EXHIBIT 99.1
Contact: KCSI
Landon H. Rowland (816-983-1393) Kansas City Southern Industries, Inc.
Chairman, President and Chief Executive Officer 114 West 11th Street
Kansas City, Missouri 64105
Joseph D. Monello (816-983-1213)
Vice President & Chief Financial Officer
NYSE Symbol: KSU
Release No.: 1999-12: Date: December 6, 1999
NEWS RELEASE
KANSAS CITY SOUTHERN INDUSTRIES ANNOUNCES $400 MILLION DEBT
TENDER AND CONSENT SOLICITATION OFFER
Kansas City, Missouri
Kansas City Southern Industries, Inc. ("Company", NYSE : KSU) today
announced that it has commenced cash tender offers and consent solicitations for
the Company's outstanding $400 million in Notes and Debentures.
The following table sets forth information for each of the Notes and Debentures
to which the offers apply.
Outstanding
Aggregate Redemption Earliest
Principal Security Amount Redemption Reference Fixed
CUSIP No. Amount Description per $1,000 Date Security Spread
485170AB0 $100,000,000 7.875% $1,000.0 7/1/02 6.25% 0.35%
Notes Due 6/30/02
Due 7/1/02
485170AD6 $100,000,000 6.625% $1,000.0 3/1/05 5.875% 0.50%
Notes Due 11/15/04
Due 3/1/05
485170AC8 $100,000,000 8.8% $1,040.4 7/1/02 6.25% 0.50%
Debentures Due 6/30/02
Due 7/1/22
485170AF1 $100,000,000 7% $1,000.0 12/15/25 5.25% 0.875%
Debentures Due 2/15/29
Due 12/15/25
Total $400,000,000
The tender offers are being made upon the terms and subject to the conditions
set forth in the Offer to Purchase and Consent Solicitation Statement which are
being mailed to the holders of the Notes and Debentures on or about December 6,
1999.
Under the terms of the tender offers, the consideration for each $1,000
principal amount of Notes and Debentures will be calculated based on the yield
on an applicable United States Treasury reference security, plus an applicable
fixed spread, less the consent payment described below. The consideration will
also include accrued and unpaid interest. The consideration will be fixed two
days prior to the expiration of the tender offers. The tender offers will expire
at 9:00 a.m., New York City time, on Tuesday, January 11, 2000 unless extended
or earlier terminated by the Company.
The Company is also soliciting consents from the holders of Notes and Debentures
to amend the indenture under which the Notes and Debentures were issued. Under
the terms of the consent solicitations, each holder who tenders Notes and
Debentures and validly consents to the proposed amendments prior to the
applicable consent time and does not revoke such consent will be paid $25.00 in
cash for each $1,000 in principal amount of Notes or Debentures for which
consents have been delivered. The consent time, in order to receive such consent
payment, for each consent solicitation is 5:00 p.m., New York City time, on
Friday, December 17, 1999. Holders tendering their Notes or Debentures will be
required to consent to amendments which will eliminate or modify certain of the
covenants contained in the Indenture governing the Notes and the Debentures.
Merrill Lynch & Co. is the exclusive dealer manager and consent solicitation
agent for the tender offers and the consent solicitations.
The offers and consent solicitations are being made in connection with the
Company's planned separation of its financial services businesses from its
transportation businesses. The Company expects that the separation will be
effected through a spin-off of its financial services businesses by distributing
to its stockholders as a dividend all of the outstanding common stock of
Stilwell Financial, Inc. ("Stilwell"), a wholly-owned subsidiary to which the
Company transferred all of the capital stock of its financial services
subsidiaries and other related assets. Once the spin-off is completed, the
Company will continue under the KCSI name as a company primarily in the
transportation business.
The separation is currently expected to occur promptly following the payment for
Notes and Debentures tendered and accepted by the Company pursuant to the tender
offers.
If the requisite consents to a supplemental indenture are obtained and the
supplemental indenture with respect to any series of Notes or Debentures becomes
effective, any Notes or Debentures of such series not tendered and accepted for
payment will not have the benefits of certain covenants and other related
provisions that will be eliminated, amended or waived by the proposed
amendments. Furthermore, after the expected spin-off of Stilwell is completed,
the Company must derive the cash flows necessary to make interest and principal
payments on any remaining outstanding Notes or Debentures only from its
transportation businesses. The Company expects that the separation will result
in the debt ratings by Standard & Poor's and Moody's Investor Services on any
outstanding Notes or Debentures being downgraded below investment grade.
The Company has secured a loan commitment from The Chase Manhattan Corporation
for senior secured debt financing that is sufficient to fund the payments
pursuant to the offers and consent
solicitation and the refinancing of the Company's existing credit facilities
which would otherwise terminate at the time of the Company's planned spin-off of
Stilwell. The funding of this financing is subject to certain conditions,
including without limitation, the substantial completion by the bank of its due
diligence by an agreed upon date, there being no adverse change in the condition
(financial or otherwise) of the Company and no disruption in the syndication
markets, and other conditions customarily applicable to credit facilities of a
similar nature and amount.
This news release is neither an offer to purchase the Notes or Debentures nor a
solicitation of an offer to sell the Notes. The tender offers and consent
solicitations are only made pursuant to the offering documents. Questions
regarding the terms of the tender offers and consent solicitations may be
directed to Merrill Lynch & Co. at 888-654-8637, attention: Liability Management
Group. Copies of the offering documents may be obtained by calling Beacon Hill
Partners, Inc., at 212-843-8500 (call collect) or 800-755-5001 (toll free).
KANSAS CITY SOUTHERN INDUSTRIES, INC. is a diversified holding company with
operation in the railroad transportation and financial services industries. Its
primary railroad transportation subsidiary operations are held with in Kansas
City Southern Lines, Inc. and include: The Kansas City Southern Railway Company
and Gateway Western Railway along with equity interests in Transportacion
Ferroviaria Mexicana S.A. de C.V. and Mexrail, Inc. KCSI's primary financial
services subsidiary operations are held with in Stilwell Financial, Inc. and
include: Janus Capital Corporation, Berger LLC and Nelson Money Managers plc
along with an equity interest in DST Systems,. Inc. The Company is headquartered
in Kansas City, Missouri. In fiscal year 1998, KCSI reported total revenues of
$1.3 billion with total assets of $2.6 billion..
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This news release includes statements concerning potential future events
involving the Company, which could materially differ from the events that
actually occur. The differences could be caused by a number of factors including
those factors identified in KCSI's December 31, 1998 Form 10-K and the Current
Report on Form 8-K/A dated June 3, 1997, each filed by the Company with the
Securities and Exchange Commission (Commission file no. 1-4717). The Company
will not update any forward-looking statements in this news release to reflect
future events or developments.