $.10 per share, of Chaparral Steel Company (the "Common Shares") will be converted into the right to receive $15.50 per share in cash. Includes options to purchase Common Shares having a net cash value of $7,263,574. ** The amount of the filing fee, calculated in accordance with 240.0-11 of the Securities Exchange Act of 1934 equals 1/50th of one percent of the transaction value. [X] Check box if any part of the fee is offset as proved Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: $15,260 Form or Registration No.: Schedule 14A Filing Party: Chaparral Steel Company Date Filed: September 9, 1997 ================================================================================ 2 INTRODUCTION This Schedule 13E-3 Transaction Statement is being filed by Texas Industries, Inc., a Delaware corporation ("TXI"), TXI Acquisition Inc., a Delaware corporation and wholly-owned subsidiary of TXI ("TXI Acquisition"), and Chaparral Steel Company, a Delaware corporation (the "Company"), and is being filed in connection with an Agreement and Plan of Merger, dated as of July 30, 1997 ("the Merger Agreement") among TXI, TXI Acquisition and the Company. The following cross-reference sheet is supplied pursuant to general instruction F to 13E-3 and shows the location in the preliminary proxy statement filed by the Company with the Securities and Exchange Commission contemporaneously herewith (including all annexes and schedules thereto ("Preliminary Proxy Statement") of the information required to be included in response to the items of this Transaction Statement. The information in the Preliminary Proxy Statement, a copy of which is attached hereto as Exhibit d, is incorporated by reference and the responses to each item are qualified in their entirety by the information contained in the Preliminary Proxy Statement. CROSS-REFERENCE SHEET SHOWING LOCATION IN PRELIMINARY PROXY STATEMENT OF INFORMATION REQUIRED BY ITEMS IN SCHEDULE 13E-3
SECTION 13E-3 ITEM LOCATION IN PRELIMINARY PROXY STATEMENT ------------------ --------------------------------------- 1. Issuer and Class of Security Subject to the Transaction Item 1(a)....................................... Cover Page and "The Parties" Item 1(b)....................................... Cover Page and "Introduction-Record Date; Quorum; Required Vote" Item 1(c)....................................... "Market Prices and Dividends" Item 1(d)....................................... "Market Prices and Dividends" Item 1(e)....................................... Not Applicable Item 1(f)....................................... Quarterly Periods 2. Identity and Background Items 2(a) - (d) and (g)........................ Cover Page; "Introduction General;" "-- The Special Meeting;" "The Parties;" and "Management of TXI, TXI Acquisition and the Company" Items 2(e) and (f).............................. Not Applicable 3. Past Contacts, Transactions or Negotiations Item 3(a)(1).................................... "Special Factors -- Interests of Certain Persons in the Merger" Item 3(a)(2) and (b)............................ "Special Factors -- Background of the Merger" and "-- Certain Litigation" 4. Terms of Transaction Item 4(a)....................................... "Introduction -- Record Date; Quorum; Required Vote;" "Special Factors -- Interests of Certain Persons in the Merger;" and "The Merger" Item 4(b)....................................... "Introduction -- Record Date; Quorum; Required Vote;" "Special Factors -- Interests of Certain Persons in the Merger;" and "The Merger -- General -- Treatment of Shares in the Merger"
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SECTION 13E-3 ITEM LOCATION IN PRELIMINARY PROXY STATEMENT ------------------ --------------------------------------- 5. Plans or Proposals of the Issuer or Affiliate Items 5(a) - (g)................................ "Special Factors -- Background of the Merger;" "-- Purpose and Structure of the Merger;" "-- Plans for the Company After the Merger;" and "-- Interests of Certain Persons in the Merger" 6. Source and Amounts of Funds or Other Consideration Item 6(a)....................................... "The Merger -- Payment for Public Shares; Sources of Funds" Item 6(b)....................................... "Special Factors -- Fees and Expenses" Item 6(c) and (d)............................... "The Merger -- Payment for Public Shares; Sources of Funds" 7. Purpose(s), Alternatives, Reasons and Effects Items 7(a) and (c).............................. "Special Factors -- Background of the Merger;" "-- Purpose and Structure of the Merger;" and "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger" Item 7(b)....................................... "Special Factors -- Background of the Merger;" "-- Purpose and Structure of the Merger;" and "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger" Item 7(d)....................................... "Special Factors -- Background of the Merger;" "-- Purpose and Structure of the Merger;" "-- Plans for the Company After the Merger;" "-- Certain Effects of the Merger;" "-- Certain U.S. Federal Income Tax Consequences;" and "The Merger -- Accounting Treatment" 8. Fairness of the Transaction Item 8(a)....................................... "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger" Item 8(b)....................................... "Special Factors -- Background of the Merger;" "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger;" "-- Purpose and Structure of the Merger"; "-- Opinion of Robinson- Humphrey"; Summary of Financial Analyses; "-- TXI's Financial Advisor"
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SECTION 13E-3 ITEM LOCATION IN PRELIMINARY PROXY STATEMENT ------------------ --------------------------------------- Item 8(c)....................................... "Introduction -- Record Date; Quorum; Required Vote;" "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger;" and "The Merger -- General -- Conditions to the Merger; Amendment, Waiver and Termination" Item 8(d)....................................... "Special Factors -- Background of the Merger;" "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger;" and "-- Opinion of Robinson-Humphrey; Summary of Financial Analyses" Item 8(e)....................................... "Special Factors -- Background of the Merger;" "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger" Item 8(f)....................................... Not Applicable 9. Reports, Opinions, Appraisals and Certain Negotiations Items 9(a) - (c)................................ "Special Factors -- Background of the Merger;" "-- Opinion of Robinson- Humphrey; Summary of Financial Analyses"; "-- TXI's Financial Advisor;" and Exhibits (b)(1), (b)(2) and (b)(3) 10. Interest in Securities of the Issuer Item 10(a)...................................... "Introduction -- Record Date; Quorum; Required Vote"; "Special Factors -- Interests of Certain Persons in the Merger;" and "Ownership of Common Shares" Item 10(b)...................................... Not Applicable 11. Contracts, Arrangements or Understandings with Respect to the Issuer's Securities......................... "Special Factors -- Interests of Certain Persons in the Merger;" "The Merger;" Annex A to the Preliminary Proxy Statement 12. Present Intention and Recommendation of Certain Persons with Regard to the Transaction Items 12(a) - (b)............................... "Introduction -- The Special Meeting;" "-- Record Date; Quorum; Required Vote;" "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger;" and "-- Interests of Certain Persons in the Merger"
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SECTION 13E-3 ITEM LOCATION IN PRELIMINARY PROXY STATEMENT ------------------ --------------------------------------- 13. Other Provisions of the Transaction Item 13(a)...................................... "The Merger -- Appraisal Rights" and Annex B to the Preliminary Proxy Statement Item 13(b) and (c).............................. Not Applicable 14. Financial Information Item 14(a)...................................... "Selected Consolidated Financial Data of the Company;" "Incorporation of Certain Documents by Reference;" Exhibits (g)(1) and (g)(2) Item 14(b)...................................... Not Applicable 15. Persons and Assets Employed, Retained or Utilized Item 15(a)...................................... "Introduction -- Solicitation of Proxies" Item 15(b)...................................... "Introduction -- Solicitation of Proxies;" "Special Factors -- Background of the Merger;" "-- Opinion of Robinson-Humphrey; Summary of Financial Analyses;" "TXI's Financial Advisor;" and "-- Fees and Expenses" 16. Additional Information............................. Preliminary Proxy Statement in its entirety 17. Material to be Filed as Exhibits................... Separately filed with this Schedule 13E-3
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION (a) The name of the issuer of the class of equity security subject to the Rule 13e-3 transaction is Chaparral Steel Company and the address of its principle executive offices is 300 Ward Road, Midlothian, Texas 76065-9651. (b) The relevant information set forth on the Cover Page of the Preliminary Proxy Statement and under the caption "Introduction -- Record Date; Quorum and Required Vote" is incorporated here and by reference. (c) The relevant information set forth under the caption "Market Prices and Dividends" is incorporated herein by reference. (d) The relevant information set forth under the caption "Market Prices and Dividends" is incorporated herein by reference. (e) Not Applicable. (f) 5 6
AMOUNT OF COMMON RANGE OF AVERAGE QUARTERLY PERIODS(1) SHARES PURCHASED PRICES PAID PURCHASE PRICE -------------------- ---------------- -------------- -------------- FISCAL 1996 (ENDED MAY 31, 1996) First Quarter................................... 0 -- -- Second Quarter.................................. 651,800 $9.50 -- $10.00 $ 9.77 Third Quarter................................... 0 -- -- Fourth Quarter(2)............................... 454,700 $13.375 $13.375 FISCAL 1997 (ENDED MAY 31, 1997) First Quarter(2)................................ 349,100 $10.75 $10.75 Second Quarter.................................. 0 -- -- Third Quarter................................... 0 -- -- Fourth Quarter.................................. 0 -- --
- --------------- (1) The information set forth in this table reflects purchases of the Common Shares made by the Company since the commencement of the Company's second full fiscal year preceding the date of this Schedule 13E-3. (2) Only one purchase transaction occurred during such quarterly period. ITEM 2. IDENTITY AND BACKGROUND (a) - (d) and (g). This Transaction Statement is being filed by TXI, TXI Acquisition and the Company (the Company being the issuer.) The following information set forth on the Cover Page of the Preliminary Proxy Statement and set forth under the captions "Introduction -- General," "-- The Special Meeting," "The Parties" and "Management of TXI, TXI Acquisition and the Company" is incorporated herein by reference. (e) and (f). During the last 5 years, none of TXI, TXI Acquisition and the Company or, to the best of the knowledge of TXI, TXI Acquisition or the Company, any of the persons listed under the caption "Management of TXI, TXI Acquisition and the Company" (i) has been convicted in a criminal proceeding (excluding traffic violations or some other misdemeanors), or (ii) was or is a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining further violations of, or prohibiting activates subject to, federal or state securities laws or finding any violations of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS. (a)(1). The relevant information set forth under the caption "Special Factors -- Interests of Certain Persons in the Merger" is incorporated herein by reference. (a)(2) and (b). The relevant information set forth under the captions "Special Factors -- Background of the Merger" and "-- Certain Litigation" is incorporated herein by reference. ITEM 4. TERMS OF THE TRANSACTION. (a) The relevant information set forth under the captions "Introduction -- Record Date; Quorum; Required Vote," "Special Factors -- Interests of Certain Persons in the Merger" and "The Merger" are incorporated herein by reference. (b) The relevant information set forth under the captions "Introduction -- Record Date; Quorum; Required Vote," "Special Factors -- Interests of Certain Persons in the Merger" and "The Merger -- General -- Treatment of Shares in the Merger" is incorporated herein by reference. 6 7 ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE. (a) - (g) The relevant information set forth under the captions "Special Factors -- Background of the Merger," "-- Purpose and Structure of the Merger," "-- Plans for the Company After the Merger" and "-- Interests of Certain Persons in the Merger" is incorporated herein by reference. ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) The relevant information set forth under the captions "The Merger -- Payment for Public Shares; Sources of Funds" is incorporated herein by reference. (b) The relevant information set forth under the caption "Special Factors -- Fees and Expenses" is incorporated herein by reference. (c) and (d) The relevant information set forth under the caption "The Merger -- Payment for Public Shares; Sources of Funds" is incorporated herein by reference. ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS. (a) and (c). The relevant information set forth under the captions "Special Factors -- Background of the Merger," "-- Purpose and Structure of the Merger" and "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger" is incorporated herein by reference. (b) The relevant information set forth under the caption "Special Factors -- Background of the Merger," "-- Purpose and Structure of the Merger" and "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger" is incorporated herein by reference. (d) The relevant information set forth under the captions "Special Factors -- Background of the Merger," "-- Purpose and Structure of the Merger," "-- Plans for the Company After the Merger," "-- Certain Effects of the Merger," "-- Certain U.S. Federal Income Tax Consequences" and "The Merger -- Accounting Treatment" is incorporated herein by reference. ITEM 8. FAIRNESS OF THE TRANSACTION. (a) The relevant information set forth under the captions "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger" is incorporated herein by reference. (b) The relevant information set forth under the captions "Special Factors -- Background of the Merger," "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger," "-- Purpose and Structure of the Merger," "-- Opinion of Robinson-Humphrey; Summary of Financial Analyses" and "-- TXI's Financial Advisor" is incorporated herein by reference. (c) The relevant information set forth under the captions "Introduction -- Record Date; Quorum; Required Vote," "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger" and "The Merger -- General -- Conditions to the Merger; Amendment, Waiver and Termination" is incorporated herein by reference. (d) The relevant information set forth under the caption "Special Factors -- Background of the Merger," "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger" and "Opinion of Robinson-Humphrey; Summary of Financial Analyses" is incorporated herein by reference. (e) The relevant information set forth under the captions "Special Factors -- Background of the Merger," "-- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger" is incorporated herein by reference. (f) Not Applicable. 7 8 ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS (a) - (c) The relevant information set forth under the captions "Special Factors -- Background of the Merger," "-- Opinion of Robinson-Humphrey; Summary of Financial Analyses," "-- TXI's Financial Advisor" and Exhibits (b)(1), (b)(2) and (b)(3) to this Transaction Statement is incorporated herein by reference. ITEM 10. INTEREST IN SECURITIES OF THE ISSUER. (a) The relevant information set forth under the captions "Introduction -- Record Date; Quorum; Required Vote," "Special Factors -- Interests of Certain Persons in the Merger" and "Ownership of Common Shares" is incorporated herein by reference. (b) Not applicable. ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S SECURITIES The relevant information set forth under the captions "Special Factors -- Interests of Certain Persons in the Merger," "The Merger" and Annex A to the Preliminary Proxy Statement is incorporated herein by reference. ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO THE TRANSACTION. (a) and (b). The relevant information set forth under the captions "Introduction -- The Special Meeting," "-- Record Date; Quorum; Required Vote," "Special Factors -- Recommendation of the Special Committee and Board of Directors of the Company; Fairness of the Merger" and "Interests of Certain Persons in the Merger" is incorporated herein by reference. ITEM 13. OTHER PROVISIONS OF THE TRANSACTION. (a) The relevant information set forth under the caption "The Merger -- Appraisal Rights" and in Annex B to the Preliminary Proxy Statement is incorporated herein by reference. (b) and (c). Not applicable. ITEM 14. FINANCIAL INFORMATION. (a) The relevant information set forth under the caption "Selected Consolidated Financial Data of the Company" in the Preliminary Proxy Statement is incorporated herein by reference. Pursuant to Instruction D and Instruction F to Schedule 13E-3, the following are incorporated by reference: (i) The "Consolidated Financial Statements" from the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1997 (a copy of which is filed as Exhibit (g)(1) to this Transaction Statement); (ii) the Company's Annual Report on Form 10-K/A for the fiscal year ended May 31, 1997 (a copy of which is filed as Exhibit (g)(1) to this Transaction Statement); (iii) Part I, "Financial Information," Item 1, "Consolidated Financial Statements" from the Company's Quarterly Report on Form 10-Q for the period ended August 31, 1997 (a copy of which is filed as Exhibit (g)(2) to this Transaction Statement); and (iv) the Company's Quarterly Report on Form 10-Q/A for the period ended August 31, 1997 (a copy of which is filed as Exhibit (g)(2) to this Transaction Statement). (b) Not applicable. 8 9 ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED. (a) and (b). The relevant information set forth under the captions "Introduction -- Solicitation of Proxies", "Special Factors -- Background of the Merger", "-- Opinion of Robinson-Humphrey; Summary of Financial Analyses," "TXI's Financial Advisor" and "Fees and Expenses" is incorporated herein by reference. ITEM 16. ADDITIONAL INFORMATION. The information set forth in the Preliminary Proxy Statement is incorporated herein by reference in its entirety. ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NUMBER DESCRIPTION ------- ----------- (a) -- Not Applicable. (b)(1) -- Fairness Opinion of The Robinson-Humphrey Company, Inc. (incorporated by reference to Annex C to the Preliminary Proxy Statement). (b)(2)* -- Presentation materials provided to the Special Committee of the Board of Directors of the Company by The Robinson-Humphrey Company, Inc. on June 20, 1997. (b)(3)* -- Presentation materials provided to the Special Committee of the Board of Directors of the Company by The Robinson-Humphrey Company, Inc. on July 29, 1997. (b)(4) -- Presentation materials provided to the Board of Directors of Texas Industries, Inc. by SBC Warburg Dillon Read on May 22, 1997. (c) -- Agreement and Plan of Merger dated as of July 30, 1997 among Chaparral Steel Company, Texas Industries, Inc. and TXI Acquisition Inc. (incorporated by reference to Annex C to the Preliminary Proxy Statement). (d) -- The Preliminary Proxy Statement (incorporated by reference to the Preliminary Proxy Statement). (e) -- Dissenters' Rights (incorporated by reference to Annex B to the Preliminary Proxy Statement). (f) -- Not Applicable. (g)(1) -- Consolidated Financial Statements (incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1997, as amended by the Company's Annual Report on Form 10-K/A for the Fiscal year ended May 31, 1997). (g)(2) -- Part I, "Financial Information," Item 1, "Consolidated Financial Statements" (incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended August 31, 1997, as amended by the Company's Quarterly Report on Form 10-Q/A for the period ended August 31, 1997).
- --------------- * Previously Filed. After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Transaction Statement is true, complete and correct. TEXAS INDUSTRIES, INC. By: /s/ ROBERT D. ROGERS ---------------------------------- Title: President ---------------------------------- Date: November 28, 1997 9 10 After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Transaction Statement is true, complete and correct. TXI ACQUISITION INC. By: /s/ ROBERT D. ROGERS ---------------------------------- Title: President ---------------------------------- Date: November 28, 1997 After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Transaction Statement is true, complete and correct. CHAPARRAL STEEL COMPANY By: /s/ GORDON E. FORWARD ---------------------------------- Title: President ---------------------------------- Date: November 28, 1997 10 11 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION ------- ----------- (a) -- Not Applicable. (b)(1) -- Fairness Opinion of The Robinson-Humphrey Company, Inc. (incorporated by reference to Annex C to the Preliminary Proxy Statement). (b)(2)* -- Presentation materials provided to the Special Committee of the Board of Directors of the Company by The Robinson-Humphrey Company, Inc. on June 20, 1997. (b)(3)* -- Presentation materials provided to the Special Committee of the Board of Directors of the Company by The Robinson-Humphrey Company, Inc. on July 29, 1997. (b)(4) -- Presentation materials provided to the Board of Directors of Texas Industries, Inc. on May 22, 1997. (c) -- Agreement and Plan of Merger dated as of July 30, 1997 among Chaparral Steel Company, Texas Industries, Inc. and TXI Acquisition Inc. (incorporated by reference to Annex C to the Preliminary Proxy Statement). (d) -- The Preliminary Proxy Statement (incorporated by reference to the Preliminary Proxy Statement). (e) -- Dissenters' Rights (incorporated by reference to Annex B to the Preliminary Proxy Statement). (f) -- Not Applicable. (g)(1) -- Consolidated Financial Statements (incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1997, as amended by the Company's Annual Report on Form 10-K/A for the fiscal year ended May 31, 1997). (g)(2) -- Part I, "Financial Information," Item 1, "Consolidated Financial Statements" (incorporated by reference from the Company's Quarterly Report on Form 10-Q for the period ended August 31, 1997, as amended by the Company's Quarterly Report on Form 10-Q/A for the period ended August 31, 1997).
- --------------- * Previously Filed. EX-99.(B)(4) 2 PRESENTATION MATERIALS 1 Exhibit (b)(4) Project CAN / Exhibit 13E13 ================================================================================ EXTREMELY CONFIDENTIAL PROJECT CAN TIN PURCHASE OF CAN MINORITY PUBLIC STAKE DILLON, READ & CO. INC. MAY 22, 1997 2 Project CAN ================================================================================ The accompanying material was compiled on a confidential basis for use by the Board of Directors of TIN (the "Company") in evaluating the proposal described therein and not with a view to public disclosures or filing thereof under the Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Federal Securities Laws"). This material was prepared for the Company for the specific use by specific persons and was not prepared to conform with any disclosure standards under the Federal Securities Laws. Neither the Company nor Dillon, Read & Co. Inc. ("Dillon Read") nor any of their representative officers, directors, employees, affiliates, advisors, agents or representatives warrants the accuracy or completeness of any of the material set forth herein. Nothing contained in the accompanying material is, or shall be relied upon as, a promise or representation as to the past or the future. It should be understood that any estimates, valuations and/or projections contained in the accompanying material were prepared or derived from information supplied by the Company without any independent verification thereof by Dillon Read. Accordingly, no representation or warranty can be or is made by Dillon Read as to the accuracy or achievability of any such valuations, estimates and/or projections. DILLON READ 3 Project CAN ================================================================================ TABLE OF CONTENTS Overview of Current Situation . . . . . . . . . . . . . . . . . . . .A Preliminary Valuation Discussion . . . . . . . . . . . . . . . . . . .B Discussion of Minority Buy-In Transactions . . . . . . . . . . . . . .C Pro Forma Impact of Buy-In . . . . . . . . . . . . . . . . . . . . . .D Timing and Process . . . . . . . . . . . . . . . . . . . . . . . . . .E Exhibits Detailed Comparable Steel Company Analysis . . . . . . . . . .1 Shareholder Profile Summary . . . . . . . . . . . . . . . . .2 DILLON READ 4 Project CAN ================================================================================ TIN PURCHASE OF CAN MINORITY PUBLIC STAKE OVERVIEW OF CURRENT SITUATION . . . . . . . . . . . A DILLON READ 5 Project CAN / A - 1 ================================================================================ OVERVIEW OF CURRENT SITUATION o TIN HAS INFORMED DILLON READ THAT IT IS CONSIDERING THE REPURCHASE OF THE 15% OF CAN THAT IT DOES NOT CURRENTLY OWN o DILLON READ UNDERSTANDS THIS COURSE OF ACTION - Eliminates management distractions related to governance, IR, etc. - Simplifies cash flow and accounting - If financed properly, can be modestly accretive to TIN - Little benefit to valuation for either Company under current structure o DILLON READ IS WILLING TO ASSIST TIN IN EVALUATING AND EXECUTING A BUY-IN INCLUDING: - Presentation to Board on valuation of CAN - Review process of buy-in with Board - Negotiate on behalf of TIN Board - Assist TIN in formulating communication - Assist in drafting of disclosure documents including proxy statement - Render opinion to TIN Board DILLON READ 6 Project CAN / A - 2 ================================================================================ OVERVIEW OF PROCESS o DILLON READ EXPECTS THE CONTEMPLATED TRANSACTION WILL BE STRAIGHTFORWARD AND LIKELY COMPLETED IN APPROXIMATELY FOUR MONTHS FROM ANNOUNCEMENT OF OFFER: Day of May 22 Presentation to TIN Board of Directors Offer made to CAN's Board Public announcement made Week of July 14 Agreement reached Week of July 21 File proxy statement with SEC Week of August 18 Mail proxy materials to shareholders Week of September 15 Hold special shareholders meeting Close merger DILLON READ 7 Project CAN / A - 3 ================================================================================ OVERVIEW OF STRATEGIC RATIONALE o TIN HAS DELIVERED SUBSTANTIAL SHARE APPRECIATION TO INVESTORS WHILE CAN HAS TRAILED TIN OVER THE LAST FIVE YEARS. DESPITE A RECENT PULLBACK IN THE STOCK RELATED TO THE ANNOUNCEMENT OF CAN EAST, TIN HAS STILL DELIVERED SUPERIOR RETURNS TO INVESTORS. [CHART] DILLON READ 8 Project CAN / A - 4 ================================================================================ REASONS FOR BUY-IN o CURRENT CONFIGURATION (85% OWNERSHIP) DOES NOT APPEAR TO ENHANCE: - Valuation - Credit standing - Capital raising capabilities o BUY-IN STREAMLINES TIN CREDIT PROFILE: - Ability to consolidate debt at holding company level - Capture of 100% of cash flow from CAN that is substantially greater than amount TIN receives in dividends - Cash flows of TIN could be available to CAN o ELIMINATES MINORITY INTEREST ACCOUNTING FROM CONSOLIDATED FINANCIAL STATEMENTS DILLON READ 9 Project CAN / A - 5 ================================================================================ TRANSACTION IMPLICATIONS - INVESTOR PERSPECTIVE o ELIMINATION OF PURE "STEEL" PLAY OPPORTUNITY - Current illiquidity makes CAN a difficult investment for institutions - Many current investors own the stock based upon financial or technical play and not as a "Steel" company - Potential loss of steel analyst coverage o BUY-IN INCREASES STEEL PROFILE OF TIN o CAPITAL EXPENDED TO FUND BUY-IN DILLON READ 10 Project CAN / A - 6 ================================================================================ TRANSACTION IMPLICATIONS - FINANCIAL o TIN MAY INCUR ADDITIONAL GOODWILL FROM THE TRANSACTION - Purchase price may exceed minority share book value in CAN o DEPENDING ON SOURCE AND COST OF FUNDS USED, TRANSACTIONS CAN BE MODESTLY ACCRETIVE TO TIN EARNINGS PER SHARE o GIVEN PRIOR CONSIDERATIONS, TRANSACTIONS WILL LIKELY HAVE LITTLE OTHER IMPACT ON FINANCIAL STATEMENTS DILLON READ 11 Project CAN ================================================================================ TIN PURCHASE OF CAN MINORITY PUBLIC STAKE OVERVIEW OF CURRENT SITUATION . . . . . . . . . . . A PRELIMINARY VALUATION DISCUSSION . . . . . . . . . B DILLON READ 12 Project CAN / B - 1 ================================================================================ CURRENT STOCK PRICE o CURRENTLY, CAN IS VALUED ON AN EQUITY BASIS AS FOLLOWS: ------------------------------------------------ (in millions, except per share data) Stock Price (5/8/97) $12.00 Shares Outstanding 28.4 Total Equity Market Capitalization $340.6 ------------------------------------------------ o SINCE ITS IPO ON JULY 7, 1988, CAN HAS TRADED IN A RANGE OF $16.75 TO $6.00 PER SHARE [GRAPH] DILLON READ 13 Project CAN / B - 2 ================================================================================ COMPARABLE STEEL COMPANY OVERVIEW o IN EVALUATING THE PROSPECTS OF STEEL COMPANIES, INVESTORS TEND TO VALUE COMPANIES BASED UPON: - Company prospects for growth - Price (and business) cycle of steel products in respective markets - Cost structure - Individual characteristics of each company o OTHER FACTORS ALSO IMPACT A STOCK'S VALUE: - Wall Street sponsorship (research coverage) - Public float and average trading volume - Aggregate equity market capitalization
(dollars in millions) # of Equity Public Float as a LTM Avg. Daily Equity Market Research Analysts % of Total Float Trading Volume 1 Capitalization ----------------- ----------------- ---------------- -------------- Tier I Commercial Metals 13 85% 18,123 $430 Steel of West Virginia 4 91 10,633 52 Kentucky Electric 4 92 6,130 20 NS Group 9 66 16,236 78 Tier II Birmingham Steel 17 95 89,566 $441 Oregon Steel 15 91 97,059 437 NW Steel & Wire 5 51 30,791 71 CAN 9 15% 9,600 $341 Rank 5/8 8/8 7/8 4/8 Note 1: Average daily trading volumes have been reduced by 50% to eliminate double counting where appropriate.
DILLON READ 14 Project CAN / B - 3 ================================================================================ COMPARABLE STEEL COMPANY ANALYSIS -- STOCK PRICE PERFORMANCE o can HAS A HISTORY OF LAGGING PERFORMANCE COMPARED TO ITS PEERS [CHART ] DILLON READ 15 Project CAN / B - 4 ================================================================================ COMPARABLE STEEL COMPANY ANALYSIS -- FORWARD P/E MULTIPLES o ON A FORWARD EARNINGS BASIS, CAN CONSISTENTLY TRADES AT A DISCOUNT [GRAPH] Note 1: Steel Index is comprised of Birmingham Steel, Oregon Steel, Commercial Metals, Steel of West Virginia. Note 2: P/E is defined as price at end of each month divided by EPS 1 yr. forward. DILLON READ 16 Project CAN / B - 5 ================================================================================ COMPARABLE STEEL COMPANY ANALYSIS o BASED ON FUTURE EARNINGS ESTIMATES, CAN IS REASONABLY VALUED COMPARED TO ITS PEERS IMPLIED EQUITY VALUE (dollars in millions) ACTUAL IMPLIED EQUITY VALUE IMPLIED EQUITY EQUITY TIER 1 TIER 2 VALUE CY98 MULTIPLE CY98 MULTIPLE ------ -------------------- -------------- $341 $323 $370 DILLON READ 17 Project CAN ================================================================================ TIN PURCHASE OF CAN MINORITY PUBLIC STAKE OVERVIEW OF CURRENT SITUATION . . . . . . . . . . . . . . . . . . . . . . . . A PRELIMINARY VALUATION DISCUSSION . . . . . . . . . . . . . . . . . . . . . . B DISCUSSION OF MINORITY BUY-IN TRANSACTIONS . . . . . . . . . . . . . . . . . C DILLON READ 18 Project CAN / C - 1 ================================================================================ MINORITY BUY-IN OVERVIEW o MINORITY SHAREHOLDERS ARE NOT ENTITLED TO A CONTROL PREMIUM. o UNDER DELAWARE LAW, TIN COULD EFFECT A NON-PREMIUM MERGER WITH CAN. - Appraisal rights would be available to dissenting CAN shareholders. o HOWEVER, PREMIUMS TO ACQUIRE REMAINING INTERESTS HAVE AVERAGED 22%, ONE DAY PRIOR TO ANNOUNCEMENT, AND 32% FOUR WEEKS PRIOR TO ANNOUNCEMENT. DILLON READ 19 Project CAN / C - 2 ================================================================================ AVERAGE PREMIUMS PAID FOR MINORITY BUY-IN TRANSACTIONS ========================================================================= AVERAGE PREMIUMS PAID OVER TARGET STOCK PRICE BEFORE DATE OF ANNOUNCEMENT
Acquisition of Remaining Interest(1) ---------------------------------------------------------------------- Average Premium --------------------------------------------- One Day Four Weeks Prior to Announcement Prior to Announcement Number of Transactions --------------------------------------------- ---------------------- 1992 23.6% 21.7% 4 1993 24.6 35.1 3 1994 20.6 22.8 7 1995 28.2 34.1 7 1996 14.1 47.7 5 1997(2) NA NA 0 '92 - 96 22.2% 32.3% - --------------------------------------------------------------------------------
Note 1: Transaction values at $10MM or greater. Note 2: Year to date. DILLON READ 20 Project CAN ================================================================================ TIN PURCHASE OF CAN MINORITY PUBLIC STAKE OVERVIEW OF CURRENT SITUATION . . . . . . . . . . . . . . . . . . . . A PRELIMINARY VALUATION DISCUSSION . . . . . . . . . . . . . . . . . . B DISCUSSION OF MINORITY BUY-IN TRANSACTIONS . . . . . . . . . . . . . C PRO FORMA IMPACT OF BUY-IN . . . . . . . . . . . . . . . . . . . . . D DILLON READ 21 Project CAN / D - 1 ================================================================================ PRO FORMA IMPACT OF BUY-IN - BALANCE SHEET ======================================================================== Balance Sheet Data (dollars in millions)
TIN Pro Forma 2/28/97 Acq. Adjust. 2/28/97 ------- ------------ --------- Cash $ 4.0 $ 0.0 $ 4.0 Current 321.7 321.7 PPE, net 397.1 397.1 Other assets 101.5 101.5 Acquisition-related goodwill -- 17.6 17.6 ------ ------ Total Assets $824.3 17.6 $841.9 Current liabilities $ 86.5 $ 86.5 Other liabilities 79.2 79.2 Total debt 198.2 -- 198.2 Debt acquisitions-related -- 52.8 52.8 ------ ------ Total debt 198.2 52.8 251.0 Minority interest 35.3 (35.3) 0.0 Common stock 425.2 -- 425.2 ------ ------ Total Liabilities & Equity $824.3 $841.9 - --------------------------------------------------------------------------------
Note 1: Assumes a transaction price based upon closing stock price of $12.00. Source: Company available documents. DILLON READ 22 Project CAN / D - 2 ================================================================================ PRO FORMA IMPACT OF BUY-IN - INCOME STATEMENT ======================================================================== Income Statement Data (dollars in millions)
TIN TIN Pro Forma LTM 2/28/97 Acq. Adjust. LTM 2/28/97 ----------- ------------ ----------- EBIT $140.0 $140.0 Interest expense 19.1 19.1 ------ ------ EBT 120.9 120.9 Tax expense 41.0 41.0 Minority interest (6.6) (6.6) ------ ------ Pre-acquisition net income 73.3 73.3 Acquisition-related adjustments Less: Goodwill -- $0.5 0.5 Plus: Minority interest -- 6.6 6.6 Less: Interest expense -- 3.4 3.4 ------ ------ Pro-forma net income -- $ 75.9 EPS Pre-Acquisition EPS $ 3.29 $ 3.27 Pro Forma EPS -- 3.41 Shares Outstanding Fully-diluted shares outstanding 22.3 22.3 Acquisition-related shares issued -- -- ------ ------ Pro forma shares outstanding 22.3 22.3
- -------------------- Note 1: Assumes a transaction price based upon closing stock price of $12.00 as if it had occurred at the beginning of the period. DILLON READ 23 Project CAN ================================================================================ TIN PURCHASE OF CAN MINORITY PUBLIC STAKE OVERVIEW OF CURRENT SITUATION . . . . . . . . . . . . . . . . . . . . A PRELIMINARY VALUATION DISCUSSION . . . . . . . . . . . . . . . . . . B DISCUSSION OF MINORITY BUY-IN TRANSACTIONS . . . . . . . . . . . . . C PRO FORMA IMPACT OF BUY-IN . . . . . . . . . . . . . . . . . . . . . D TIMING AND PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . E DILLON READ 24 Project CAN / E - I ================================================================================ ILLUSTRATIVE MINORITY BUY-IN PROCESS TIN'S BOARD ACTION o TIN BOARD VOTES TO BUY-OUT MINORITY SHAREHOLDERS - After consulting with outside advisors o TIN SENDS A LETTER TO BOARD OF CAN STATING: - TIN intention - Price offered - Form of consideration (cash; stock; combination; other) - Requesting CAN Board establish special committee o PUBLIC ANNOUNCEMENT OF OFFER BY CAN AND TIN DILLON READ 25 Project CAN / E - 2 ================================================================================ ILLUSTRATIVE MINORITY BUY-IN PROCESS CAN BOARD ACTION o FULL BOARD ESTABLISHES SPECIAL COMMITTEE OF DISINTERESTED DIRECTORS - Should not be employees of TIN or CAN - Should not be directors of TIN - Should not have long-standing commercial relationship with TIN (consultant; lawyer; advisor; supplier) o PUBLIC ANNOUNCEMENT OF ESTABLISHMENT OF SPECIAL COMMITTEE (SIMULTANEOUS WITH ANNOUNCEMENT OF OFFER) o CAN BOARD WILL LIKELY ACT IN ACCORDANCE WITH SPECIAL COMMITTEE DILLON READ 26 Project CAN / E - 3 ================================================================================ ILLUSTRATIVE MINORITY BUY-IN PROCESS SPECIAL COMMITTEE'S ACTION o HAS FIDUCIARY OBLIGATION TO PROTECT THE INTERESTS OF MINORITY SHAREHOLDERS - Must review and analyze TIN's offer as to adequacy and fairness - Must exercise due consideration and care - Must recommend to full CAN Board accepting or rejecting TIN's offer o HAS PRACTICAL OBLIGATION TO ATTEMPT TO NEGOTIATE BEST PRICE - Enters into negotiations with TIN and its advisors - CAN should have no obligation to sell o HIRES ADVISORS TO HELP MEET BOTH OBLIGATIONS - Legal - Financial DILLON READ 27 Project CAN / E - 4 ================================================================================ ILLUSTRATIVE MINORITY BUY-IN PROCESS NEGOTIATE PRICE o SPECIAL COMMITTEE AND ITS ADVISORS WILL ANALYZE PRICE WITH REGARD TO: - CAN DCF valuation - Public market for similar businesses/assets - Comparable company analysis - And anything else that can justify a higher price o MINORITY SHAREHOLDERS ARE NOT ENTITLED TO A VOTING CONTROL PREMIUM o TIN AND ITS ADVISORS WILL DO SIMILAR ANALYSIS o THE TWO SIDES WILL NEGOTIATE OVER PRICE AND TERMS o BEGIN DRAFTING OF PROXY AND SCHEDULE 13E-3 - Include 13e-3 "going private" disclosure - Will file after negotiated price is accepted DILLON READ 28 Project CAN / E - 5 ================================================================================ ILLUSTRATIVE MINORITY BUY-IN PROCESS NEGOTIATIONS COMPLETE o OPINIONS RENDERED - From Special Committee's advisors to Special Committee - From TIN'S advisors to TIN'S Board o SPECIAL COMMITTEE MAKES RECOMMENDATIONS TO CAN BOARD o CAN BOARD MAKES DECISION IN RESPECT TO OFFER o JOINT ANNOUNCEMENT DILLON READ 29 Project CAN / E - 6 ================================================================================ ILLUSTRATIVE MINORITY BUY-IN PROCESS EFFECT REPURCHASE o PROCESS - CAN files proxy statement; respond to SEC comments - CAN mails proxy materials to shareholders - CAN holds shareholder meeting DILLON READ 30 Project CAN / E - 7 ================================================================================ ILLUSTRATIVE SUMMARY TIMETABLE OF PROCESS - ---------- ---------- ---------- ----------- -------------- May 1997 June 1997 July 1997 August 1997 September 1997 [Calendar] [Calendar] [Calendar] [Calendar] [Calendar] - ---------- ---------- ---------- ----------- -------------- TIN TIN CAN CAN DILLON READ DR Outside Advisors OA Company Counsel CC Accountants ACCT
Date Task Responsibility - ------------------------------ -------------------------------------------------------- -------------- Day of May 22 o TIN hires DILLON READ to review process TIN o TIN Board reviews buy-out of CAN minority shareholders TIN, DR o DILLON READ advises TIN Board on recommendations for execution of transaction TIN, DR o TIN Board decides to proceed with offer TIN o TIN Board makes offer to CAN TIN o TIN files revised 13-D TIN, CC o TIN and CAN notify NYSE TIN, CAN o Public announcement of offer by CAN and TIN TIN, CAN o CAN forms special committee CAN, CC Weeks of May 26 and June 2 o CAN hires financial and legal advisors TIN, CAN Weeks of June 9 through July 7 o CAN enters into negotiations with TIN through respective advisors TIN, CAN, DR, CC, OA o Advisors for TIN and CAN perform supporting analysis TIN, CAN, DR, OA Week of July 14 o CAN accepts negotiated offer CAN, OA, CC o Advisors render fairness opinions DR, OA o TIN and CAN sign Merger Agreement; Joint public announcement All Parties Week of July 21 o File proxy statement circular with SEC All Parties o TIN and CAN make fourth quarter and fiscal year-end announcements TIN, CAN, CC, ACCT Week of August 18 o Respond to SEC comments and mail proxy statement All Parties Week of September 16 o Special shareholder meeting and vote CAN o Close Merger All Parties
DILLON READ 31 Project CAN ================================================================================ TIN PURCHASE OF CAN MINORITY PUBLIC STAKE EXHIBITS - -------- DETAILED STEEL COMPARABLE COMPANY ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DILLON READ 32 Project CAN / Exhibit 1 - 1 ================================================================================ COMPARABLE STEEL COMPANY ANALYSIS
Tier I Product Location - ------------------------ ----------------------------------------------------- ----------------------------------------- Commercial Metals Manufactures reinforcing and structural steel, steel Steel mini-mills located in Seguin, warehousing, joist manufacturing, fence post Texas; Birmingham, Alabama; Cayce, manufacturing, and railcar repair and rebuilding. South Carolina; and Magnolia, Company also processes recycled steel. Arkansas. Steel of West Virginia Custom designs and manufactures finished steel products Steel mini-mill and steel (billets). Billets are reheated to form engineered shapes fabrication facility in West known as specialty steel sections. Virginia as well as steel fabrication facility in Tennessee. Kentucky Electric A manufacturer of SBQ Flats for the leaf-spring Operations are located near suspension, cold drawn bar conversion and truck Ashland, Kentucky. trailer support beams. NS Group Produces a diverse group of specialty steel products which Manufactures seamless OCTG, line include seamless and welded tubular goods primarily used pipe products and SBQ products in oil and natural gas drilling and production operations. at facilities located in Koppel and Also produces special bar quality products, primarily used Ambridge, Pennsylvania and Baytow, in the manufacture of heavy industrial equipment; and hot Texas. rolled coils, which are sold to service centers and other manufacturers for further processing. Tier II - ------------------------ Birmingham Steel Produces steel reinforcing bar and merchant products. Mini-mills are located in Alabama, Also specializes in manufacturing steel rod and wire from Illinois, Mississippi, and semi-finished billets. Washington. Operates its steel distribution facilities in Florida and Texas. Oregon Steel Manufactures and markets specialty and commodity steel Operates two steel mini-mills and products. four finishing facilities in the western U.S. and Canada. Northwestern Steel and Produces structural steel products such as wide flange Operations are located in Sterling Wire Co. beams, light structural shapes and merchants bars. Also and Rock Falls, Illinois; Houston, produces rod and wire products including nails, concrete Texas; and Hickman, Kentucky. reinforcing mesh, and residential and agricultural fencing.
DILLON READ 33 Project CAN / Exhibit 1 - 2 ================================================================================ COMPARABLE STEEL COMPANY ANALYSIS ================================================================================ Operating Data
LTM LTM Gross LTM EBIT LTM EBITDA LTM Net Income Average Return Revenues Margin Margin Margin Margin on Equity -------- ---------- -------- ---------- ----------------- -------------- Tier I Commercial Metals $2,248.8 10.7% 3.8% 5.7% 2.0% 12.9% Steel of West Virginia 95.3 10.5 5.8 13.0 2.5 4.9 Kentucky Electric 102.3 12.8 6.3 7.4 3.6 10.4 NS Group 425.3 10.6 5.3 9.7 NM NM - --------------------------------------------------------------------------------------------------------------------------------- Average 11.2% 5.3% 9.0% 2.7% 9.4% - --------------------------------------------------------------------------------------------------------------------------------- Tier II Birmingham Steel $ 871.4 7.9% 4.0% 8.6% 1.6% 3.1% Oregon Steel 772.8 13.2 7.4 11.1 3.2 6.9 Northwestern Steel & Wire 639.1 4.9 3.0 7.3 1.5 9.5 - --------------------------------------------------------------------------------------------------------------------------------- Average 8.7% 4.8% 9.0% 2.1% 6.5% - --------------------------------------------------------------------------------------------------------------------------------- CAN $ 596.5 15.9% 11.2% 16.9% 6.6% 12.5% - ---------------------------------------------------------------------------------------------------------------------------------
Source: Publicly available documents. DILLON READ 34 Project CAN / Exhibit 1 - 3 ================================================================================ COMPARABLE STEEL COMPANY ANALYSIS ================================================================================ Trading Statistics
Multiples of Enterprise Value Multiples of Stock Price ------------------------------- ------------------------------------------- LTM LTM LTM LTM CY 1997 CY 1998 % EPS Sales EBITDA EBIT E.P.S. E.P.S. E.P.S. CY1997/CY1998 ------ ------ --------- ------------------------------------------- Tier I Commercial Metals 0.3x 4.8x 7.1x 9.8X 10.7x 9.1x 17.5% Steel of West Virginia 0.7 5.3 12.0 21.4 15.4 12.3 25.0 Kentucky Electric 0.5 6.6 7.8 5.7 NM 5.9 15.0% NS Group 0.5 5.2 9.7 NM NM NA NM - ------------------------------------------------------------------------------------------------------------- Average Tier I(1) 0.4x 5.5x 8.2x 9.8x 10.7x 9.1x 16.3% - ------------------------------------------------------------------------------------------------------------- Tier II Birmingham Steel 1.0x 12.2x 26.3x 30.3x 13.8x 9.4x 46.3% Oregon Steel 1.1 9.4 14.2 16.1 15.4 11.3 36.0 Northwestern Steel & Wire 0.4 5.8 14.1 8.0 NM 18.8 NM - ------------------------------------------------------------------------------------------------------------- Average Tier II(l) 0.8x 7.6x 14.2x 12.1x 14.6x 10.4x 41.1% CAN 0.7x 4.0x 5.9x 9.0x 9.1x 9.6x (5.3%) - -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- Note 1: Excludes Steel of West Virginia from all averages, Birmingham from all TM averages and Northwestern Steel & Wire and Kentucky Electric from projected CY 1997 and CY 1998 earnings averages. Source: Publicly available documents; forecasts provided by Zacks, Nelson's and First Call and stock prices as of May 8, 1997. DILLON READ 35 Project CAN ================================================================================ TIN PURCHASE OF CAN MINORITY PUBLIC STAKE EXHIBITS - -------- DETAILED COMPARABLE STEEL COMPANY ANALYSIS . . . . . . 1 SHAREHOLDER PROFILE SUMMARY . . . . . . . . . . . . . 2
DILLON READ 36 Project CAN / Exhibit 2 - 1 ================================================================================ SHAREHOLDER PROFILE ===============================================================================
CAN % of Total TIN Institution Shares Held Minority Position Shares Held - ----------- ----------- ----------------- ----------- Dimensional Fund Advisors 1,026,399 23.8% 666,486 First Manhattan Co. 728,275 16.9 148,000 Wilshire Assoc. Inc. 209,362 4.9 Barclays Bank Pic 169,104 3.9 591,468 Private Capital Management 122,700 2.9 355,600 Mellon Bank Corporation 106,839 2.5 148,108 Zweig/Glaser Advisers 82,800 1.9 99,000 Lighthouse Capital 77,900 1.8 ANB Investment 73,100 1.7 76,904 Brandywine Asset Mgmt 31,900 0.7 88,400 --------- ---- --------- Total 2,628,379 61.0% 2,173,966 ========= ==== =========
Note: Shaded area indicates overlapping ownership with TIN shareholders. Source: CDA/Spectrum as of December 31, 1996. DILLON READ -----END PRIVACY-ENHANCED MESSAGE-----