EXHIBIT (a)(1)(H)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase, dated April 25, 2001, and the related Letter of
Transmittal and any amendments or supplements thereto and is being made to all
holders of Shares ("Holders"). Purchaser (as defined below) is not aware of any
state or jurisdiction where the making of the Offer or the acceptance of Shares
is prohibited by any applicable law. If Purchaser becomes aware of any state or
jurisdiction where the making of the Offer or the acceptance of Shares is not in
compliance with any applicable law, Purchaser will make a good faith effort to
comply with such law. If, after such good faith effort, Purchaser cannot comply
with such law, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) Holders in such state or jurisdiction. In any state or
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by BB&T Capital Markets, a division of Scott & Stringfellow,
Inc., or one or more registered brokers or dealers licensed under the laws of
such state or jurisdiction.
Notice of Offer to Purchase for Cash
Up to 2,500,000 but not less than 2,000,000
of the Outstanding Shares of Common Stock
(Including the Associated Common Stock Purchase Rights)
of
Katy Industries, Inc.
at
$8.00 Net Per Share in Cash
by
KKTY Holding Company, L.L.C.
KKTY Holding Company, L.L.C., a Delaware limited liability company
("Purchaser"), hereby offers to purchase up to 2,500,000 but not less than
2,000,000 of the outstanding shares of common stock, $1.00 par value per share
(the "Common Stock"), inclusive of their respective associated Common Stock
purchase rights (the "Rights," and the shares of Common Stock inclusive of their
respective Rights, the "Shares"), of Katy Industries, Inc., a Delaware
corporation (the "Company"), at a purchase price of $8.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated April 25, 2001, and in the
related Letter of Transmittal (the Offer to Purchase and the Letter of
Transmittal, and any amendments or supplements thereto, collectively constitute
the "Offer"). The Rights were issued pursuant to the Rights Agreement, dated as
of January 13, 1995, as amended (the "Rights Agreement"), between the Company
and LaSalle Bank National Association, as Rights Agent, and are currently
evidenced by and trade with certificates evidencing the Common Stock.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON TUESDAY, JUNE 5, 2001, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN IMMEDIATELY PRIOR TO THE EXPIRATION OF THE OFFER AT
LEAST 2,000,000 SHARES (THE "MINIMUM CONDITION"); (2) AT THE COMPANY'S UPCOMING
ANNUAL STOCKHOLDERS' MEETING, THE COMPANY'S STOCKHOLDERS HAVING DULY (A) ELECTED
THE DIRECTORS OF THE COMPANY'S BOARD OF DIRECTORS, INCLUDING FIVE NOMINEES
DESIGNATED BY PURCHASER, (B) APPROVED AND ADOPTED AN AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION AUTHORIZING THE CLASSIFICATION OF THE COMPANY'S
BOARD OF DIRECTORS INTO TWO CLASSES AND 600,000 SHARES OF CONVERTIBLE PREFERRED
STOCK AND (C) AUTHORIZED AND APPROVED THE ISSUANCE AND THE SALE OF 400,000
SHARES OF THE COMPANY'S CONVERTIBLE PREFERRED STOCK TO PURCHASER; (3) THE
COMPANY HAVING CONSUMMATED THE SALE OF HAMILTON METALS, L.P., ONE OF ITS WHOLLY
OWNED SUBSIDIARIES, AND RECEIVED GROSS PROCEEDS IN CASH, NET OF ANY RETAINED
LIABILITIES OF HAMILTON METALS, L.P. RETAINED BY THE COMPANY, IN AN AMOUNT NOT
LESS THAN $20 MILLION; AND (4) THE COMPANY HAVING ENTERED INTO DEFINITIVE
DOCUMENTATION WITH BANKERS TRUST COMPANY WITH RESPECT TO THE CREDIT FACILITIES
TO BE ESTABLISHED IN CONNECTION WITH THE REFINANCING OF THE COMPANY'S EXISTING
LOANS. THE OFFER IS ALSO SUBJECT TO THE SATISFACTION OF CERTAIN OTHER CONDITIONS
REFERRED TO IN THE INTRODUCTION AND SECTION 1, "TERMS OF THE OFFER; PRORATION"
AND SECTION 15, "CERTAIN CONDITIONS TO PURCHASER'S OBLIGATIONS" OF THE OFFER TO
PURCHASE.
Upon the terms and subject to the conditions of the Offer, if more than
2,500,000 Shares are validly tendered and not properly withdrawn prior to the
Expiration Date (as defined below), Purchaser will accept for payment and pay
for only 2,500,000 Shares on a pro rata basis (with appropriate adjustments to
avoid the purchase of fractional Shares) from each stockholder who has validly
tendered Shares in the Offer based on the number of Shares properly tendered by
each stockholder prior to the Expiration Date and not properly withdrawn. In the
event that proration of tendered Shares is required, Purchaser shall determine
the proration factor as soon as practicable following the Expiration Date.
Because of the difficulty of determining the precise number of Shares validly
tendered and not properly withdrawn prior to the Expiration Date (due in part to
the guaranteed delivery procedures described in Section 3 of the Offer to
Purchase), Purchaser does not expect that it will be able to announce the final
results of such proration or pay for any Shares until approximately four New
York Stock Exchange trading days after the Expiration Date. Stockholders may
obtain such preliminary information from the Information Agent and may be able
to obtain such information from their broker.
The Offer and the Preferred Stock Purchase (as defined below) are being made
pursuant to a Preferred Stock Purchase and Recapitalization Agreement, dated as
of March 29, 2001 (the "Recapitalization Agreement"), by and between Purchaser
and the Company. The Recapitalization Agreement provides, among other things,
for the making of the Offer by Purchaser.
The Board of Directors of the Company unanimously (other than one director who
did not vote because of a potential conflict of interest) approved the
Recapitalization Agreement and the transactions contemplated thereby, including
the Offer, and determined that the terms of the Recapitalization Agreement and
the Offer are fair to, and in the best interests of, the Holders and recommends
that the Holders consider accepting the Offer and tendering all or some of their
Shares pursuant to the Offer.
Tendering Holders whose Shares are registered in their own name and who tender
directly to LaSalle Bank National Association, as Depositary (the "Depositary"),
will not be obligated to pay brokerage fees or commissions or, except as set
forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes with
respect to the purchase of Shares by Purchaser pursuant to the Offer.
In connection with the Offer and the Recapitalization Agreement, Purchaser
entered into a Stock Voting and Tender Agreement with two of the Company's
directors, trusts for the benefit of members of the Wallace E. Carroll, Jr.
family and entities associated with the Carroll family (collectively, the
"Agreement Stockholders"), dated as of March 29, 2001 (the "Voting Agreement"),
pursuant to which the Agreement Stockholders have agreed to collectively tender
at least 1,500,000 Shares to Purchaser in connection with the Offer and vote
2,500,000 Shares in favor of or against certain proposals relating to the Offer,
the Preferred Stock Purchase (as defined below) and the Recapitalization
Agreement that the Agreement Stockholders may be requested to vote upon at an
annual or special meeting of the Company's stockholders or in connection with
any consent solicitation in accordance with the terms and conditions of the
Voting Agreement. A copy of the Voting Agreement is filed as an exhibit to the
Tender Offer Statement on Schedule TO filed by Purchaser with the Securities and
Exchange Commission (the "Commission").
The purpose of the Offer is for Purchaser to acquire for cash up to 2,500,000
but not less than 2,000,000 Shares. In addition, one of the purposes of the
Offer is to influence control of the business of the Company. If Purchaser
accepts for payment and pays for Shares pursuant to the terms and conditions of
the Offer, Purchaser will, after the Offer expires and concurrently with the
purchase of the Shares, purchase from the Company 400,000 shares of the
Company's Convertible Preferred Stock (the "Preferred Stock Purchase"). After
completion of the purchase of the Shares pursuant to the Offer and the
consummation of Preferred Stock Purchase, Purchaser will own approximately 52%
of the fully diluted Shares (excluding outstanding options) if Purchaser
purchases the minimum 2,000,000 Shares pursuant to the Offer (or approximately
56% of the fully diluted Shares (excluding outstanding options) if Purchaser
purchases the maximum 2,500,000 Shares pursuant to the Offer) and will have the
right to nominate a majority of the board of directors of the Company, subject
to election by the Holders of shares of Common Stock. See Section 13, "The
Transaction Documents and the Recapitalization - The Recapitalization
Agreement - Corporate Governance," of the Offer to Purchase.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as of and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. Upon the terms
and subject to the conditions of the Offer, payment for Shares accepted pursuant
to the Offer will be made by deposit of the purchase price with the Depositary,
which will act as agent for tendering Holders for the purpose of receiving
payments from Purchaser and transmitting such payment to tendering Holders whose
Shares have been accepted for payment. Upon the deposit of funds with the
Depositary for the purpose of making payments to tendering Holders, Purchaser's
obligation to make such payment will be satisfied and tendering Holders must
thereafter look solely to the Depositary for payments of amounts owed to them by
reason of the acceptance for payment of Shares pursuant to the Offer. In all
cases, payment for Shares accepted for payment pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates evidencing
such Shares or timely confirmation of a book-entry transfer of such Shares into
the Depositary's account at The Depository Trust Company ("DTC") pursuant to the
procedures set forth in Section 3, "Procedures for Tendering Shares" of the
Offer to Purchase, (ii) the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with any required
signature guarantees or, in connection with a book-entry transfer, an Agent's
Message (as defined in Section 2, "Acceptance for Payment and Payment for
Shares" of the Offer to Purchase) and (iii) any other documents required by the
Letter of Transmittal. Under no circumstances will interest on the purchase
price for Shares be paid by Purchaser regardless of any delay in making such
payment or extension of the Expiration Date (as defined below).
The term "Expiration Date" means 5:00 P.M., New York City time, on June 5,
2001, unless Purchaser (subject to the terms of the Recapitalization Agreement
and the applicable rules and regulations of the Commission) shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire. Subject to the terms of the
Recapitalization Agreement and to the applicable rules and regulations of the
Commission and to applicable law, at the scheduled Expiration Date, the Offer
may be extended for a period of an additional 20 business days, but not beyond
June 30, 2001. Purchaser shall give notice of any such extension to the
Depositary and Innisfree M&A Incorporated (the "Information Agent") and make a
public announcement thereof. There can be no assurance that the Offer will be
extended.
During any such extension, all Shares previously tendered and not properly
withdrawn will remain subject to the Offer and subject to the right of a
tendering Holder to withdraw its Shares. Any such extension will be followed, as
promptly as practicable, by a public announcement thereof by no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Subject to applicable law (including Rules 14d-4(d),
14d-6(c) and 14e-1 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), which require that material changes be promptly
disseminated to Holders in a manner reasonably designed to inform them of such
changes) and without limiting the manner in which Purchaser may choose to make
any public announcement, Purchaser will have no obligation to publish, advertise
or otherwise communicate any such public announcement other than by issuing a
press release to the Dow Jones News Service and making appropriate filing(s)
with the Commission.
Subject to the provisions of the Recapitalization Agreement, applicable rules
and regulations of the Commission and applicable law, the obligation of
Purchaser to accept for payment, and pay for, any Shares tendered pursuant to
the Offer shall be subject to the conditions set forth in Section 15, "Certain
Conditions to Purchaser's Obligations" of the Offer to Purchase. Purchaser
reserves the right to modify the terms of the Offer, provided that, without the
prior written consent of the Company, Purchaser will not decrease the Offer
Price or change the form of consideration payable in the Offer, reduce the
minimum number of shares that is a condition to the Offer, increase the maximum
number of Shares sought to be purchased in the Offer, impose additional
conditions to the Offer or amend any other term of the Offer in any manner
adverse to the Holders, except as required by law.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless accepted for payment by Purchaser pursuant to
the Offer, may also be withdrawn at any time after June 23, 2001, or at such
later time as may apply if the Offer is extended. For a withdrawal to be
effective, a written notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase. Any such notice of withdrawal must specify the name, address and
social security number or taxpayer identification number of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder of the Shares, if different from that of the
person who tendered such Shares. If certificates for Shares to be withdrawn have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution (as defined
in Section 3, "Procedures For Tendering Shares" of the Offer to Purchase),
unless such Shares have been tendered for the account of an Eligible
Institution. Shares tendered pursuant to the procedure for book-entry transfer
as set forth in Section 3, "Procedures For Tendering Shares" of the Offer to
Purchase may be withdrawn only by means of the withdrawal procedures made
available by DTC, must specify the name and number of the account at DTC to be
credited with the withdrawn Shares and must otherwise comply with DTC's
procedures. Withdrawals of tenders of Shares may not be rescinded and any Shares
properly withdrawn will thereafter be deemed not validly tendered for any
purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 3, "Procedures for
Tendering Shares" of the Offer to Purchase at any time prior to the Expiration
Date.
The receipt of cash for Shares pursuant to the Offer will be a taxable
transaction for United States federal income tax purposes and possibly for
state, local or foreign income tax purposes as well. In general, a Holder who
sells Shares pursuant to the Offer will recognize gain or loss for United States
federal income tax purposes equal to the difference, if any, between the amount
of cash received and the Holder's adjusted tax basis in the Shares sold pursuant
to the Offer for cash. If the Shares tendered constitute capital assets in the
hands of the Holder, such gain or loss will be capital gains or loss. In
general, capital gains recognized by an individual will be subject to a maximum
United States federal income tax rate of 20% if the Shares were held for more
than one year, and if held for one year or less they will be subject to tax at
ordinary income tax rates, as described in Section 5, "Certain Federal Income
Tax Consequences" of the Offer to Purchase.
The information required to be disclosed by paragraph (d)(1) of Rule 14d-6
under the Exchange Act is contained in the Offer to Purchase and is
incorporated herein by reference.
The Company has provided Purchaser with the Company's list of Holders and
security position listings in respect of the Shares for the purpose of dissemin-
ating the Offer to Purchase, the Letter of Transmittal and other relevant
materials to Holders. The Offer to Purchase, the Letter of Transmittal and any
other relevant materials will be mailed to record holders of Shares whose names
appear on the Company's list of Holders and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names or the names of whose
nominees appear on the Company's list of Holders, or, where applicable, who are
listed as participants in a clearing agency's security position listing.
The Offer to Purchase and the related Letter of Transmittal contain important
information that should be read carefully before any decision is made with
respect to the Offer.
Requests for copies of the Offer to Purchase, the related Letter of
Transmittal and other materials related to the Offer may be directed to the
Information Agent as set forth below and copies will be furnished promptly at
Purchaser's expense. Questions or requests for assistance may be directed to the
Information Agent or the Dealer Manager as set forth below.
The Information Agent for the Offer is:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Banks and Brokers Call Collect: (212) 750-5833
All Others Call Toll-Free: (888) 750-5834
The Dealer Manager for the Offer is:
BB&T Capital Markets
909 East Main Street
Richmond, VA 23219
(804) 782-2005
April 25, 2001