SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 3, 1998
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PHILADELPHIA SUBURBAN CORPORATION
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(Exact name of registrant specified in Charter)
Pennsylvania 1-6659 23-1702594
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(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
762 Lancaster Avenue
Bryn Mawr, Pennsylvania 19010
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(Address of principal executive offices) Zip Code
Registrant's telephone, including area code: (610) 527-8000
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Not Applicable
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(Former name and former address, if changed since last report)
Item 5. Other Events.
On February 3, 1998 the Board of Directors of Philadelphia
Suburban Corporation (the "Company") declared a dividend distribution of one
right (a "Right") for each outstanding share of Common Stock, $.50 par value
(each, a "Common Share"), of the Company to stockholders of record at the
close of business on March 1, 1998. Each Right entitles the registered holder
to purchase from the Company a unit consisting of one one-thousandth of a
share (a "Unit") of the Series A Junior Participating Preferred Shares, par
value $1.00 per share, of the Company (the "Preferred Shares"), or a
combination of securities and assets of equivalent value, at a Purchase Price
of $90 per Unit, subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
Initially, ownership of the Rights will be evidenced by the
Common Share certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. The Rights will separate
from the Common Shares and a distribution date will occur (the "Distribution
Date") upon the earlier of (i) ten (10) business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding Common Shares (the "Stock
Acquisition Date"), or (ii) within ten (10) business days (or such later date
as may be determined by the Board of Directors prior to such time as any
person or group of affiliated or associated persons becomes an Acquiring
Person) following the commencement of a tender offer or exchange offer that
would result in a person or group (excluding the Company and its subsidiaries
and benefit plans) beneficially owning 20% or more of the outstanding Common
Shares. Until the Distribution Date, the Rights will be evidenced by the
Common Share certificates and will be transferred with and only with such
Common Share certificates. Therefore, the surrender for transfer of any
certificates for Common Shares outstanding will also constitute the transfer
of the Rights associated with the Common Shares represented by such
certificate.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on March 1, 2008, unless earlier
redeemed by the Company as described below or unless a transaction under
Section 13(d) of the Rights Agreement has occurred.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and thereafter, the separate
Rights Certificates alone will represent the Rights. Except as otherwise
determined by the Board of Directors, and except in connection with the
exercise of employee stock options or stock appreciation rights or under any
other benefit plan for employees or directors or in connection with the
exercise of warrants or conversion of convertible securities, only Common
Shares issued after March 1, 1998 and prior to the Distribution Date will be
issued with Rights.
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Except in the circumstances described below, after the
Distribution Date each Right will be exercisable into one one-thousandth of a
Preferred Share (a "Preferred Share Fraction"). Each Preferred Share Fraction
carries voting and dividend rights that are intended to produce the equivalent
of one Common Share. The voting and dividend rights of the Preferred Shares
are subject to adjustment in the event of dividends, subdivisions and
combinations with respect to the Common Shares of the Company. In lieu of
issuing certificates for Preferred Share Fractions which are less than an
integral multiple of one Preferred Share (i.e. 1,000 Preferred Share
Fractions), the Company may pay cash representing the current market value of
the Preferred Share Fractions.
In the event that at any time following the Stock
Acquisition Date, (i) the Company is the surviving corporation in a merger
with an Acquiring Person and its Common Shares remain outstanding, (ii) a
person, including affiliates and associates, becomes the beneficial owner of
more than 20% of the then outstanding Common Shares (unless such acquisition
is made pursuant to a tender or exchange offer for all outstanding Common
Shares upon terms and conditions determined by at least a majority of the
Continuing Directors (as defined below), after receiving advice from one or
more nationally recognized investment banking firms, to be in the best
interests of the Company and its stockholders (a "Qualifying Offer")), (iii)
an Acquiring Person engages in one or more "self-dealing" transactions, as set
forth in the Rights Agreement or (iv) during such time as there is an
Acquiring Person an event occurs that results in such Acquiring Person's
ownership interest being increased by more than one percent (1%) (e.g., a
reverse stock split), each holder of a Right will thereafter have the right to
receive, upon exercise, Common Shares (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to
approximately two times the exercise price of the Right. In lieu of requiring
payment of the Purchase Price upon exercise of the Rights following any such
event, the Company, by action of a majority of the Continuing Directors in
office at the time, may permit the holders simply to surrender the Rights, in
which event they will be entitled to receive Common Shares (and other
property, as the case may be) with a value of 50% of what could be purchased
by payment of the full Purchase Price. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in clauses (i), (ii),
(iii) or (iv) of this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person who was involved in the transaction giving rise to any
such event will be null and void. However, Rights are not exercisable
following the occurrence of any of the events set forth above until such time
as the Rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price of $90 per Right, each
Right not otherwise voided following an event set forth in the preceding
paragraph would entitle its holder to purchase $180 worth of Common Shares (or
other consideration, as noted above) for $90. Assuming that the Common Shares
had a per share value of $30 at such time, the holder of each valid Right
would be entitled to purchase six Common Shares for $90. Alternatively, the
Company could permit the holder to surrender each Right in exchange for stock
equivalent to three Common Shares (or cash or other securities with a value of
$90) without the payment of any consideration other than the surrender of the
Right.
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In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or other business
combination transaction in which the Company is not the surviving corporation
(other than a merger that follows a Qualifying Offer), or (ii) 50% or more of
the Company's assets or earning power is sold or transferred, each holder of a
Right (except Rights that previously have been voided as set forth above)
shall thereafter have the right to receive, upon exercise, common shares of
the acquiring company having a value equal to approximately two times the
exercise price of the Right. Again, provision is made to permit, at the option
of the Company, surrender of the Rights in exchange for one-half of the value
otherwise purchasable. The events set forth in this paragraph and in the
second preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number of Units of
Preferred Shares or other securities or property issuable upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) if holders of the Preferred
Shares are granted certain rights or warrants to subscribe for Preferred
Shares or convertible securities at less than the current market price of the
Preferred Shares, or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular quarterly
dividends) or of subscription rights or warrants (other than those referred to
above). Similar dilution protection exists with respect to transactions
affecting Common Shares similar to those described in clauses (i) - (iii)
above.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading date prior to the date of exercise.
At any time until ten days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a price
of $.01 per Right. That ten day redemption period may be extended by the Board
of Directors so long as the Rights are still redeemable. Under certain
circumstances set forth in the Rights Agreement, the decision to redeem will
require the concurrence of a majority of the Continuing Directors (as defined
below). Immediately upon the action of the Board of Directors ordering
redemption of the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
The term "Continuing Directors" means any member of the
Board of Directors of the Company who was a member of the Board prior to the
date of the Rights Agreement, and any person who is subsequently elected to
the Board if such person's nomination for election to the Board is recommended
or approved by a majority of the Continuing Directors, but shall not include
an Acquiring Person, or an affiliate or associate of an Acquiring Person, or
any representative of the foregoing entities.
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Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the distribution
of the Rights will not be taxable to stockholders or to the Company,
stockholders may, depending upon the circumstances, recognize taxable income
in the event that the Rights become exercisable for Preferred Shares (or other
consideration) of the Company or for common shares of the acquiring company as
set forth above.
Other than those provisions relating to certain principal
economic terms of the Right, any of the provisions of the Rights Agreement may
be amended by the Board of Directors of the Company prior to the Distribution
Date. After the Distribution Date, the provisions of the Rights Agreement may
be amended by the Board (in certain circumstances with the concurrence of a
majority of the Continuing Directors) in order to cure any ambiguity, to make
changes that do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or to shorten or lengthen
any time period under the Rights Agreement; provided, however, that no
amendment to adjust the time period governing redemption shall be made at such
time as the Rights are not redeemable.
A copy of the Rights Agreement is being filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement
on Form 8-A. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit
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4 Rights Agreement, dated as of March 1, 1998,
between Philadelphia Suburban Corporation and
ChaseMellon Shareholder Services, L.L.C., as
Rights Agent.
99 Press Release dated February 3, 1998.
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Signature
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PHILADELPHIA SUBURBAN CORPORATION
By: /s/ Roy H. Stahl
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Name: Roy H. Stahl
Title: Vice President and General Counsel
Dated: February 6, 1998
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Exhibit No. Exhibit Page
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4 Rights Agreement, dated as of March 1, 1998,
between Philadelphia Suburban Corporation and
ChaseMellon Shareholder Services, L.L.C., as
Rights Agent.
99 Press Release dated February 3, 1998.
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