SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
SCHEDULE 13E-3/A
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AMENDMENT NO. 1
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TRANSACTION STATEMENT UNDER SECTION 13(e)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 13e-3 THEREUNDER
______________________________
THERMO FIBERGEN INC.
(NAME OF ISSUER)
KADANT INC.
FIBERGEN ACQUISITION INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
CUSIP 88355U109
(CUSIP NUMBER OF CLASS OF SECURITIES)
Sandra L. Lambert, Esq.
Vice President, General Counsel and Secretary
Kadant Inc.
245 Winter Street
Waltham, Massachusetts 02451
(781) 370-1650
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF FILING PERSON)
with a copy to:
Megan N. Gates, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
(617) 542-6000
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION, PASSED UPON THE
MERITS OR THE FAIRNESS OF THE TRANSACTION OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information statement subject
to Regulation 14A, Regulation 14C, or Rule 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. [X] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies. [ ]
Check the following box if this is a final amendment reporting the results of
the transaction. [ ]
CALCULATION OF FILING FEE
Transaction Valuation(1): $4,688,646.75 Amount of Filing Fee(2): $938
(1) Calculated for purposes of calculating the filing fee only. This amount is
based upon the purchase of 253,250 shares of Common Stock, $.01 par value
per share, of Thermo Fibergen Inc. (assuming the exercise of all vested and
outstanding in-the-money options to purchase shares of Common Stock) at a
price of $12.75 per share.
(2) The amount of the filing fee, calculated in accordance with Regulation
240.0-11 under the Securities Exchange Act of 1934, as amended, equals 1/50
of one percent of the Transaction Valuation.
[X] Check the box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $938
Form or Registration No.: Schedule 13E-3
Filing Party: Kadant Inc. and Fibergen Acquisition Inc.
Date Filed: November 21, 2001
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SUMMARY TERM SHEET
This summary and the remainder of this Transaction Statement on Schedule
13E-3 include information describing the going private merger involving Thermo
Fibergen Inc., how it affects you, what your rights are with respect to the
merger as a stockholder of Thermo Fibergen and the position of Kadant Inc.
regarding the fairness of the terms of the merger. Please read this summary and
the remainder of this document very carefully.
PURPOSE OF THE MERGER (PAGE 8).
On November 9, 2001, Kadant announced that its Board of Directors had authorized
its management to proceed with a proposal to merge its majority-owned
subsidiary, Thermo Fibergen, with a wholly-owned subsidiary of Kadant. On
October 11, 2001, Thermo Fibergen completed the second of two redemption periods
with respect to its common stock redemption rights, which were issued as part of
Thermo Fibergen's initial public offering in 1996. Each redemption right
entitled the holder to surrender for redemption one share of common stock for
each redemption right exercised for a redemption price of $12.75 net to the
surrendering holder in cash, without interest. Following the completion of the
second and final redemption period, there were 10,522,087 shares of Thermo
Fibergen common stock outstanding, of which 10,407,600 shares, or approximately
98.9%, were owned by Kadant.
The purpose of the merger is for Kadant to acquire the minority public interest
in Thermo Fibergen and to provide Thermo Fibergen's stockholders with $12.75 in
cash for each share of Thermo Fibergen common stock. This is the same price per
share as was payable in the redemption periods relating to the Thermo Fibergen
common stock and common stock redemption rights. Following the merger, Kadant
plans to retain Thermo Fibergen as part of its business.
PRINCIPAL TERMS OF THE MERGER.
The Merger (page 7). Kadant plans to contribute all of the shares of
Thermo Fibergen common stock it owns to Fibergen Acquisition in exchange for
shares of common stock of Fibergen Acquisition. As a result of this
contribution, Fibergen Acquisition expects that it will own at least 90% of
Thermo Fibergen's outstanding shares. As soon as possible, after completion of
the Securities and Exchange Commission's review of this Transaction Statement on
Schedule 13E-3, Kadant will cause Fibergen Acquisition to merge with and into
Thermo Fibergen in a "short-form" merger. Fibergen Acquisition does not intend
to enter into a merger agreement with Thermo Fibergen or to seek the approval of
the directors of Thermo Fibergen for the merger. Stockholders of Thermo Fibergen
will not be entitled to vote their shares with respect to the merger.
Merger Consideration (page 7). The consideration in the merger will be
$12.75 per share in cash. This price is the same as the redemption price that
was paid to redeeming stockholders during the redemption periods relating to
Thermo Fibergen's common stock, which took place during the months of September
2000 and September and October 2001. This price represents a premium of 8.05%
over the last reported sale price for the Thermo Fibergen common stock on
October 18, 2001, which was the last date on which the Thermo Fibergen common
stock traded prior to the date on which the Kadant board of directors met to
approve the merger. On November 8, 2001, Thermo Fibergen received notice from
the American Stock Exchange that the exchange intends to delist the Thermo
Fibergen common stock from trading. The Company subsequently received notice
that the delisting would be effective at the opening of the trading session
on Tuesday, November 27, 2001. Accordingly, the Shares are no longer listed for
trading on any exchange. The most recent closing sale price per share as
reported on the American Stock Exchange prior to the date of this Schedule 13E-3
was $12.50, on November 26, 2001.
Affiliation of Thermo Fibergen, Fibergen Acquisition, and Kadant. As of
October 29, 2001, Kadant owned 98.9% of the outstanding shares of common stock
of Thermo Fibergen. Certain officers and directors of Kadant are also officers
or directors of Thermo Fibergen. In addition, Fibergen Acquisition is a wholly-
owned subsidiary of Kadant.
Thermo Fibergen Shares Outstanding; Ownership by Kadant (page 24). As of
October 29, 2001, 10,522,087 shares of Thermo Fibergen common stock were
outstanding. As of October 29, 2001, options granted by Thermo Fibergen to
purchase 178,000 shares of Thermo Fibergen common stock were outstanding. Kadant
owned a total of 10,407,600 shares of Thermo Fibergen common stock, or
approximately 98.9% of the outstanding shares of Thermo Fibergen common stock,
as of October 29, 2001. Of the shares owned by Kadant, 97,750 shares
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have been reserved for issuance pursuant to stock options granted by Kadant
under its stock option plans.
Payment for Shares (page 20). We will pay you for your shares of Thermo
Fibergen common stock promptly after the effective date of the merger.
Instructions for surrendering your stock certificates, together with a
description of statutory appraisal rights, will be set forth in a Notice of
Merger and Appraisal Rights and a Letter of Transmittal, which will be mailed to
stockholders of record of Thermo Fibergen on the date the merger becomes
effective and should be read carefully. Please do not submit your stock
certificates before you have received these documents. Sending us your stock
certificates with a properly signed Letter of Transmittal will waive your
appraisal rights described below. See Item 4 -- "Terms of the Transaction" in
this Schedule 13E-3.
Other Possible Purchases of Thermo Fibergen Common Stock (page 7). If,
before the merger is effective, the aggregate ownership by Kadant of the
outstanding shares of Thermo Fibergen common stock should fall below 90% because
of the exercise of outstanding options or for any other reason, Fibergen
Acquisition intends to acquire additional shares of Thermo Fibergen common stock
on the open market or in privately negotiated transactions to the extent
required for the aggregate ownership of Thermo Fibergen common stock by Kadant
to equal or exceed 90%. These purchases would be made at market prices or
privately negotiated prices at the time of purchase, which may be higher or
lower than the $12.75 per share price in the merger. See "Introduction."
Source of Funds (page 23). The total amount of funds expected to be
required by Fibergen Acquisition to pay the merger consideration for Thermo
Fibergen common stock in the merger, and to pay related fees and expenses, is
estimated to be approximately $1.5 million assuming no options to acquire Thermo
Fibergen common stock are exercised prior to the merger. Fibergen Acquisition
will obtain these funds from Kadant as a loan or a capital contribution. Kadant
has committed to provide any required financing to Fibergen Acquisition. There
are no conditions to the financing of the merger.
KADANT'S AND FIBERGEN ACQUISITION'S POSITIONS ON THE FAIRNESS OF THE
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MERGER (PAGE 11).
Determination of the Board of Directors of Kadant. The board of directors
of Kadant, at a meeting held on November 8, 2001, determined that the terms of
the merger are fair to the unaffiliated stockholders of Thermo Fibergen. In
considering the fairness from a financial point of view of the $12.75 per share
merger consideration, the board of directors of Kadant reviewed, relied in
part upon, and adopted an analysis of the ranges of potential values of the
shares of Thermo Fibergen's common stock that resulted from the application of
accepted valuation methodologies. This analysis, including the selection of
valuation methodologies, was prepared by management of Kadant. For a discussion
of the factors that the board of directors of Kadant considered in determining
the fairness of the merger and a summary of the financial analysis prepared by
management of Kadant, see "Special Factors -- Fairness of the Merger -- Factors
Considered in Determining Fairness" and "--Reports, Opinions, Appraisals and
Negotiations -- Preparer and Summary of the Report, Opinion or Appraisal."
Determination of the Board of Directors of Fibergen Acquisition. The Board
of Directors of Fibergen Acquisition reviewed the fairness analysis and
conclusion of the Board of Directors of Kadant, and has adopted the Kadant
Board's analysis and conclusion that the Merger is fair to the unaffiliated
public stockholders. Accordingly, the Board of Directors of Fibergen
acquisition has determined that the Merger is fair to the unaffiliated public
stockholders.
Potential Conflicts of Interest. Kadant is the majority stockholder of
Thermo Fibergen. Some of the officers and directors of Kadant are also officers
or directors of Thermo Fibergen and own shares of common stock of, or hold
options to purchase shares of common stock of, Kadant and/or Thermo Fibergen. If
the merger is consummated, these officers and directors will receive $12.75 in
cash in exchange for their shares on the same terms and conditions as are
applicable to all unaffiliated public stockholders of Thermo Fibergen. See
Schedule I - "Members of the Board of Directors and Executive Officers of
Kadant" for a description of the share and option ownership by the kadant
officers and directors. As a result, there are various actual or potential
conflicts of interest in connection with the merger.
CONSEQUENCES OF THE MERGER.
Completion of the merger will have the following consequences:
. Kadant will have complete control over Thermo Fibergen's business.
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. Kadant will own 100% of the equity interest in Thermo Fibergen's
business and will solely have the benefit or detriment of any change in
Thermo Fibergen's value.
. The shares of Thermo Fibergen will no longer be publicly traded.
. Thermo Fibergen will no longer be subject to the requirements of the
Securities Exchange Act of 1934, including requirements to file annual
and other periodic reports or to provide the type of going-private
disclosure contained in this Schedule 13E-3.
. After the merger, each of your shares, subject to statutory appraisal
rights, will be converted into the right to receive $12.75 in cash,
without interest.
APPRAISAL RIGHTS (PAGE 20).
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You have a statutory right to dissent from the merger and demand payment of
the judicially appraised fair value of your Thermo Fibergen shares plus a fair
rate of interest, if any, from the date of the merger. This value may be more or
less than the $12.75 per share in cash consideration in the merger. The
statutory right of dissent is set out in Section 262 of the Delaware General
Corporation Law and is complicated. Any failure to comply with its terms will
result in an irrevocable loss of such right. Stockholders seeking to exercise
their statutory right of dissent are encouraged to seek advice from legal
counsel. See Item 4 -- "Terms of the Transaction -- Appraisal Rights" in this
Schedule 13E-3.
FOR MORE INFORMATION (PAGE 16).
More information regarding Thermo Fibergen and Kadant is available from
their respective public filings with the Securities and Exchange Commission.
See Item 2 -- "Subject Company Information" and Item 3 -- "Identity and
Background of Filing Person" in this Schedule 13E-3.
If you have any questions about the merger, please call Kadant Investor
Relations at (781) 370-1650.
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INTRODUCTION
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This Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3") is
being filed by (i) Kadant Inc., a Delaware corporation ("Kadant"), and (ii)
Fibergen Acquisition Inc., a Delaware corporation and a wholly-owned subsidiary
of Kadant ("Fibergen Acquisition"), pursuant to Section 13(e) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 13e-3
thereunder. This Schedule 13E-3 is being filed in connection with a "short-form"
merger (the "Merger") of Fibergen Acquisition with and into Thermo Fibergen
Corporation, a Delaware corporation (the "Company" or "Thermo Fibergen"),
pursuant to Section 253 of the Delaware General Corporation Law ("DGCL"). The
effective date (the "Effective Date") of the Merger will be as soon as possible
following completion of Securities and Exchange Commission review of this
Schedule 13E-3.
As of October 29, 2001, there were issued and outstanding 10,522,087 shares
of common stock, $.01 par value per share (the "Shares"), of the Company. As of
October 29, 2001, Kadant held a total of 10,407,600 Shares, or approximately
98.9% of the total Shares outstanding. Of the Shares owned by Kadant, 97,750
Shares have been reserved for issuance pursuant to stock options granted by
Kadant under its stock option plans. Kadant intends to acquire the Shares that
it does not currently own through the Merger. Kadant intends to contribute the
Shares that it currently owns to Fibergen Acquisition immediately before the
Effective Date in exchange for common stock of Fibergen Acquisition.
Upon the consummation of the Merger, each outstanding Share (other than
Shares held by Fibergen Acquisition, the Company and stockholders of the Company
who properly exercise statutory appraisal rights under the DGCL) will be
automatically converted into the right to receive $12.75 per Share in cash (the
"Merger Price"), without interest, upon surrender of the certificate for such
Share to American Stock Transfer & Trust Company (the "Paying Agent"). This
price is the same price per share as was paid in connection with the two
redemption periods, held during the month of September 2000 and from September
1, 2001 through October 11, 2001, relating to the Company's common stock
redemption rights (the "Redemption Rights"), and represents a premium of 8.05%
over the closing price for the Shares on October 18, 2001, the last date on
which the Shares traded prior to the Kadant Board of Directors meeting to
approve the Merger. The Redemption Rights were issued as part of units together
with shares of Common Stock in the Company's initial public offering in 1996.
Instructions with regard to the surrender of stock certificates, together
with a description of statutory appraisal rights, will be set forth in a Notice
of Merger and Appraisal Rights and a Letter of Transmittal, which documents will
be mailed to stockholders of record of Thermo Fibergen on the Effective Date and
should be read carefully.
Under the DGCL, no action is required by the Board of Directors or the
stockholders of the Company, other than Fibergen Acquisition, for the Merger to
become effective. The Company will be the surviving corporation in the Merger.
As a result of the Merger, Kadant will be the only stockholder of the Company.
As of October 29, 2001, the Company had granted outstanding options to
purchase 178,000 Shares under its Directors Stock Option Plan and Equity
Incentive Plan (the "Plans"). The exercise prices of these outstanding options
range from $7.95 to $13.50. This is in addition to the 97,750 shares underlying
options to purchase Shares granted by Kadant under Kadant's stock option plans.
It is possible that some of these options will be exercised before the Effective
Date.
If, because of the exercise of options or for any other reason, Fibergen
Acquisition owns, or determines that it might on the Effective Date own, less
than 90% of the then outstanding Shares, Fibergen Acquisition may make open
market or privately negotiated purchases of Shares to the extent necessary for
Fibergen Acquisition to own at least 90% of the outstanding Shares on the
Effective Date. Any such open market or privately negotiated purchases by
Fibergen Acquisition would be made at market prices or privately negotiated
prices at the time of purchase, which may be higher or lower than the Merger
Price.
This Schedule 13E-3 and the documents incorporated by reference in this
Schedule 13E-3 include certain forward-looking statements. These statements
appear throughout this Schedule 13E-3 and include statements regarding the
intent, belief or current expectations of Kadant and its Board of Directors,
including statements concerning Kadant's strategies following completion of the
Merger. Such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties. Actual results may differ materially from
those described in such forward-looking statements as a result of various
factors.
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SPECIAL FACTORS
PURPOSES, ALTERNATIVES, REASONS AND EFFECTS OF THE MERGER
PURPOSES
On November 9, 2001, Kadant announced that its Board of Directors had authorized
its management to proceed with a proposal to merge the Company with a wholly-
owned subsidiary of Kadant, thereby making the Company a wholly-owned subsidiary
of Kadant. On October 11, 2001, the Company completed the second of two
redemption periods with respect to its Redemption Rights, which were issued as
part of the Company's initial public offering in 1996. Each Redemption Right
entitled the holder to surrender for redemption one Share for each Redemption
Right exercised for a redemption price of $12.75 net to the surrendering holder
in cash, without interest. Following the completion of the second and final
redemption period, there were 10,522,087 Shares outstanding. Kadant owns 98.9%
of these outstanding Shares. This majority ownership by Kadant results in an
extremely low daily trading volume for the remaining outstanding Shares.
The purpose of the Merger is for Kadant to acquire the minority public interest
in the Company and to provide the Company's stockholders other than Kadant (the
"Public Stockholders") with $12.75 in cash for each of their Shares. This is the
same price per share as was payable in the redemption periods relating to the
Redemption Rights. Following the Merger, Kadant plans to retain Thermo Fibergen
as part of its business. Kadant believes that, following the completion of the
final redemption period with respect to the Company's Redemption Rights in
October 2001, the extremely limited trading volume in the Shares makes ownership
of the Shares unattractive to the holders of the Shares because they are not
readily salable in the public market. This problem has been exacerbated by the
delisting of the Shares from the American Stock Exchange ("the "AMEX") on
November 27, 2001. Kadant also believes that, given the Company's very small
stockholder base after the final redemption period (estimated to be
approximately 100 stockholders), the costs of maintaining the Company's status
as a public company are not justified.
ALTERNATIVES
Kadant and Fibergen Acquisition believe that effecting the transaction by
way of a short-form merger with Fibergen Acquisition under Section 253 of the
DGCL is the quickest and most cost effective way for Kadant to acquire the
outstanding public minority equity interest in the Company. Kadant and Fibergen
Acquisition considered and rejected the alternative of a long-form merger
because of the cost and delay of obtaining the approvals of the Company's Board
of Directors and of the Public Stockholders. Kadant and Fibergen Acquisition
also rejected the alternative of a tender offer as it entailed additional costs
and a subsequent short-form merger would in all likelihood still be required.
REASONS
In determining whether to effect the Merger, the Board of Directors of
Kadant (the "Kadant Board") considered several factors, including the financial
performance and profitability of the Company and the potential benefits to the
Company's business if the Company were to become part of a larger business unit.
The Kadant Board also considered the following factors:
- - the prospect of achieving greater marketing, operating and administrative
efficiency as a result of the Company's operations being conducted in a more
coordinated manner with the rest of Kadant's businesses;
- - the facts that, following the final redemption period with respect to the
Redemption Rights, the trading volume in the Company's remaining Shares had
dwindled to the point that on most days no Shares traded at all, and that the
American Stock Exchange had notified the Company that it would delist the
Shares from trading;
- - the fact that the proposed Merger Price represented a premium of 8.05% over
the closing price of the Shares on October 18, 2001, which was the last date
on which the Shares traded prior to the meeting of
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the Kadant Board, and that the Public Stockholders would receive the same
price per Share as had been paid in connection with the redemption of the
Redemption Rights;
- - the reduction in the amount of public information available to competitors
about the Company's businesses that would result from the termination of the
Company's obligations under the reporting requirements of the Securities and
Exchange Commission (the "Commission");
- - the elimination of additional burdens on management associated with public
reporting and other tasks resulting from the Company's public company status,
including, for example, the dedication of time by and resources of the
Company's management and Board of Directors to stockholder and analyst
inquiries and investor and public relations;
- - the decrease in costs, particularly those associated with being a public
company (for example, as a privately-held entity, the Company would no longer
be required to file quarterly, annual or other periodic reports with the
Commission or publish and distribute to its stockholders annual reports and
proxy statements), that the Kadant Board anticipates could result in savings
of approximately $450,000 per year, including fees for an audit by an
independent accounting firm and legal fees;
- - the greater flexibility that the Company's management would have to focus on
long-term business goals, as opposed to quarterly earnings, as a non-
reporting company; and
- - recent public capital market trends affecting small-cap companies, including
perceived lack of interest by institutional investors in companies with a
limited public float.
The Kadant Board also considered the advantages and disadvantages of the
following alternatives to acquiring the minority stockholder interest in the
Company:
- - a sale of Kadant's equity interest in the Company; and
- - leaving the Company as a majority-owned, public subsidiary.
The first alternative, selling Kadant's equity interest in the Company, was
briefly considered. It was not an alternative that was pursued at length, given
that Kadant did not want to sell its equity interest in the Company, but rather
intended to retain the Company as a part of Kadant's business.
In the view of the Kadant Board, the principal advantage of having the
Company as a majority-owned, public subsidiary of Kadant was the ability of
Kadant to invest the cash that would be required to buy the minority stockholder
interest in the Company for other purposes. The disadvantages of leaving the
Company as a majority-owned, public subsidiary which were considered by the
Kadant Board included the inability to achieve many of the benefits of taking
the Company private discussed above. The Kadant Board concluded that the
advantages of leaving the Company as a majority-owned, public subsidiary of
Kadant were significantly outweighed by the disadvantages of doing so, and
accordingly that alternative was rejected.
The Kadant Board also considered the extremely low volume of trading in the
Shares and considered that the Merger would result in immediate, enhanced
liquidity for the Public Stockholders who remained as such following the final
redemption period with respect to the Company's Redemption Rights. The Kadant
Board considered trends in the price of the Shares in the past twelve months and
during the period between the Company's initial public offering and the
announcement of Kadant's intention to take the Company private.
This Rule 13e-3 transaction is structured as a short-form merger under
Section 253 of the DGCL. This form of merger allows the Public Stockholders to
receive cash for their Shares quickly and allows the Company to become a wholly-
owned subsidiary of Kadant without any action by the Board of Directors of the
Company or the Public Stockholders.
EFFECTS
GENERAL. Upon completion of the Merger, Kadant will have complete control over
the conduct of the Company's business and will have a 100% interest in the net
book value and net earnings of the Company. Once the Merger is completed, the
Public Stockholders will no longer be able to benefit from a sale of the Company
to a third
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party. In addition, Kadant will receive the benefit of complete
control over any future increases in the value of the Company and will bear the
complete risk of any losses incurred in the operation of the Company and any
decrease in the value of the Company. Kadant's ownership of the Company prior to
the Merger aggregated approximately 98.9%. Upon completion of the Merger,
Kadant's interest in the Company's net book value (adjusted to treat the Common
Stock subject to redemption as equity) of $29,475,000 on September 29, 2001 and
net loss of $2,305,000 for the nine months ended September 29, 2001 will
increase from approximately 98.9% to 100% of those amounts. The Merger will
have no effect on Kadant's existing ability to use net operating loss
carryforwards generated by the Company to shelter its future income, because it
currently is tax consolidated with the Company as a result of its existing
ownership of more than 80% of the Company's outstanding Shares.
STOCKHOLDERS. Upon completion of the Merger, the Public Stockholders would no
longer have any interest in, and would not be stockholders of, the Company and
therefore would not participate in the Company's future earnings and potential
growth and would no longer bear the risk of any decreases in the value of the
Company. In addition, the Public Stockholders would not share in any
distribution of proceeds after any sales of businesses of the Company, whether
contemplated at the time of the Merger or thereafter. See Item 6(c) -- "Purposes
of the Transaction and Plans or Proposals -- Plans." All of the Public
Stockholders' other incidents of stock ownership, such as the rights to vote on
certain corporate decisions, to elect directors, to receive distributions upon
the liquidation of the Company and to receive appraisal rights upon certain
mergers or consolidations of the Company (unless such appraisal rights are
perfected in connection with the Merger), as well as the benefit of potential
increases in the value of a Public Stockholder's holdings in the Company based
on any improvements in the Company's future performance, will be extinguished
upon completion of the Merger.
Upon completion of the Merger, the Public Stockholders will also not bear
the risks of potential decreases in the value of their holdings in the Company
based on any downturns in the Company's future performance. Instead, the Public
Stockholders will have liquidity in the form of the Merger Price in place of an
ongoing equity interest in the Company in the form of the Shares. In summary, if
the Merger is completed, the Public Stockholders will have no ongoing rights as
stockholders of the Company (other than statutory appraisal rights in the case
of Public Stockholders who are entitled to and perfect such rights under
Delaware law).
THE SHARES. If the Merger is consummated, public trading of the Shares will
cease. The AMEX has delisted the Shares from trading on the AMEX, effective at
the opening of the trading session on Tuesday, November 27, 2001. Kadant also
intends to deregister the Shares under the Exchange Act. As a result, the
Company will no longer be required under the federal securities laws to file
reports with the Commission and will no longer be subject to the proxy rules
under the Exchange Act.
The Shares are currently "margin securities," as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing banks to
extend credit on the collateral of such securities. Following the Merger, the
Shares will no longer constitute "margin securities" for purposes of the margin
regulations of the Federal Reserve Board and will no longer be eligible to serve
as collateral for loans made by banks.
TREATMENT OF THE COMPANY OPTIONS. The Company has granted outstanding options
to purchase 178,000 Shares. In addition, Kadant has granted outstanding options
to purchase 97,750 Shares under its stock option plans. These options will not
be exchanged for options to purchase shares of Kadant common stock in the
Merger, and will be cancelled on the Effective Date. Effective November 16,
2001, the Boards of Directors of the Company and Kadant accelerated the vesting
of 253,250 in-the-money options held by current employees, officers and
directors. The Company expects that all of the vested, in-the-money options will
be exercised prior to the Effective Date. All options that remain outstanding
as of the Effective Date will be cancelled.
DEFERRED COMPENSATION PLAN FOR DIRECTORS. On the Effective Date, the Company's
deferred compensation plan for directors (the "Deferred Compensation Plan") will
terminate, and the Company will distribute to each participant the sum in cash
equal to the balance of stock units credited to his deferred compensation
account under the Deferred Compensation Plan as of the Effective Date multiplied
by the Merger Price.
Based on the units accumulated on September 29, 2001, Mr. McKone will
receive $39,133.84 for his units and Mr. Wellington will receive $32,510.22 for
his units.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. The following is a
general summary of the material U.S. federal income tax consequences of the
Merger to beneficial owners of Shares. This summary is based upon the provisions
of the Code, applicable treasury regulations thereunder, judicial decisions and
current administrative rulings as in effect on the date of this Schedule 13E-3.
The discussion does not address all aspects of U.S. federal income taxation that
may be relevant to particular taxpayers in light of their personal circumstances
or to taxpayers subject to special treatment under the Code (for example, life
insurance companies, foreign corporations, foreign partnerships, foreign estates
or trusts, or individuals who are not citizens or residents of the United States
and beneficial owners whose Shares were acquired pursuant to the exercise of
warrants, employee stock options or otherwise as compensation) and does not
address any aspect of state, local, foreign or other taxation.
A stockholder whose Shares are converted, pursuant to the Merger, into a
right to receive cash will recognize gain or loss equal to the difference
between (i) the amount of cash that such stockholder receives in the Merger and
(ii) such stockholder's adjusted tax basis in such Shares, assuming that such
stockholder is not deemed to own additional Shares following the Merger pursuant
to constructive ownership rules under Section 318 of the Code. Such gain or loss
will be capital gain or loss, and generally will be long-term capital gain or
loss if at the Effective Date the stockholder's holding period for the Shares is
more than one year. Holders of Shares should be aware that the Paying Agent will
be required in certain cases to withhold and remit to the United States Treasury
31% of amounts payable in the Merger to any stockholder that (i) has provided
either an incorrect tax identification number or no number at all, (ii) is
subject to backup withholding by the Internal Revenue Service for failure to
report the receipt of interest or dividend income properly, or (iii) has failed
to certify to the Paying Agent that such stockholder is not subject to backup
withholding or that such stockholder is an "Exempt Recipient." Backup
withholding is not an additional tax, but rather may be credited against the
taxpayer's tax liability for the year.
In general, cash received by Public Stockholders who exercise statutory
appraisal rights ("Dissenting Stockholders") in respect of appraisal rights will
result in the recognition of gain or loss to the Dissenting Stockholder. Any
such Dissenting Stockholder should consult with its tax advisor for a full
understanding of the tax consequences of the receipt of cash in respect of
appraisal rights pursuant to the Merger.
None of Kadant, Fibergen Acquisition or the Company expects to recognize
any gain, loss or income by reason of the Merger.
EACH BENEFICIAL OWNER OF SHARES IS URGED TO CONSULT SUCH BENEFICIAL OWNER'S TAX
ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH BENEFICIAL OWNER OF THE
MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
FAIRNESS OF THE MERGER.
FAIRNESS. Because Kadant currently owns a majority of the Shares, Kadant and
Fibergen Acquisition are deemed "affiliates" of the Company under Rule 12b-2 of
the Exchange Act. Accordingly, in compliance with Rule 13e-3 under the Exchange
Act, the Kadant Board and the Board of Directors of Fibergen Acquisition have
considered the fairness of the Merger to the unaffiliated Public Stockholders.
On November 8, 2001, the Kadant Board held a meeting at which the proposed
plan to acquire the minority stockholder interest in the Company through the
Merger was presented and discussed. At the November 8 meeting, the Kadant Board
resolved to take the Company private by having Kadant acquire for cash, through
the Merger, all of the Shares held by the Public Stockholders at a purchase
price of $12.75 per Share. The Kadant Board determined that the Merger is fair
to the unaffiliated Public Stockholders.
FACTORS CONSIDERED IN DETERMINING FAIRNESS.
In reaching its determination that the terms of the Merger are fair to the
unaffiliated Public Stockholders, the Kadant Board considered the factors set
forth in this Section captioned " -- Fairness of the Merger," which constitute
all of the material factors considered by the Kadant Board in making its
determination. The Kadant Board determined that each of the following factors
supported its belief that the Merger is fair to the unaffiliated Public
Stockholders:
- - Financial analysis. In considering the fairness of the Merger from a
financial point of view to the Company's unaffiliated stockholders, including
the Public Stockholders, the Kadant Board reviewed, relied in part upon, and
adopted an analysis of the ranges of potential values of the Shares that
10
result from the application of accepted valuation methodologies. This
financial analysis, including the selection of valuation methodologies, was
prepared by the management of Kadant ("Kadant Management") at the direction
of the Kadant Board for the Kadant Board's review, consideration and
adoption. The financial analyses undertaken by Kadant Management included an
analysis based upon public trading multiples and discounted cash flows. The
analysis of trading multiples of companies engaged in businesses which Kadant
Management judged to be analogous to the Company's business indicated an
estimated range of equity values for the Shares of approximately $1.22 to
$0.03 per Share. The analysis based upon discounted cash flows indicated an
estimated present value for the Shares of approximately $3.53 per Share. The
Kadant Board considered the discounted cash flow methodology used by Kadant
Management to be analogous to a determination of the Company's going concern
value. See "Special Factors --Reports, Opinions, Appraisals and
Negotiations -- Preparer and Summary of the Report, Opinion or Appraisal."
- - Information concerning the financial performance, condition, business
operations and prospects of the Company. The Kadant Board believed the Merger
Price to be attractive in light of the Company's current financial
performance, profitability and growth prospects. The Company's
net operating loss has increased significantly, to $4,440,000 for the nine
months ended September 29, 2001, as the Company attempts to complete the
development of its products and incurs resulting costs for marketing and
other expenses. Kadant Management expects these costs to increase, and the
Company does not have sufficient capital necessary to meet its business plan.
In light of these uncertainties, the Kadant Board concluded that the Merger
would be fair to the unaffiliated Public Stockholders in that it would shift
the risk of the future financial performance of the Company from the Public
Stockholders, who do not have the power to control decisions made as to the
Company's business, entirely to Kadant, who does have the power to control
the Company's business and who has the resources to manage and bear the risks
inherent in the business over the long term.
- - The Merger Price of $12.75 per Share. The Kadant Board considered the current
and historical trading prices of the Shares, and the fact that the proposed
Merger Price was the same price per share paid to holders of the Redemption
Rights who properly surrendered Shares for redemption during the redemption
periods with respect to the Redemption Rights. Over the two years preceding
the date of the meeting of the Kadant Board, the Shares had traded as high as
$12.875 per Share and as low as $8.50 per Share. The Kadant Board believed
that the presence of the Redemption Rights, which included a redemption price
of $12.75 per Share, had acted as a floor on the price of the Shares,
particularly during the months immediately leading up to the redemption
periods in September 2000 and September 2001. See Item 2(c) - "Trading Market
and Price" for further information as to the current and historical trading
prices of the Shares. The Kadant Board also observed that the proposed Merger
Price represented a premium of 8.05% over the closing price for the Shares on
October 18, 2001, which was the last date on which the Shares traded prior to
the date of the Board's meeting. In addition, the Merger would eliminate the
exposure of the Public Stockholders to any future or continued declines in
the price of the Shares. See "Special Factors -- Purposes, Alternatives,
Reasons and Effect of the Merger--Effects."
- - The market price and relative lack of liquidity for the Shares, particularly
following the completion of the final redemption period with respect to the
Redemption Rights, the threatened delisting of the Shares from the AMEX, and
the liquidity that will be realized by the Public Stockholders from the
Merger. The Kadant Board believed that the liquidity that would result from
the Merger would be beneficial to the unaffiliated Public Stockholders
because Kadant's ownership of approximately 98.9% of the outstanding Shares
(1) results in an extremely small public float that limits the amount of
trading in the Shares and (2) decreases the likelihood that a proposal to
acquire the Shares by an independent entity could succeed without the consent
of Kadant.
In addition, Kadant intends to retain its majority holdings in the Company, and
does not intend to seek a buyer for the Company. This fact foreclosed the
opportunity to consider an alternative transaction with a third party purchaser
of the Company or otherwise provide liquidity in the form of a third party offer
to the Public Stockholders. Accordingly, it is unlikely that finding a third
party buyer for the Company was a realistic option for the Public Stockholders.
Kadant had neither solicited nor received an offer for the Company from a third
party in the two years leading up to the date of its November 8 meeting. Kadant
considered the absence of any third party buyer for the Company to support the
fairness of the Merger to the unaffiliated Public
11
Stockholders, because the absence of a third party buyer demonstrated that the
proposed Merger with Kadant was the only likely source of prompt liquidity for
the Shares which was simultaneously available to all of the unaffiliated Public
Stockholders.
Procedural Fairness. The Kadant Board also determined that the Merger is
procedurally fair to the unaffiliated Public Stockholders. In making such
determination, the Kadant Board considered the fact that Public Stockholders who
believe that the terms of the Merger are not fair can pursue appraisal rights in
the Merger under state law.
The Kadant Board considered appointing a special committee of its members
who did not have any interests in the Company in order to determine the fairness
to the unaffiliated Public Stockholders of the proposed Merger. For a further
description of these interests, see "Schedule I - Stock Ownership." However, the
Kadant Board decided not to pursue that option for the following reasons. The
Kadant Board believed that any special committee that was appointed would need
to retain its own independent legal counsel and financial advisors to help the
special committee evaluate the fairness of the proposed transaction. The Kadant
Board also believed that, based on the factors described above in this section,
the terms of the proposed Merger were fair to the unaffiliated Public
Stockholders, and that the potential financial cost of hiring such advisors and
the diversion of management resources that would be caused by the negotiations
between the special committee and Kadant would outweigh any benefit that would
be derived from the appointment of a special committee.
The Kadant Board also discussed the absence of the procedural safeguards
set forth below under "Certain Negative Considerations", relating to the lack of
approval by the Company's unaffiliated Public Stockholders of the Merger, the
absence of an unaffiliated representative to act solely on behalf of the
Company's unaffiliated Public Stockholders, and the absence of the approval by
the Company's Board of Directors of the Merger. With respect to the lack of
approval by the unaffiliated Public Stockholders of the Merger, the Kadant Board
believed that the absence of this factor was outweighed by the ability of the
Public Stockholders to demand appraisal of the fair value of their Shares if
they did not agree that the proposed Merger Price was fair. With respect to the
absence of an unaffiliated representative who would have acted solely on behalf
of the unaffiliated Public Stockholders in the Merger, the Kadant Board believed
that the costs of hiring and compensating such a representative, including
likely fees for independent legal and financial advisors to the representative,
would have outweighed any benefit to the unaffiliated Public Stockholders of
receiving input from the representative. Similarly, with respect to the absence
of the approval by the Company's Board of Directors of the Merger, the Kadant
Board believed that, had the Company's Board of Directors been asked to approve
the proposed Merger, it would have wanted to hire its own independent legal and
financial advisors, which would also have consumed financial resources that the
Company did not have to spare.
Certain Negative Considerations. The Kadant Board also considered the following
factors, each of which they considered negative, in their deliberations
concerning the fairness of the terms of the Merger and its procedural fairness:
- - Termination of participation in future growth of the Company. Following the
successful completion of the Merger, the Public Stockholders would cease to
participate in the future earnings or growth, if any, of the Company or
benefit from increases, if any, in the value of their holdings in the
Company.
- - Conflicts of Interest. The financial interests of Kadant are adverse as to
the Merger Price to the financial interests of the Public Stockholders. In
addition, officers and directors of the Company have actual or potential
conflicts of interest in connection with the Merger. Certain officers and
directors of Kadant are also officers and directors of the Company, and
officers and directors of Kadant also hold equity interests in the Company.
See Schedule I to this Transaction Statement on Schedule 13E-3 for a
description of these positions and equity interests.
- - No Public Stockholder Approval. The Public Stockholders will not have an
opportunity to vote on the Merger.
- - No Unaffiliated Representative or Independent Director Approval. The majority
of the members of the Board of Directors of the Company who are not employees
of the Company have not retained an unaffiliated representative to act solely
on behalf of the Public Stockholders for the purpose of negotiating the terms
of the Merger or preparing a report concerning the fairness of the Merger. In
addition, such majority of the independent members of the Company's Board of
Directors have not approved the Merger.
12
Other Factors. The Kadant Board did not consider the net book value of the
Company as a useful method in assessing the Company's value and, accordingly,
did not evaluate the fairness of the Merger Price in relation to the Company's
net book value. The Company's net book value at September 29, 2001 was
approximately $29,475,000 (adjusted to treat the Common Stock subject to
redemption as equity), which would have yielded a valuation for the Company of
$2.55 per Share, which is substantially less than the proposed Merger Price of
$12.75 per Share. The Kadant Board relied in part upon valuation methodologies
selected by Kadant Management for the purpose of their financial analysis. The
Kadant Board noted that Kadant Management did not employ net book value in its
financial analysis.
The Kadant Board also did not consider "shopping" the Company to
prospective buyers. Shopping the Company would not only entail substantial time
delays and allocation of management's time and energy, but would also disrupt
and discourage the Company's employees and create uncertainty among the
Company's customers and suppliers. Furthermore, Kadant does not intend to sell
the Company, but rather intends to continue to operate the Company as part of
Kadant's business, which precluded the Board of Directors of the Company from
"shopping" the Company. Consequently, the Kadant Board considered but gave
little weight to the determination not to "shop" the Company, in light of there
being other methods of valuing the Company available.
The Kadant Board did not consider the Merger Price as compared to any
implied liquidation value because it was not contemplated that the Company be
liquidated, whether or not the Merger was completed. See Item 6(c) -- "Purposes
of the Transaction and Plans or Proposals -- Plans." The Kadant Board
also believed that the piecemeal sale of the Company's assets suggested by a
liquidation analysis of the Company would not yield a higher price per Share
than the proposed Merger Price because a liquidation analysis would have to take
into account the complexities of each individual sale transaction and more
expenses to the Company for legal and financial advisors.
Recent Purchases of Shares by Kadant. See Item 2(f) - "Subject Company
Information - Prior Stock Purchases" for information on purchases of Shares by
Kadant and the Company during the past two years. The Kadant Board believed
that the Merger Price was fair to the unaffiliated Public Stockholders, in light
of purchases of Shares by Kadant and the Company during the past two years, in
that the Merger Price exceeded any price paid by Kadant or the Company for
Shares during the past two years.
Conclusions of the Kadant Board. The Kadant Board concluded that, given the
performance of the Shares between the Company's initial public offering and the
announcement of Kadant's intention to take the Company private, the
uncertainties surrounding the Company's future growth prospects and the limited
trading market for the Shares, the Merger would result in a fair treatment of
the unaffiliated Public Stockholders. In determining that the Merger is fair to
the Public Stockholders, the Kadant Board considered the above factors as a
whole and did not assign specific or relative weights to them, other than that
the Merger Price of $12.75 per Share in cash was considered the most important
factor. Notwithstanding the considerations set out in this section under the
heading "-- Certain Negative Considerations," the Kadant Board believes that the
Merger is procedurally fair to the unaffiliated Public Stockholders.
Fairness Determination of the Fibergen Acquisition Board. The Board of
Directors of Fibergen Acquisition reviewed the fairness analysis and conclusion
of the Board of Directors of Kadant, and has adopted the Kadant Board's analysis
and conclusion that the Merger is fair to the unaffiliated Public Stockholders.
Accordingly, the Board of Directors of Fibergen Acquisition has determined that
the Merger is fair to the unaffiliated Public Stockholders.
APPROVAL OF SECURITY HOLDERS
Because the Merger is being effected as a short-form merger under Section
253 of the DGCL, it does not require approval by the Company's stockholders
(other than approval by the directors and stockholders of Fibergen Acquisition).
UNAFFILIATED REPRESENTATIVE
The majority of the Company's directors who are not employed by the Company
have not retained a representative to act on behalf of the Public Stockholders.
13
APPROVAL OF DIRECTORS OF THE COMPANY
Because the Merger is being effected as a short-form merger under Section
253 of the DGCL, it does not require approval by the Board of Directors of the
Company.
OTHER OFFERS
No other firm offers have been made in the last two years for (a) any
merger or consolidation of the Company with or into another company; (b) any
sale or transfer of all or any substantial part of the Company's assets; or (c)
any purchase of the Company's securities that would enable the holder to
exercise control of the Company.
REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS
PREPARER AND SUMMARY OF THE REPORT, OPINION OR APPRAISAL
Kadant Management presented an analysis of the ranges of potential values
of the Shares that resulted from the application of several accepted valuation
methodologies to the Board of Directors of Kadant and to the Kadant Board on
November 8, 2001. This financial analysis, including the selection of valuation
methodologies, was prepared by Kadant Management to assist the Kadant Board with
its evaluation of the Merger.
THE FINANCIAL ANALYSIS CONDUCTED BY KADANT MANAGEMENT WAS PROVIDED TO THE KADANT
BOARD, AND DOES NOT CONSTITUTE A RECOMMENDATION AS TO WHETHER OR NOT PUBLIC
STOCKHOLDERS SHOULD EXERCISE THEIR APPRAISAL RIGHTS.
In conducting their financial analysis, Kadant Management reviewed, among
other things:
- - the audited financial statements of the Company and Kadant for the fiscal
year ended December 30, 2000;
- - the unaudited financial statements of the Company and Kadant for the period
ended September 29, 2001;
- - current and historical market prices of the Shares;
- - certain publicly available information concerning the business of the Company
and of certain other companies engaged in businesses deemed by Kadant
Management to be comparable to those of the Company;
- - the reported market prices for securities of certain other companies deemed
by Kadant Management to be comparable to the Company;
- - publicly available terms of certain transactions involving companies deemed
by Kadant Management to be comparable to the Company and the consideration
paid for such companies;
- - the terms of other business combinations deemed relevant by Kadant
Management; and
- - certain agreements with respect to outstanding indebtedness or obligations of
the Company and Kadant.
Kadant Management also held discussions with members of the management of
the Company with respect to certain aspects of the Merger, the past and current
business operations of the Company, the financial condition and future prospects
and operations of the Company and other matters believed necessary or
appropriate to Kadant Management's inquiry. In addition, Kadant Management
reviewed such other financial studies and analyses and considered such other
information as Kadant Management deemed appropriate for the purposes of its
financial analysis.
The following is a summary of the material financial analyses undertaken by
Kadant Management with respect to the Company and presented to the Kadant Board:
14
Public Trading Multiples. Using publicly available information, Kadant
Management compared selected financial data of the Company with similar data for
selected publicly traded companies engaged in businesses which Kadant Management
judged to be analogous to the Company's business. The companies selected by
Kadant Management were Trex Company, Inc., U.S. Plastic Lumber Corp., and Oil-
Dri Corporation of America. These companies were selected, among other reasons,
because they compete in similar industries with fairly similar competitive
dynamics and growth potential. For each comparable company, publicly available
financial performance through the most recent last twelve months was measured.
In addition, Kadant Management derived estimates of sales, earnings before
interest, taxes, depreciation and amortization ("EBITDA"), book value,
enterprise value, and net income for the year ending December 31, 2001 for each
comparable company from the Institutional Brokers Estimates System.
Kadant Management applied a range of multiples derived from such analysis
to the Company's estimated sales, EBITDA, book value, enterprise value and net
income for fiscal year 2001, and arrived at an estimated range of equity values
for the Shares of between $1.22 and $0.03 per Share.
Discounted Cash Flow Analysis. Kadant Management conducted a discounted cash
flow analysis for the purpose of determining the fully diluted equity value per
Share. Kadant Management calculated the after tax cash flows that the Company is
expected to generate during fiscal years 2001 through 2006 based upon financial
projections prepared by Kadant Management after discussions with the management
of the Company. Kadant Management also calculated a terminal asset value of the
Company at the end of the six-year period ending 2006 equal to ten times the
after tax cash flow in 2006. The after tax cash flows and the terminal asset
value were then discounted to present value using a discount rate of 30%, which
was chosen by Kadant Management based upon an analysis of the Company's weighted
average cost of capital. Based on this analysis, Kadant Management concluded
that the estimated present value of the Shares was $3.63 per Share.
As described above, Kadant Management's financial analysis was only one of many
factors considered by the Kadant Board in their determination that the terms of
the Merger are fair to the unaffiliated Public Stockholders and should not be
viewed as determinative of the views of the Kadant Board with respect to the
value of the Company.
15
TRANSACTION STATEMENT
ITEM 1. SUMMARY TERM SHEET.
See the section above captioned "Summary Term Sheet."
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) NAME AND ADDRESS. The subject company is Thermo Fibergen Inc. ("Thermo
Fibergen" or the "Company"). The principal executive offices of the Company are
located at 8 Alfred Circle, Bedford, Massachusetts 01730, and its telephone
number is (781) 370-1650.
The Company is subject to the disclosure requirements of the Exchange Act and in
accordance therewith is required to file reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. Such reports, proxy statements and other information are
available for inspection at the Commission's public reference facilities at 450
Fifth Street, N.W., Washington, D.C. 20549 and should also be available for
inspection at the regional offices of the Commission located at 7 World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies may be obtained at
prescribed rates from the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains a web site that
contains reports, proxy and information statements and other information
regarding registrations that file electronically with the Commission at
http://www.sec.gov. In addition, certain material filed by the Company may also
be available for inspection at the offices of the American Stock Exchange, 86
Trinity Place, New York, New York 10006-1881.
(b) SECURITIES. The exact title of the class of equity securities subject to
the Merger is: Common Stock, par value $0.01 per share, of the Company. As of
October 29, 2001, 10,522,087 Shares were outstanding, of which 114,487 Shares
were held by stockholders other than Kadant. As of October 29, 2001, Kadant held
10,407,600 shares of Thermo Fibergen common stock, or approximately 98.9% of the
outstanding shares of Thermo Fibergen common stock. In addition, as of October
29, 2001, options granted by the Company to purchase 178,000 Shares were
outstanding, and options granted by Kadant to purchase 97,750 Shares were
outstanding.
(c) TRADING MARKET AND PRICE. The Shares were listed on the American Stock
Exchange under the symbol "TFG". On November 8, 2001, the Company received
notice from the American Stock Exchange that the Shares would be delisted for
failure to maintain the public float requirement for continued listing. The
Company subsequently received notice that the delisting would be effective
at the opening of the trading session on Tuesday, November 27, 2001.
Accordingly, the Shares are no longer listed for trading on any exchange. The
following table sets forth the high and low closing prices per Share on the
American Stock Exchange, as reported in publicly available sources for each of
the periods indicated.
HIGH LOW
FISCAL YEAR ENDED JANUARY 1, 2000:
- ---------------------------------------------------------------
1st Quarter............................. $ 9.375 $ 8.50
- ---------------------------------------------------------------
2nd Quarter............................. $ 11.75 $ 9.0625
- ---------------------------------------------------------------
3rd Quarter............................. $ 11.50 $11.1875
- ---------------------------------------------------------------
4th Quarter............................. $ 12.1875 $ 10.25
- ---------------------------------------------------------------
FISCAL YEAR ENDED DECEMBER 30, 2000:
- ---------------------------------------------------------------
1st Quarter............................. $ 12.188 $ 11.625
- ---------------------------------------------------------------
2nd Quarter............................. $ 12.4375 $ 11.25
- ---------------------------------------------------------------
3rd Quarter............................. $ 12.50 $ 11.50
- ---------------------------------------------------------------
4th Quarter............................. $ 12.875 $ 11.25
- ---------------------------------------------------------------
FISCAL YEAR ENDING DECEMBER 29, 2001:
- ---------------------------------------------------------------
1st Quarter............................. $ 11.625 $ 11.37
- ---------------------------------------------------------------
2nd Quarter............................. $ 12.00 $ 11.50
- ---------------------------------------------------------------
3rd Quarter............................. $ 12.75 $ 12.10
- ---------------------------------------------------------------
4th Quarter (through Nov. 27, 2001)..... $ 12.50 $ 11.50
16
As of November 26, 2001, there were 7 holders of record of the Shares and
approximately 100 beneficial owners of the Shares.
The most recent closing sale price per Share as reported on the American Stock
Exchange prior to the date of this Schedule 13E-3 was $12.50, on November 26,
2001.
(d) DIVIDENDS. The Company has not declared any dividends since its initial
public offering in 1996. Other than the requirements of Delaware law, there are
no legal or contractual restrictions on the Company's ability to declare
dividends.
(e) PRIOR PUBLIC OFFERINGS. The Company has not made an underwritten public
offering of its securities during the past three years.
(f) PRIOR STOCK PURCHASES. The following table sets forth the number of Shares
purchased by the Company, the range of prices paid and the average purchase
price for each quarter during the fiscal year ended January 1, 2000. Except as
provided below, none of Kadant, Fibergen Acquisition or the Company has
purchased any Shares during the two year period ended October 31, 2001.
FISCAL YEAR ENDED JANUARY 1, 2000:
SHARES PRICE AVERAGE
PURCHASED RANGE PURCHASE PRICE
1st Quarter.. 250,000 $8.90625 $8.90625
- -------------------------------------------------------------
2nd Quarter.. 152,600 $9.1875 - $11.50 $10.31
- -------------------------------------------------------------
3rd Quarter.. 69,100 $11.1875 - $11.3125 $11.28
- -------------------------------------------------------------
4th Quarter.. 82,700 $10.75 - $11.125 $10.965
- -------------------------------------------------------------
In addition, during the redemption period for the Redemption Rights in
September 2000, the Company redeemed 2,713,951 shares of Common Stock at the
redemption price of $12.75 per share, for a total of $34,602,875.25. During the
final redemption period for the Redemption Rights in September and October 2001,
the Company redeemed 1,030,562 shares of Common Stock at the redemption price of
$12.75 per share, for a total of $13,139,665.50.
17
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSONS.
FIBERGEN ACQUISITION
(a) NAME AND ADDRESS. Fibergen Acquisition is a newly organized corporation
that is a wholly-owned subsidiary of Kadant and was formed for the purpose of
effecting the Merger. Fibergen Acquisition's principal executive offices are
located at 245 Winter Street, Waltham, Massachusetts 02451, and its telephone
number is (781) 370-1650.
(b) BUSINESS BACKGROUND OF ENTITY. Fibergen Acquisition has been formed for the
sole purpose of merging with and into the Company. Fibergen Acquisition is
organized under the laws of the State of Delaware.
(c) BUSINESS AND BACKGROUND OF NATURAL PERSONS. The name, business address,
position with Fibergen Acquisition, principal occupation, five-year employment
history and citizenship of each of the directors and executive officers of
Fibergen Acquisition, together with the names, principal businesses and
addresses of any corporations or other organizations in which such principal
occupations are conducted, are set forth on Schedule I hereto. During the last
five years, none of Fibergen Acquisition or, to the best knowledge of Fibergen
Acquisition, any of the persons listed in Schedule I to this Schedule 13E-3 has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). During the last five years, none of Fibergen Acquisition or, to
the best knowledge of Fibergen Acquisition, any of the persons listed in
Schedule I to this Schedule 13E-3 was a party to any 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
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
KADANT
(a) NAME AND ADDRESS. Kadant, a Delaware corporation, owns a majority of the
outstanding Shares. The principal executive offices of Kadant are located at 245
Winter Street, Suite 300, Waltham, Massachusetts 02451, and its telephone number
is (781) 370-1650.
(b) BUSINESS BACKGROUND OF ENTITY. Kadant operates in two business segments:
the pulp and papermaking equipment and systems segment and the composite and
fiber-based products segment. Kadant is a leading designer and manufacturer of
stock-preparation systems and equipment, papermaking machine accessories and
water-management systems for the pulp and paper industry. Until August 8, 2001,
Kadant was a majority-owned subsidiary of Thermo Electron Corporation.
Kadant's common stock is listed on the AMEX under the symbol "KAI." Kadant
is subject to the disclosure requirements of the Exchange Act and in accordance
therewith is required to file reports, proxy statements and other information
with the Commission relating to its business, financial condition and other
matters. Such reports, proxy statements and other information are available for
inspection and copying at prescribed rates at the offices of the Commission and
the American Stock Exchange as described above in Item 2(a) -- "Subject Company
Information -- Name and Address."
(c) BUSINESS AND BACKGROUND OF NATURAL PERSONS. The name, business address,
position with Kadant, principal occupation, five-year employment history and
citizenship of each of the directors and executive officers of Kadant, together
with the names, principal businesses and addresses of any corporations or other
organizations in which such principal occupations are conducted, are set forth
in Schedule I hereto. During the last five years, none of Kadant or, to the best
knowledge of Kadant, any of the persons listed in Schedule I to this Schedule
13E-3 has been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors). During the last five years, none of Kadant or, to the
best knowledge of Kadant, any of the persons listed in Schedule I to this
Schedule 13E-3 was a party to any 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 future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
ITEM 4. TERMS OF THE TRANSACTION.
(a) MATERIAL TERMS. Prior to the Effective Date, Kadant plans to contribute
all of the Shares it owns to Fibergen Acquisition, in exchange for common stock
of Fibergen Acquisition. As of October 29, 2001, Kadant owned 10,407,600 Shares,
representing in the aggregate approximately 98.9% of the outstanding Shares. On
the
18
Effective Date, Kadant will cause Fibergen Acquisition to merge with and
into the Company pursuant to Section 253 of the DGCL, with the Company to be the
surviving corporation. To so merge, the Board of Directors and the stockholders
of Fibergen Acquisition will approve the Merger and Fibergen Acquisition will
file a Certificate of Ownership and Merger with the Secretary of State of
Delaware. Upon the Effective Date:
- each Share issued and outstanding immediately prior to the Effective Date
(other than Shares owned by Fibergen Acquisition or the Company and Shares
held by Public Stockholders, if any, who properly exercise their
dissenters' statutory appraisal rights under the DGCL) will be cancelled
and extinguished and be converted into and become a right to receive the
Merger Price; and
- each share of Fibergen Acquisition's capital stock issued and outstanding
immediately prior to the Effective Date shall be converted into one
validly issued, fully paid and nonassessable share of the common stock of
the Company as the surviving corporation of the Merger. As a result of the
Merger, Kadant will own all of the outstanding equity interests in the
Company.
Under the DGCL, because Fibergen Acquisition will hold at least 90% of the
outstanding Shares, Fibergen Acquisition will have the power to effect the
Merger without a vote of the Company's Board of Directors or the Public
Stockholders. Fibergen Acquisition intends to take all necessary and
appropriate action to cause the Merger to become effective on the Effective
Date, without a meeting or consent of the Company's Board of Directors or the
Public Stockholders. The Merger Price will be $12.75 in cash per Share. The
reasons for the Merger are set out in "Special Factors -- Purposes,
Alternatives, Reasons and Effects of the Merger -- Purposes," "-- Alternatives"
and "-- Reasons." Certain federal income tax consequences of the Merger are set
out in "Special Factors -- Purposes, Alternatives, Reasons and Effects of the
Merger -- Effects -- Certain Federal Income Tax Consequences of the Merger."
Upon completion of the Merger, in order to receive the cash Merger Price of
$12.75 per Share, each stockholder or a duly authorized representative must (1)
deliver a Letter of Transmittal, appropriately completed and executed, to the
Shareholder Services Department of the Paying Agent, at 40 Wall Street, 46th
Floor, New York, New York, 10005, and (2) surrender such Shares by delivering
the stock certificate or certificates that, prior to the Merger, had evidenced
such Shares to the Paying Agent, as set forth in a Notice of Merger and
Appraisal Rights and Letter of Transmittal which will be mailed to stockholders
of record on the Effective Date. Stockholders are encouraged to read the Notice
of Merger and Appraisal Rights and Letter of Transmittal carefully when
received. Delivery of an executed Letter of Transmittal shall constitute a
waiver of statutory appraisal rights.
The Merger will be accounted for as the acquisition of a minority interest
by Kadant, using the purchase method of accounting.
For federal income tax purposes, the receipt of the cash consideration by
holders of the Shares pursuant to the Merger will be a taxable sale of the
holders' Shares. See "Special Factors -- Purposes, Alternatives, Reasons and
Effects of the Merger -- Effects -- Certain Federal Income Tax Consequences of
the Merger."
(b) DIFFERENT TERMS. Stockholders of the Company will be treated as described
in Item 4(a) "--Terms of the Transaction -- Material Terms."
(c) APPRAISAL RIGHTS. Under the DGCL, record holders of the Shares who follow
the procedures set forth in Section 262 will be entitled to have their Shares
appraised by the Court of Chancery of the State of Delaware and to receive
payment of the fair value of such shares together with a fair rate of interest,
if any, as determined by such court. The fair value as determined by the
Delaware court is exclusive of any element of value arising from the
accomplishment or expectation of the Merger. The following is a summary of
certain of the provisions of Section 262 of the DGCL and is qualified in its
entirety by reference to the full text of Section 262, a copy of which is
attached to this Schedule 13E-3 as Exhibit (f). Notice of the Effective Date and
the availability of appraisal rights under Section 262 (the "Merger Notice")
will be mailed to record holders of the Shares and should be reviewed. Any
Public Stockholder entitled to appraisal rights will have the right, within 20
days after the date of mailing of the Merger Notice, to demand in writing from
the Company an appraisal of his or her Shares. Such demand will be sufficient if
it reasonably informs the Company of the identity of the stockholder and that
the stockholder intends to demand an appraisal of the fair value of his or her
Shares. Failure to make such a timely demand would foreclose a stockholder's
right to appraisal.
19
Only a holder of record of Shares is entitled to assert appraisal rights
for the Shares registered in that holder's name. A demand for appraisal should
be executed by or on behalf of the holder of record fully and correctly, as the
holder's name appears on the stock certificates. Holders of Shares who hold
their shares in brokerage accounts or other nominee forms and wish to exercise
appraisal rights should consult with their brokers to determine the appropriate
procedures for the making of a demand for appraisal by such nominee. All written
demands for appraisal of Shares should be sent or delivered to Sandra L.
Lambert, General Counsel, Thermo Fibergen Inc., c/o Kadant Inc., 245 Winter
Street, Waltham, Massachusetts 02451.
If the Shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of the demand should be made in that
capacity, and if the Shares are owned of record by more than one person, as in a
joint tenancy or tenancy in common, the demand should be executed by or on
behalf of all joint owners. An authorized agent, including one or more joint
owners, may execute a demand for appraisal on behalf of a holder of record;
however, the agent must identify the record owner or owners and expressly
disclose the fact that, in executing the demand, the agent is agent for such
owner or owners.
A record holder such as a broker holding Shares as nominee for several
beneficial owners may exercise appraisal rights with respect to the Shares held
for one or more beneficial owners while not exercising such rights with respect
to the Shares held for other beneficial owners; in such case, the written demand
should set forth the number of shares as to which appraisal is sought and where
no number of shares is expressly mentioned the demand will be presumed to cover
all Shares held in the name of the record owner.
Within 10 calendar days after the Effective Date, the Company, as the
surviving corporation in the Merger, must send a notice as to the effectiveness
of the Merger. Within 120 calendar days after the Effective Date, the Company,
or any stockholder entitled to appraisal rights under Section 262 and who has
complied with the foregoing procedures, may file a petition in the Delaware
Court of Chancery demanding a determination of the fair value of the Shares of
all such stockholders. The Company is not under any obligation, and has no
present intention, to file a petition with respect to the appraisal of the fair
value of the Shares. Accordingly, it is the obligation of the stockholders to
initiate all necessary action to perfect their appraisal rights within the time
prescribed in Section 262.
Within 120 calendar days after the Effective Date, any stockholder of
record who has complied with the requirements for exercise of appraisal rights
will be entitled, upon written request, to receive from the Company a statement
setting forth the aggregate number of Shares with respect to which demands for
appraisal have been received and the aggregate number of holders of such Shares.
Such statement must be mailed within 10 calendar days after a written request
therefor has been received by the Company or within 10 calendar days after the
expiration of the period for the delivery of demands for appraisal, whichever is
later.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Court of Chancery will determine the stockholders
entitled to appraisal rights and will appraise the fair value of the Shares,
exclusive of any element of value arising from the accomplishment or expectation
of the Merger, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. Holders considering seeking
appraisal should be aware that the fair value of their Shares as determined
under Section 262 could be more than, the same as or less than the amount per
Share that they would otherwise receive if they did not seek appraisal of their
Shares. The Delaware Supreme Court has stated that "proof of value by any
techniques or methods that are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in the
appraisal proceedings. In addition, Delaware courts have decided that the
statutory appraisal remedy, depending on factual circumstances, may or may not
be a dissenter's exclusive remedy. The Court will also determine the amount of
interest, if any, to be paid upon the amounts to be received by persons whose
Shares have been appraised. The costs of the action may be determined by the
Court and taxed upon the parties as the Court deems equitable. The Court may
also order that all or a portion of the expenses incurred by any holder of
Shares in connection with an appraisal, including, without limitation,
reasonable attorneys' fees and the fees and expenses of experts used in the
appraisal proceeding, be charged pro rata against the value of all the Shares
entitled to appraisal.
The Court may require stockholders who have demanded an appraisal and who
hold Shares represented by certificates to submit their certificates to the
Court for notation thereon of the pendency of the appraisal proceedings. If any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the Effective Date, be entitled to vote the Shares
subject to such demand for any purpose or be entitled to the payment of
dividends or other distributions on those shares (except dividends or other
distributions payable to holders of record of Shares as of a date prior to the
Effective Date).
20
If any stockholder who demands appraisal of Shares under Section 262 fails
to perfect, or effectively withdraws or loses, the right to appraisal, as
provided in the DGCL, the Shares of such holder will be converted into the right
to receive the Merger Price, without interest. A stockholder will fail to
perfect, or effectively lose, the right to appraisal if no petition is filed
within 120 calendar days after the Effective Date. A stockholder may withdraw a
demand for appraisal by delivering to the Company a written withdrawal of the
demand for appraisal and acceptance of the Merger Price, except that any such
attempt to withdraw made more than 60 calendar days after the Effective Date
will require the written approval of the Company. Once a petition for appraisal
has been filed, such appraisal proceeding may not be dismissed as to any
stockholder without the approval of the Court.
For federal income tax purposes, stockholders who receive cash for their
Shares upon exercise of their statutory right of dissent will realize taxable
gain or loss. See "Special Factors -- Purposes, Alternatives, Reasons and
Effects of the Merger -- Effects -- Certain Federal Income Tax Consequences of
the Merger."
The foregoing summary does not purport to be a complete statement of the
procedures to be followed by stockholders desiring to exercise their appraisal
rights and is qualified in its entirety by express reference to the Section 262
of the DGCL, the full text of which is attached hereto as Exhibit (f).
STOCKHOLDERS ARE URGED TO READ EXHIBIT (F) IN ITS ENTIRETY SINCE FAILURE TO
COMPLY WITH THE PROCEDURES SET FORTH THEREIN WILL RESULT IN THE LOSS OF
APPRAISAL RIGHTS.
(d) PROVISION FOR UNAFFILIATED SECURITY HOLDERS. Neither Kadant nor Fibergen
Acquisition intends to grant unaffiliated stockholders special access to the
Company's records in connection with the Merger. Neither Kadant nor Fibergen
Acquisition intends to obtain counsel to or appraisal services for unaffiliated
stockholders of the Company.
(e) ELIGIBILITY FOR LISTING OR TRADING. Not applicable.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(a) (1) TRANSACTIONS. The following are all transactions that occurred during
the past two years between (i) Fibergen Acquisition, Kadant or, to the best
knowledge of Fibergen Acquisition and Kadant, any of the persons listed on
Schedule I and (ii) the Company or any of its affiliates that are not natural
persons where the aggregate value of such transactions is more than one percent
of the Company's consolidated revenues for (1) the fiscal year in which the
transaction occurred or (2), with respect to the current year, the past portion
of the current fiscal year. Pursuant to a promissory note dated as of August 24,
2001, the Company borrowed $6 million principal amount from Kadant in order to
meet its obligations under the Redemption Rights. This amount is due on August
24, 2002 and bears interest at a rate equal to the 90-day Commercial Paper
Composite Rate plus twenty-five (25) basis points. The Company's obligation to
make any payment of principal or interest on the loan is conditioned on the
Company's ability to meet its cash flow requirements at the time of any such
payment.
(2) During the past two years, there have been no transactions between Fibergen
Acquisition, Kadant or, to the best knowledge of Fibergen Acquisition and
Kadant, any of the persons listed on Schedule I hereto and any executive
officer, director or affiliate of Company that is a natural person where the
aggregate value of the transaction or series of similar transactions with such
person exceeded $60,000.
(b) SIGNIFICANT CORPORATE EVENTS. During the past two years there have been no
negotiations, transactions or material contacts between (i) Fibergen
Acquisition, Kadant or, to the best knowledge of Fibergen Acquisition and
Kadant, any of the persons listed on Schedule I hereto and (ii) except as
described above, the Company or its affiliates concerning any merger,
consolidation, acquisition, tender offer for or other acquisition of any class
of the Company's securities, election of the Company's directors or sale or
other transfer of a material amount of assets of the Company, other than votes
cast by Kadant for the election of directors of the Company in the normal
course.
(c) NEGOTIATION OR CONTACTS. During the past two years there have been no
negotiations or material contacts concerning the matters referred to in
paragraph (b) of this Item between (i) any affiliates of the Company or (ii) the
Company or any of its affiliates and any person not affiliated with the Company
who would have a direct interest in such matters.
21
(e) AGREEMENTS INVOLVING THE SUBJECT COMPANY'S SECURITIES. There are no
agreements, arrangements or understandings, whether or not legally enforceable,
between Fibergen Acquisition, Kadant or, to the best knowledge of Fibergen
Acquisition and Kadant, any of the persons on Schedule I hereto and any other
person with respect to any securities of the Company.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(b) USE OF SECURITIES ACQUIRED. The securities acquired will be cancelled.
(c) PLANS. It is currently expected that, following the consummation of the
Merger, the business and operations of the Company will, except as set forth in
this Schedule 13E-3, be conducted by the Company substantially as they are
currently being conducted. Kadant intends to continue to evaluate the business
and operations of the Company with a view to maximizing the Company's potential.
As such, it will take such actions as it deems appropriate under the
circumstances and market conditions then existing. Kadant intends to cause the
Company to terminate the registration of the Shares under Section 12(b) of the
Exchange Act following the Merger, which would result in the suspension of the
Company's duty to file reports pursuant to the Exchange Act. For additional
information see Item 4 --"Terms of the Transaction" and "Special Factors --
Purposes, Alternatives, Reasons and Effects of the Merger -- Effects."
Kadant does not currently have any commitment or agreement for, and is not
currently negotiating, the sales of any of the Company's businesses.
Additionally, Kadant does not currently contemplate any material change in the
composition of the Company's current management, except that Kadant intends to
appoint a Board of Directors comprised solely of members of the Company's and
Kadant's management after the Merger.
Except as otherwise described in this Schedule 13E-3, the Company has not,
and Fibergen Acquisition and Kadant have not, as of the date of this Schedule
13E-3, approved any specific plans or proposals for:
- any extraordinary corporate transaction involving the Company after the
completion of the Merger;
- any sale or transfer of a material amount of assets currently held by the
Company after the completion of the Merger;
- any change in the Board of Directors or management of the Company;
- any material change in the Company's dividend rate or policy; or
- any other material change in the Company's corporate structure or business.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.
See the section above captioned "Special Factors - Purposes,
Alternatives, Reasons and Effects of the Merger."
ITEM 8. FAIRNESS OF THE TRANSACTION.
See the section above captioned "Special Factors - Fairness of the
Merger."
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.
See the section above captioned "Special Factors - Reports, Opinions,
Appraisals and Negotiations."
ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) SOURCE OF FUNDS. The total amount of funds required by Fibergen
Acquisition to pay the Merger Price to all Public Stockholders, and to pay
related fees and expenses, is estimated to be approximately $1.5 million
assuming no options to acquire Shares are exercised prior to the Merger.
Fibergen Acquisition will obtain the funds to pay the Merger Price to all Public
Stockholders from Kadant as a loan or a capital contribution. The loan will be
evidenced by an unsecured note that will bear interest at a floating rate equal
to the 90-day Commercial Paper Rate ("DCP Rate") plus 25 basis points adjusted
at the beginning of each quarter. Because Kadant has committed to
22
provide the necessary financing for the Merger, Fibergen Acquisition has no
alternative financing arrangements.
(b) CONDITIONS. There are no conditions to the financing of the merger.
(c) EXPENSES. The Paying Agent will receive reasonable and customary
compensation for its services and will be reimbursed for certain reasonable out-
of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection with the Merger, including certain liabilities under U.S.
federal securities laws.
Neither Kadant nor Fibergen Acquisition will pay any fees or commissions to
any broker or dealer in connection with the Merger. Brokers, dealers,
commercial banks and trust companies will, upon request, be reimbursed by
Fibergen Acquisition for customary mailing and handling expenses incurred by
them in forwarding materials to their customers.
The following is an estimate of fees and expenses to be incurred by
Fibergen Acquisition in connection with the Merger:
LEGAL.................................... $30,000
FILING................................... 938
MISCELLANEOUS............................ 4,062
-------
$35,000
=======
(d) BORROWED FUNDS. See Item 4(a) - "Source of Funds."
ITEM 11. INTEREST IN SECURITIES OF SUBJECT COMPANY.
(a) SECURITIES OWNERSHIP. On the Effective Date, immediately prior to the
Merger, Fibergen Acquisition is expected to be the owner of 10,407,600 Shares,
representing 98.9% of the outstanding Shares. Because Kadant owns 100% of the
equity interest in Fibergen Acquisition, Kadant may also be deemed to be the
beneficial owner of these Shares. Details regarding the ownership of Shares by
the persons named on Schedule I to this Schedule 13E-3 are set out thereon.
(b) SECURITIES TRANSACTIONS. Kadant will contribute the Shares held by it to
Fibergen Acquisition prior to the Effective Date. None of the Shares referred to
in the preceding paragraph were acquired in the past 60 days.
ITEM 12. THE SOLICITATION OR RECOMMENDATION.
Not applicable.
23
ITEM 13. FINANCIAL STATEMENTS.
(a) FINANCIAL INFORMATION. The audited financial statements for the fiscal
years ended December 30, 2000 and January 1, 2000 are incorporated by reference
herein from Exhibit 13 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 2000. The Company's unaudited financial
statements as of September 29, 2001 and for the nine month periods ended
September 29, 2001 and September 30, 2000 are incorporated herein by reference
to the Company's Quarterly Report on Form 10-Q for the period ended September
29, 2001. Copies of the Company's Form 10-K and 10-Q filings may be obtained by
contacting the Company's Investor Relations Department at 781-370-1650 or from
the Securities and Exchange Commission's web site at www.sec.gov. In addition,
copies of such documents may be inspected at the Securities and Exchange
Commission's Public Reference Room, located at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330.
The Company's ratio of earnings to fixed charges, as required by
subparagraph (3), is set forth below:
Nine months ended September 29, 2001 - Not applicable; coverage
deficiency was $3,942,000.
Fiscal year ended December 30, 2000 - Not applicable; coverage deficiency
was $1,904,000.
Fiscal year ended January 1, 2000 - Not applicable; coverage deficiency was
$126,000.
The Company's book value per share (adjusted to treat the Common Stock
subject to redemption as equity) as of December 30, 2000, as required by
subparagraph (4), was $2.21.
The Company's book value per share (adjusted to treat the Common Stock
subject to redemption as equity) as of September 29, 2001, as required by
subparagraph (4), was $2.55.
(b) PRO FORMA INFORMATION. Not applicable.
(c) SUMMARY INFORMATION.
Set forth below is certain selected financial information with respect to
the Company excerpted or derived from the audited financial statements contained
in the Company's Form 10-K, and the unaudited financial statements contained in
the Company's Form 10-Q (collectively, the Company Reports"). More comprehensive
financial information is included in the Company Reports and in other documents
filed by the Company with the SEC (which may be inspected or obtained in the
manner set forth above), and the following financial information is qualified in
its entirety by reference to the Company Reports and other documents and all of
the financial information (including any related notes) contained therein or
incorporated therein by reference.
The selected financial information of the Company presented below as of and
for the fiscal years ended December 30, 2000, January 1, 2000, January 2, 1999,
January 3, 1998 and December 28, 1996 has been derived from the Company's
Financial Statements, which have been audited by Arthur Andersen LLP. The
selected financial information for the nine months ended September 29, 2001 and
September 30, 2000 has not been audited. The results of operations for the nine
months ended September 29, 2001 are not necessarily indicative of results for
the entire year. The selected financial information presented below should be
read in conjunction with the Company's Financial Statements and related notes
set forth in the Form 10-K and Form 10-Q.
24
(In thousands except Nine Months Ended
per share amounts) 9/29/2001 9/30/2000(a) 2000 (a) 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
DATA
Revenues $ 5,870 $ 5,755 $ 7,794 $ 8,579 $ 5,276 $ 4,836 $ 2,223
Net Income (Loss) (2,305) 732 423 1,040 399 1,098 (367)
Earnings (Loss) per
Share:
Basic (.20) .05 .03 .07 .03 .07 (.03)
Diluted (.20) .05 .03 .07 .02 .07 (.03)
Weighted Average Shares:
Basic 11,516 14,167 13,500 14,389 14,715 14,715 11,321
Diluted 11,516 14,532 13,830 15,540 16,867 16,414 11,321
BALANCE SHEET DATA
Working Capital $ (12,173) $(8,868) $(9,394) $(9,167) $55,909 $58,609 $56,477
Total Assets 38,714 71,651 38,465 72,438 71,116 70,164 71,033
Common Stock
Subject to
Redemption (b) - - - - 58,260 57,176 56,087
Shareholders'
Investment 3,962 5,774 5,836 5,640 11,242 11,959 11,921
OTHER DATA
Book Value per Share $ .34 $ .50 $ .41 $ .40
Cash Dividends - - - -
Ratio of Earnings to
Fixed Charges (c) n/a n/a n/a n/a
Ratio of Earnings to
Fixed Charges
Coverage
Deficiency $ 3,942 $ 498 $ 1,904 $ 126
(a) Reflects the sale of the fiber-recovery and water clarification services
plant for $3,600, resulting in a gain of $729, and the September 2000 redemption
of Company common stock for $34,603.
(b) Reflects the reclassification of common stock subject to redemption to
current liabilities in 1999 and in each period thereafter.
(c) For purposes of computing the ratio of earnings to fixed charges,
"earnings" represent income (loss) before taxes and minority interest, plus
fixed charges. "Fixed charges" consist of interest expense, accretion of common
stock subject to redemption, and one-third of rental expense, which is deemed to
be the interest component of such rental expense.
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) SOLICITATION OR RECOMMENDATIONS. There are no persons or classes of persons
who are directly or indirectly employed, retained, or to be compensated to make
solicitations or recommendations in connection with the Merger.
(b) EMPLOYEES AND CORPORATE ASSETS. No employees or corporate assets will be
used by Fibergen Acquisition or Kadant in connection with the Merger.
25
ITEM 15. ADDITIONAL INFORMATION. None.
ITEM 16. EXHIBITS.
(f) Delaware General Corporation Law Section 262.
26
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.
KADANT INC.
/s/ Thomas M. O'Brien
---------------------
NAME: Thomas M. O'Brien
TITLE: Executive Vice President
and Chief Financial Officer
FIBERGEN ACQUISITION INC.
/s/ Thomas M. O'Brien
---------------------
NAME: Thomas M. O'Brien
TITLE: President
Date: December 14, 2001
27
SCHEDULE I
MEMBERS OF THE BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS OF KADANT
The name, business address, position with Kadant, present principal occupation
or employment and five-year employment history of each of the directors and
executive officers of Kadant, together with the names, principal businesses and
addresses of any corporations or other organizations in which such principal
occupations are conducted, are set forth below. Unless otherwise indicated, each
occupation set forth refers to Kadant, each individual is a United States
citizen and each individual's business address is 245 Winter Street, Waltham,
Massachusetts 02451. Unless otherwise indicated, to the knowledge of Kadant, no
director or executive officer of Kadant has been convicted in a criminal
proceeding during the last five years (excluding traffic violations or similar
misdemeanors) and no director or executive officer of Kadant was a party to any
judicial or administrative proceeding during the last five years (except for any
matters that were dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.
JOHN M. ALBERTINE
- -----------------
Dr. Albertine, 57, has been a director of Kadant since June 2001. Dr. Albertine
has been a managing partner in High Street Capital Management, L.L.C., a private
equity fund, since March 2001 and the chief executive officer of Albertine
Enterprises, Inc., a consulting and merchant-banking firm, since 1990. He is
also the founder and has been the chief executive officer of Jam Shoe Concepts,
which operates a chain of retail shoe stores, since January 2000. Dr. Albertine
is a director of Intermagnetics General Corp. and Semco Energy, Inc. He served
as president of the American Business Conference, founded by Arthur Levitt, Jr.,
from 1981 until 1986, executive director of the Congressional Joint Economic
Committee under Chairman Senator Lloyd Bentsen from 1979 until 1980 and the head
of a presidential committee on aviation safety under President Ronald Reagan
from 1987 until 1988. Dr. Albertine has also been a director of the Company
since June 2001.
JAN-ERIC BERGSTEDT
- -------------------
Mr. Bergstedt, 65, has been a vice president of Kadant and president of its AES
Engineered Systems subsidiary since November 1993.
SANDRA L. LAMBERT
- -----------------
Ms. Lambert, 46, has been vice president, general counsel and secretary of
Kadant since August 2001 and has been the Company's secretary since 1991. Ms.
Lambert served as vice president and secretary of Thermo Electron from March
1999 until August 2001, secretary and senior counsel of Thermo Electron from
1990 until March 1999 and associate general counsel of Thermo Electron from 1984
until 1990. Ms. Lambert is also general counsel and secretary of the Company.
FRANCIS L. MCKONE
- -----------------
Mr. McKone, 66, has been a director of Kadant since March 1998. Mr. McKone has
been the chairman of the board of Albany International Corp., a worldwide
supplier of paper-machine fabrics, since 1998. Mr. McKone was also the chief
executive officer of Albany International Corp. from May 1993 until his
retirement in October 2000. He is also a director of Albany International Corp.
and the Company.
DONALD E. NOBLE
- ---------------
Mr. Noble, 86, has been a director of Kadant since January 1992. From December
1992 to May 2000, he served as Kadant's chairman of the board. For more than 20
years, from 1959 to 1980, Mr. Noble served as the chief executive officer of
Rubbermaid Incorporated, first with the title of president and then as the
chairman of the board.
THOMAS M. O'BRIEN
- -----------------
Mr. O'Brien, 50, has been Kadant's executive vice president since September 1998
and became Kadant's chief financial officer and treasurer in August 2001. He
also served as Kadant's vice president, finance from 1991 until
28
September 1998. From 1990 to 1991, Mr. O'Brien was chief financial officer and
vice president of finance of Racal Interlan, Inc. Prior to 1990, Mr. O'Brien
held various finance positions at Prime Computer, Compugraphic Corporation and
the General Electric Company. Mr. O'Brien has been chief financial officer,
chief accounting officer and treasurer of the Company since August 2001. Mr.
O'Brien is also the president and sole director of Fibergen Acquisition.
JONATHAN W. PAINTER
- -------------------
Mr. Painter, 42, has been executive vice president of Kadant since September
1997, was treasurer of Thermo Electron from August 1994 through June 1997, and
was treasurer of Kadant from October 1994 through June 1997. Mr. Painter has
been the president and chief executive officer of the Company since May 2001,
and has been a director of the Company since its incorporation in February 1996.
WILLIAM A. RAINVILLE
- --------------------
Mr. Rainville, 59, has been president and chief executive officer of Kadant
since its inception in November 1991, a director of Kadant since January 1992,
and the chairman of its board of directors since August 2001. Mr. Rainville was
a senior vice president of Thermo Electron from March 1993 through September
1998, and served as Thermo Electron's chief operating officer, recycling and
resource recovery, from September 1998 until August 2001. Mr. Rainville has been
chairman of the board and a director of the Company since its incorporation in
February 1996.
EDWARD J. SINDONI
- -----------------
Mr. Sindoni, 56, has been vice president of Kadant since November 1991,
president of Kadant's Thermo Web Systems Inc. subsidiary since January 1993, and
was senior vice president of Thermo Web Systems Inc. from 1987 to January 1993.
STOCK OWNERSHIP. The following table sets forth the aggregate number and
percentage of the Company's Common Stock owned by each director and executive
officer of Kadant as of October 29, 2001.
NAME (1) NUMBER OF SHARES(2)
- -------- -------------------
John M. Albertine 0
Jan-Eric Bergstedt 19,500
Sandra L. Lambert 5,000
Francis L. McKone 20,050
Donald E. Noble 1,500
Thomas M. O'Brien 10,000
Jonathan W. Painter 20,000
William A. Rainville 75,000
Edward J. Sindoni 10,000
All directors and current executive officers as a group (9 persons) 161,050
(1) Except as reflected in the footnotes to this table, shares beneficially
owned consist of shares owned by the indicated person or by that person for
the benefit of minor children, and all share ownership includes sole voting
and investment power.
(2) Shares of Common Stock beneficially owned by Mr. Bergstedt, Ms. Lambert,
Mr. McKone, Mr. Noble, Mr. O'Brien, Mr. Painter, Mr. Rainville and Mr.
Sindoni and all directors and current executive officers as a group include
19,500, 5,000, 17,000, 1,500, 10,000, 20,000, 75,000, 10,000 and 158,000
shares, respectively, that such person or group had the right to acquire
within 60 days of October 29, 2001, through the exercise of stock options.
None of the directors or executive officers owned more than 1% of the
Common Stock outstanding as of October 29, 2001; all directors and current
executive officers as a group beneficially owned approximately 1.4% of the
Common Stock outstanding as of such date.
29
MEMBERS OF THE BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS OF FIBERGEN ACQUISITION
The name, business address, position with Fibergen Acquisition, present
principal occupation or employment and five-year employment history of each of
the directors and executive officers of Fibergen Acquisition, together with the
names, principal businesses and addresses of any corporations or other
organizations in which such principal occupations are conducted, are set forth
below. Unless otherwise indicated, each occupation set forth refers to Fibergen
Acquisition, each individual is a United States citizen and each individual's
business address is 245 Winter Street, Waltham, Massachusetts 02451. Unless
otherwise indicated, to the knowledge of Fibergen Acquisition, no director or
executive officer of Fibergen Acquisition has been convicted in a criminal
proceeding during the last five years (excluding traffic violations or similar
misdemeanors) and no director or executive officer of Fibergen Acquisition was a
party to any judicial or administrative proceeding during the last five years
(except for any matters that were dismissed without sanction or settlement) that
resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities
laws, or a finding of any violation of federal or state securities laws.
THOMAS M. O'BRIEN
- -----------------
Please see biography above under "MEMBERS OF THE BOARD OF DIRECTORS AND
EXECUTIVE OFFICERS OF KADANT."
30
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
16(f) Delaware General Corporation Law Section 262
31
Exhibit 16(f)
DELAWARE GENERAL CORPORATION LAW SECTION 262
(a) Any stockholder of a corporation of this State who holds shares of stock on
the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to Section 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series
of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257,Section
258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of stock
of a constituent corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to Sections 251, 252, 254, 257,
258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such merger
or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in respect
thereof, which shares of stock (or depository receipts in respect thereof) or
depository receipts at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash in lieu
of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b., and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party to
a merger effected under Section 253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be available
for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections(d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsection (b) or (c) hereof that appraisal rights are available for any or all
the shares of the constituent corporations, and shall include in such notice a
copy of this section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of the
vote on the merger or consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such stockholder's shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or
(2) If the merger or consolidation was approved pursuant to Section 228 or
Section 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within 10
days after such effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first notice, such second
notice need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent corporation may
fix, in advance, a record date that shall be not more than 10 days prior to the
date the notice is given, provided, that if the notice is given on or after the
effective date of the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is given prior to the
effective date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders
who have complied with this section and who have become entitled to appraisal
rights. The Court may require the stockholders who have demanded an appraisal
for their shares and who hold stock represented by certificates to submit their
certificates of stock to the Register in Chancery for notation thereon of the
pendency of the appraisal proceedings; and if any stockholder fails to comply
with such direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon application
of a stockholder, the Court may order all or a portion of the expenses incurred
by any stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorney's fees and the fees and expenses of
experts, to be charged pro rata against the value of all the shares entitled to
an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(1) The shares of the surviving or resulting corporation to which the shares of
such objecting stockholders would have been converted had they assented to the
merger or consolidation shall have the status of authorized and unissued shares
of the surviving or resulting corporation. (Last amended by Ch. 339, L. 98, eff.
7-1-98.)
