EXHIBIT (a)(1)(A)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SCHUFF INTERNATIONAL, INC.
AT
$2.17 PER SHARE
BY
SCHUFF ACQUISITION CORP.
A CORPORATION WHOLLY OWNED BY
DAVID A. SCHUFF
SCOTT A. SCHUFF
AND THEIR AFFILIATES
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
DENVER TIME, ON FRIDAY, MAY 28, 2004, UNLESS THE OFFER IS EXTENDED.
Schuff Acquisition Corp., an Arizona corporation ("SAC") to be wholly
owned by David A. Schuff, Chairman of the Board of Schuff International, Inc.,
Scott A. Schuff, President and Chief Executive Officer of Schuff International
and their affiliates, the Schuff Irrevocable Trust, the Scott A. Schuff
Irrevocable Trust, and 19th Avenue/Buchanan Limited Partnership, an Arizona
limited partnership, is offering to purchase at a price of $2.17 per share all
outstanding shares of common stock of Schuff International ("Offer"), on the
terms and subject to the conditions specified in this Offer to Purchase and
related Letter of Transmittal.
A summary of the principal terms of the Offer appears on pages (iii)
through (vii). You should read this entire document carefully before deciding
whether to tender your shares.
SAC's offer is conditioned on, among other things, the tender of a
sufficient number of Schuff International shares such that, after the Schuff
International shares are purchased pursuant to the Offer, SAC would own at least
90% of the outstanding Schuff International common stock (the "Minimum
Condition"). After contribution by David A. Schuff, Scott A. Schuff, and their
affiliates of shares of common stock of Schuff International to SAC, which is
expected to occur prior to the purchase of shares pursuant to this Offer, SAC
will own approximately 71% of the outstanding common stock of Schuff
International. This Offer is also subject to certain other conditions described
in Section 11, "The Offer - - Certain Conditions of the Offer."
If you have questions about the Offer, you may call Julie Hall, the
Information Agent for the Offer, at the address and telephone number set forth
on the back cover of this Offer to Purchase. You may also obtain additional
copies of this Offer to Purchase, the related Letter of Transmittal and the
Notice of Guaranteed Delivery from the Information Agent or your broker, dealer,
commercial bank, trust company, or other nominee.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION; PASSED UPON THE
MERITS OR FAIRNESS OF SUCH TRANSACTION; OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS OFFER TO PURCHASE IS APRIL 30, 2004
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
SUMMARY TERM SHEET ....................................................................................... (iii)
IMPORTANT ................................................................................................ 1
INTRODUCTION ............................................................................................. 2
SPECIAL FACTORS .......................................................................................... 4
Background of the Offer ......................................................................... 4
Reasons for and purpose of the Offer and the Merger ............................................. 5
SAC's Plan for Schuff International ............................................................. 6
SAC's Position Regarding the Fairness of the Offer and the Merger ............................... 7
Schuff International Financial Projections ...................................................... 8
Transactions Between David A. Schuff, Scott A. Schuff, Their Affiliates, and Schuff International 9
Conduct of Schuff International's Business If The Offer Is Not Completed ........................ 10
THE TENDER OFFER ......................................................................................... 11
1. Terms of the Offer .......................................................................... 11
2. Acceptance for Payment and Payment for Shares ............................................... 12
3. Procedures for Tendering Shares ............................................................. 13
4. Rights of Withdrawal ........................................................................ 16
5. Certain Federal Income Tax Consequences of the Offer ........................................ 16
6. Price Range of Shares; Dividends; Ownership of and Transactions in Shares ................... 17
7. Certain Information Concerning Schuff International ......................................... 19
8. Certain Information Concerning SAC .......................................................... 23
9. Merger; Dissenters' Rights; Rule 13e-3 ...................................................... 24
10. Source and Amount of Funds .................................................................. 26
11. Certain Conditions of the Offer ............................................................. 27
12. Dividends and Distributions ................................................................. 28
13. Certain Legal Matters ....................................................................... 29
14. Certain Effects of the Offer ................................................................ 30
15. Fees and Expenses ........................................................................... 31
16. Miscellaneous ............................................................................... 32
SCHEDULE A
Section 262 of the General Corporation Law of the State of Delaware
Relating To The Rights of Dissenting Stockholders
ii
SUMMARY TERM SHEET
Schuff Acquisition Corp. ("SAC" or "we" or "us") is offering to purchase
all of the outstanding shares of common stock of Schuff International, Inc. for
$2.17 net per share, in cash. This summary highlights important information from
this Offer to Purchase but is intended to be an overview only. We urge you to
read carefully the remainder of this Offer to Purchase and the related Letter of
Transmittal. We have included section references to direct you to a more
complete description of the topics contained in this summary.
- Schuff Acquisition Corp., an Arizona corporation ("SAC") to be
wholly owned by David A. Schuff, Chairman of the Board of
Schuff International, Scott A. Schuff, President and Chief
Executive Officer of Schuff International, and their
affiliates, the Schuff Irrevocable Trust, the Scott A. Schuff
Irrevocable Trust, and 19th Avenue/Buchanan Limited
Partnership, an Arizona limited partnership, is offering to
purchase all of the outstanding shares of common stock of
Schuff International (the "Shares"). Prior to the purchase of
Shares pursuant to this Offer, each of David A. Schuff, Scott
A. Schuff, and their affiliates listed above will contribute
his or its shares for a proportional ownership interest in
SAC. SAC was formed by the persons and entities listed above
for purposes of making the Offer and taking Schuff
International private or removing the Shares from the public
trading markets. The tender price is $2.17 per share in cash
(the "Offer Price"), without interest, less any required
withholding taxes. The Offer Price represents a 11% premium to
the closing price of Schuff International common stock on
April 27, 2004, the last full trading day before the public
announcement of SAC's proposal to acquire the Shares.
- Currently, each of David A. Schuff and Scott A. Schuff,
together with their affiliates, own 36.1% and 35.0%,
respectively, of the common stock of Schuff International.
- This is a "going private" transaction. If the Offer is
successful and SAC owns at least 90% of the Shares, SAC will
cause Schuff International to merge with SAC (the "Merger")
and, as a result,
o SAC will own all of the equity interests in Schuff
International;
o You will no longer have any interest in Schuff
International's future earnings or growth;
o Schuff International will no longer be a public company,
and its financial statements and periodic reports would
no longer be publicly available; and
o The Shares would no longer trade on the American Stock
Exchange.
- After consummation of the Offer and prior to the Merger, SAC
expects that Schuff International will terminate the listing
of its common stock on the American Stock Exchange one
business day prior to the effective time of the Merger so as
to provide any remaining Schuff International stockholders
with statutory dissenters' rights under Delaware law.
- SAC is not required to complete the Offer unless a sufficient
number of Schuff International shares are tendered such that,
after shares are purchased pursuant to the Offer, SAC would
own at least 90% of the Shares (the "Minimum Condition").
After contribution by David A. Schuff, Scott A. Schuff, and
their affiliates of shares of common stock of Schuff
International to SAC, which is expected to occur immediately
prior to the purchase of shares pursuant to this Offer, SAC
will own approximately 71% of the outstanding common stock of
Schuff International. According to publicly available
information, as of April 27, 2004, Schuff International had
approximately 7,063,122 shares of common stock outstanding.
Based on the foregoing, if SAC were to purchase approximately
1,334,610 shares pursuant to the Offer, the Minimum Condition
would be met. SAC also has the right to waive or reduce the
number of Schuff International shares that are required to be
tendered in the Offer, subject to compliance with the
applicable sections of the Securities Exchange Act of 1934, as
amended. In no event, however, will SAC purchase Schuff
International shares in the Offer if less than a majority of
the outstanding Schuff International shares, excluding shares
beneficially owned by SAC and the executive officers and
directors of Schuff International, are tendered in the Offer.
Based on publicly available information, the tender of
958,070 shares held by stockholders other than SAC and Schuff
International's executive officers and directors will satisfy
this condition.
iii
- SAC has commenced this Offer without obtaining the prior
approval of the board of directors or stockholders of Schuff
International and neither of such approvals is required for
the commencement and consummation of the Offer. A special
committee of the board of directors Schuff International,
consisting of the independent members of the board of
directors, is required to advise the stockholders of Schuff
International of its position on the Offer within ten business
days of the date of this Offer to Purchase.
- SAC will pay to those stockholders that do not tender their
shares and do not exercise their dissenters' rights the same
consideration in the Merger as SAC pays in the Offer.
- Stockholders that sell their shares in the Offer will receive
cash for their shares sooner than stockholders that wait for
the Merger to occur. Stockholders that sell their shares in
the Offer will not be entitled to assert dissenters' rights
and obtain payment of the fair value of their shares under
Delaware law. Any stockholders that do not tender their shares
and dissent from the Merger may exercise dissenters' rights in
accordance with Section 262 of the Delaware General
Corporation Law, or DGCL. See Section 9, "The Tender
Offer--Merger; Dissenters' Rights; Rule 13e-3," beginning on
page 24 for more information on dissenters' rights.
QUESTIONS AND ANSWERS ABOUT THE TENDER OFFER
WHO IS OFFERING TO BUY MY SECURITIES?
Schuff Acquisition Corp., an Arizona corporation ("SAC") to be wholly
owned by David A. Schuff, Chairman of the Board of Schuff International,
Scott A. Schuff, President and Chief Executive Officer of Schuff
International, and their affiliates, the Schuff Irrevocable Trust, the
Scott A. Schuff Irrevocable Trust, and 19th Avenue/Buchanan Limited
Partnership, an Arizona limited partnership, and formed for the purpose of
making the Offer, is offering to buy your Schuff International shares as
described in this document. See Section 8, "The Tender Offer - - Certain
Information Concerning SAC," for further information about SAC and its
stockholders.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
SAC is offering to buy all of the shares of common stock of Schuff
International not currently owned by David A. Schuff, Scott A. Schuff, and
their affiliates. For information about the conditions to the Offer, see
Section 11, "The Tender Offer - - Certain Conditions of the Offer."
HOW MUCH IS SAC OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
SAC is offering to pay $2.17 in cash, without interest, less any required
withholding taxes, for each share of Schuff International. The Offer Price
represents a 11% premium to the closing price of Schuff International
common stock on April 27, 2004, the last full trading day before the
public announcement of SAC's intention to purchase the shares of Schuff
International's common stock not owned by David A. Schuff, Scott A.
Schuff, and their affiliates. See Section 1, "The Tender Offer - - Terms
of the Offer," for information about the terms of the Offer.
WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
If you are the record owner of your shares and you tender your shares to
SAC in the Offer, you will not have to pay brokerage fees or similar
expenses. If you own your shares through a broker or other nominee, and
your broker or nominee tenders your shares on your behalf, it may charge
you a fee for doing so. You should consult your broker or nominee to
determine whether any charges will apply. See Section 3, "The Tender Offer
- - Procedure for Tendering Shares."
HOW WILL U.S. TAXPAYERS BE TAXED FOR U.S. FEDERAL INCOME TAX PURPOSES?
If you are a U.S. taxpayer, your receipt of cash for shares of Schuff
International in the Offer will be a taxable transaction for U.S. federal
income tax purposes. You will generally recognize gain or loss in an
iv
amount equal to the difference between (i) the cash you receive in the
Offer and (ii) your adjusted tax basis in the shares of Schuff
International you sell in the Offer. That gain or loss will be a capital
gain or loss if the shares are a capital asset in your hands and will be
long-term capital gain or loss if the shares have been held for more than
one year at the time the Offer is completed. You are urged to consult your
own tax advisor regarding the particular tax consequences of the Offer to
you. See Section 5, "The Tender Offer - - Certain Federal Income Tax
Consequences of the Offer."
DOES SAC HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Yes. The Offer is not conditioned on SAC or its affiliates obtaining any
financing. SAC will fund the purchase of the Shares through financing
obtained by 19th Avenue/Buchanan Limited Partnership through its credit
and security agreement with Wells Fargo, Inc. The term facility consists
of a $7.0 million secured real estate loan, secured by cash and discounted
marketable securities of up to $1.5 million, first deeds of trust on real
estate owned by 19th Avenue/Buchanan Limited Partnership, and assignments
of rents and assumption of lease agreements from Schuff International. The
first advance of $3.0 million under the credit facility has been funded,
which refinanced existing indebtedness of 19th Avenue/Buchanan Limited
Partnership. The second advance of $4.0 million under the credit facility
will be subject to the satisfaction of certain closing conditions,
including (a) evidence that all filings required to be made by SAC in
connection with this Offer have been made with the SEC, and (b) evidence
that no injunction or stop order has been issued with respect to this
Offer or the Merger by any court or agency having jurisdiction.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
The Offer is conditioned on, among other things, the tender of a
sufficient number of Schuff International shares such that, after the
Schuff International shares are purchased pursuant to the Offer, SAC would
own at least 90% of the Shares. After contribution by David A. Schuff,
Scott A. Schuff, and their affiliates of shares of common stock of Schuff
International to SAC, which is expected to occur immediately prior to the
purchase of shares pursuant to this Offer, SAC will own approximately 71%
of the outstanding common stock of Schuff International. See the
"Introduction" and Section 11, "The Tender Offer - - Certain Conditions of
the Offer," for a complete description of all of the conditions to which
the Offer is subject. In no event, however, will SAC purchase Schuff
International shares in the Offer if less than a majority of the
outstanding Schuff International shares, excluding shares beneficially
owned by SAC and the executive officers and directors of Schuff
International, are tendered in the Offer.
WHY IS SAC MAKING THIS OFFER?
SAC is making the Offer because it believes that it would enhance the
investment in Schuff International if Schuff International were to go
private rather than remain as a publicly traded company. A more complete
discussion of the reasons for SAC's beliefs can be found under "Special
Factors - - Reasons for and Purpose of the Offer and the Merger," and " --
SAC's Plans for Schuff International."
IS THIS OFFER SUPPORTED BY THE SCHUFF INTERNATIONAL BOARD OF DIRECTORS?
SAC commenced this Offer without obtaining the prior approval of the
Schuff International board of directors. Schuff International's board of
directors has established a special committee of directors not employed by
or affiliated with Schuff International or SAC to evaluate the Offer. As
of the date of this Offer to Purchase, neither the special committee nor
Schuff International's board of directors as a whole, to SAC's knowledge,
has determined whether it would recommend that stockholders tender their
shares in the Offer. The special committee or Schuff International's board
of directors is required to communicate its determination in this regard
to the stockholders within ten business days of the date of this Offer to
Purchase. However, the approval of the special committee of the board of
directors of Schuff International is not required for stockholders to
tender their shares or for SAC to consummate the Offer.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER MY SHARES IN THE INITIAL OFFERING
PERIOD?
You may tender your shares under the Offer until 5:00 p.m., Denver Time,
on Friday, May 28, 2004, which is the scheduled expiration date of the
offering period, unless SAC decides to extend the offering period or
provide a subsequent offering period. See Section 3, "The Offer - -
Procedure for Tendering Shares," for information about tendering your
shares.
v
CAN THE OFFER BE EXTENDED AND HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
Yes, SAC may elect to extend the Offer. SAC can do so by issuing a press
release no later than 9:00 a.m., Eastern Standard Time, on the next
business day following the scheduled expiration date of the Offer. The
press release would state the approximate number of shares tendered as of
that time and would announce the extended expiration date. See Section 1,
"The Offer - Terms of the Offer," for information about extension of the
Offer.
WILL THERE BE A SUBSEQUENT OFFERING PERIOD?
Following SAC's purchase of all shares tendered during the offering
period, SAC may elect to provide a subsequent offering period of at least
three business days, during which time stockholders whose shares have not
been accepted for payment may tender their shares and receive the Offer
consideration. Tenders during any subsequent offering period may not be
withdrawn for any reason. SAC is not permitted under the federal
securities laws to provide a subsequent offering period of more than 20
business days. See Section 1 and 4, "The Tender Offer - - Terms of the
Offer," and "- - Rights of Withdrawal," respectively, for more information
concerning any subsequent offering period.
HOW DO I TENDER MY SHARES?
If you hold the certificates for your shares, you should complete the
enclosed Letter of Transmittal and enclose all the documents required by
it, including your certificates, and send them to the Depositary at the
address listed on the back cover of this document. If your broker holds
your shares for you in "street name," you must instruct your broker to
tender your shares on your behalf. In any case, the Depositary must
receive all required documents before the expiration date of the Offer,
which is Friday, May 28, 2004, unless extended. If you cannot comply
with any of these procedures, you still may be able to tender your shares
by using the guaranteed delivery procedures described in this document.
See Section 3, "The Tender Offer - - Procedure for Tendering Shares," for
more information on the procedures for tendering your shares.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
The tender of your shares may be withdrawn at any time before the
expiration date of the Offer. There will be no withdrawal rights during
any subsequent offering period. See Section 4, "The Tender Offer - -
Rights of Withdrawal," for more information.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
You (or your broker if your shares are held in "street name") must notify
the Depositary at the address and telephone number listed on the back
cover of this document, and the notice must include the name of the
stockholder that tendered the shares, the number of shares to be
withdrawn, and the name in which the tendered shares are registered. For
complete information about the procedures for withdrawing your previously
tendered shares, see Section 4, "The Offer - - Rights of Withdrawal."
IF SAC CONSUMMATES THE TENDER OFFER, WHAT ARE ITS PLANS WITH RESPECT TO ALL THE
SHARES THAT ARE NOT TENDERED IN THE OFFER?
If the Offer is successful and SAC owns at least 90% of the Shares, SAC
will cause Schuff International to merge and pay to the Schuff
International stockholders who have not tendered their shares the same
consideration SAC paid for shares in the Offer. SAC expects that Schuff
International will have a right to dissent and demand payment of the fair
value of their shares under Delaware law. If the Minimum Condition is not
satisfied, SAC does not presently intend to acquire any shares.
WHEN DOES SAC EXPECT TO COMPLETE THE OFFER AND THE MERGER?
SAC hopes to complete the Offer on Friday, May 28, 2004, the initial
scheduled expiration date. However, SAC may extend the Offer if any
conditions to the Offer have not been satisfied at the scheduled
vi
expiration date or if SAC is required to extend the Offer by the rules of
the SEC. SAC expects to complete the Merger approximately one month after
the completion of the Offer.
WILL I HAVE THE RIGHT TO ASSERT DISSENTERS' RIGHTS FOR MY SCHUFF INTERNATIONAL
SHARES?
If you tender your Schuff International shares in the Offer, you will not
be entitled to exercise statutory dissenters' rights under Delaware law
and have the right to demand payment of fair value for your shares under
Delaware law. If you do not tender your shares in the Offer and the Merger
occurs, you will have a statutory right to dissent and demand payment of
the fair value of your Schuff International shares plus accrued interest,
if any, from the date of the Merger. The value received upon exercise of
dissenters' rights may be more than, less than, or the same as the cash
consideration SAC pays in the Offer and the Merger. See Section 9, "The
Tender Offer - - Merger; Dissenters' Rights; Rule 13e-3."
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If you do not tender in the Offer and the Merger occurs, you will receive
the same consideration as paid in the tender offer, subject to any right
to dissent and demand payment of fair value of your shares under Delaware
law. If you exercise your dissenters' rights, you will not receive the
Merger consideration unless you waive or effectively lose your dissenters'
rights. If the Merger does not occur, SAC's purchase of shares will reduce
the number of shares that might otherwise trade publicly and may reduce
the number of holders of shares. These events could adversely affect the
liquidity and trading price of the remaining shares held by the public.
The shares may no longer be listed on the American Stock Exchange. Also,
Schuff International may no longer be required to make filings with the
SEC or comply with the SEC's rules relating to publicly held companies.
See Section 14, "The Tender Offer - - Certain Effects of the Offer," for
complete information about the effect of the Offer on your shares.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On April 27, 2004, the last full trading day prior to the public
announcement of SAC's intention to purchase all of the shares of Schuff
International common stock not owned by them, the reported closing price
on the American Stock Exchange was $1.95 per share. You should obtain a
recent market quotation for shares of the common stock of Schuff
International in deciding whether to tender your shares. See Section 6,
"The Tender Offer - - Price Range of Shares; Dividends; Ownership of and
Transactions in Shares," for recent high and low sales prices for the
shares.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
If you have questions or you need assistance you should contact Julie Hall
of Schuff Acquisition Corp., the Information Agent for the Offer, at the
following address and telephone number: 1841 West Buchanan, Phoenix,
Arizona 85007; phone: (602) 452-4497.
vii
IMPORTANT
Any Schuff International stockholder desiring to tender all or any portion
of such stockholder's Schuff International shares should, as applicable
(1) complete and sign the Letter of Transmittal, or a facsimile thereof,
in accordance with the instructions in the Letter of Transmittal,
including any required signature guarantees, and mail or deliver to
Computershare Trust Company, Inc. (the "Depositary") the Letter of
Transmittal or such facsimile with such stockholder's certificates
for the tendered Schuff International shares and any other required
documents, or
(2) follow the procedure for book-entry transfer of Schuff International
shares set forth in Section 3, "The Tender Offer - - Procedure for
Tendering Shares," or
(3) request such stockholder's broker, dealer, commercial bank, trust
company, or other nominee to tender shares for such stockholder.
A stockholder whose Schuff International shares are registered in the name
of a broker, dealer, commercial bank, trust company, or other nominee must ask
the broker, dealer, commercial bank, trust company, or other nominee to tender
Schuff International shares as the registered stockholder.
A stockholder that desires to tender Schuff International shares and whose
certificates for such shares are not immediately available, or who cannot comply
with the procedure for book-entry transfer on a timely basis, may tender such
Schuff International shares by following the procedure for guaranteed delivery
set forth in Section 3, "The Tender Offer - - Procedure for Tendering Shares."
Questions and requests for assistance may be directed to Julie Hall of
Schuff Acquisition Corp., as Information Agent for this offer, at its address
and telephone number set forth on the back cover of this Offer to Purchase.
Requests for additional copies of this Offer to Purchase and the Letter of
Transmittal may be directed to the Information Agent or to the brokers, dealers,
commercial banks, or trust companies holding your shares.
1
TO: The Holders of Common Stock
of Schuff International, Inc.:
INTRODUCTION
Schuff Acquisition Corp., an Arizona corporation ("SAC") to be wholly
owned by David A. Schuff, the Chairman of the Board of Directors of Schuff
International, Scott A. Schuff, the President and Chief Executive Officer of
Schuff International, the Schuff Irrevocable Trust, the Scott A. Schuff
Irrevocable Trust, and 19th Avenue/Buchanan Limited Partnership, an Arizona
limited partnership, is offering to purchase all of the outstanding shares of
common stock, par value $0.001 per share (the "Shares"), of Schuff International
at a purchase price of $2.17 per share, net to the seller in cash, without
interest (the "Offer Price"), on the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal (which
together constitute the "Offer"). The Offer Price represents a 11% premium to
the closing price of Schuff International common stock on April 27, 2004, the
last full trading day before the public announcement of SAC's proposal to
acquire the Shares.
If you are a record owner of Shares, you will not be required to pay
brokerage fees or commissions or, except as described in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the transfer and sale of Shares
in the Offer. Stockholders that hold their Shares through bankers or brokers
should check with such institutions as to whether they charge any service fee.
However, if you do not complete and sign the Substitution Form W-9 that is
included in the Letter of Transmittal, you may be subject to a required backup
U.S. federal income tax withholding of 30% of the gross proceeds payable to you.
SAC will pay all charges and expenses of Computershare Trust Company, Inc., as
depositary (the "Depositary"), and Julie Hall of SAC, as Information Agent (the
"Information Agent"), incurred in connection with the Offer.
SAC IS NOT REQUIRED TO COMPLETE THE OFFER UNLESS A SUFFICIENT NUMBER OF
SHARES ARE TENDERED THAT, AFTER THE SHARES ARE PURCHASED PURSUANT TO THE OFFER,
SAC WOULD OWN AT LEAST 90% OF THE SHARES (THE "MINIMUM CONDITION"). SAC RESERVES
THE RIGHT TO WAIVE OR REDUCE THE MINIMUM CONDITION AND TO ELECT TO PURCHASE A
LESSER NUMBER OF SHARES, SUBJECT TO COMPLIANCE WITH THE APPLICABLE SECTIONS OF
THE SECURITIES EXCHANGE ACT OF 1934. IN NO EVENT, HOWEVER, WILL SAC PURCHASE
SCHUFF INTERNATIONAL SHARES IN THE OFFER IF LESS THAN A MAJORITY OF THE
OUTSTANDING SCHUFF INTERNATIONAL SHARES, EXCLUDING SHARES BENEFICIALLY OWNED BY
SAC AND THE EXECUTIVE OFFICERS AND DIRECTORS OF SCHUFF INTERNATIONAL, ARE
TENDERED IN THE OFFER. SAC'S OFFER IS ALSO SUBJECT TO OTHER TERMS AND
CONDITIONS. SEE SECTION 1, "THE TENDER OFFER - - TERMS OF THE OFFER," AND
SECTION 11, "THE TENDER OFFER - - CERTAIN CONDITIONS OF THE OFFER."
ACCORDING TO PUBLICLY AVAILABLE INFORMATION, AS OF APRIL 28, 2004, THERE
WERE APPROXIMATELY 7,063,122 SHARES OUTSTANDING. BASED ON THE FOREGOING, AFTER
THE CONTRIBUTION TO SAC OF SHARES OF COMMON STOCK OF SCHUFF INTERNATIONAL BY
DAVID A. SCHUFF, SCOTT A. SCHUFF, AND THEIR AFFILIATES AS DESCRIBED HEREIN, THE
PURCHASE BY SAC OF 1,334,610 SCHUFF INTERNATIONAL SHARES PURSUANT TO THE OFFER
WOULD SATISFY THE MINIMUM CONDITION. BASED ON PUBLICLY AVAILABLE INFORMATION, AS
OF APRIL 28, 2004, THE EXECUTIVE OFFICERS AND DIRECTORS OF SCHUFF INTERNATIONAL,
OTHER THAN DAVID A. SCHUFF, SCOTT A. SCHUFF, AND THEIR AFFILIATES, AS A GROUP,
HELD 124,785 SHARES. AS OF THE DATE HEREOF, SAC DOES NOT KNOW WHETHER OR NOT ANY
EXECUTIVE OFFICER, DIRECTOR, OR AFFILIATE OF SCHUFF INTERNATIONAL, OTHER THAN
DAVID A. SCHUFF, SCOTT A. SCHUFF, AND THEIR AFFILIATES, INTENDS TO TENDER SHARES
IN THE OFFER.
The purpose of the Offer is to acquire as many outstanding shares as
possible as a first step in acquiring the entire equity interest in Schuff
International. If the Offer is successful and SAC owns at least 90% of the
Shares, SAC will cause Schuff International to merge with and into SAC in a
short-form merger (the "Merger"). In the Merger, each outstanding Share that is
not owned by SAC (other than Shares held by stockholders who dissent from the
Merger and perfect their dissenters' rights under the Delaware General
Corporation Law, or DGCL) will be converted into the right to receive in cash an
amount per Share equal to the Offer Price, without interest, less any required
withholding tax upon the surrender of the certificate(s) representing such
Shares. Under the DGCL, if SAC owns at least 90% of the outstanding Shares, SAC
can consummate the Merger without a vote of the Schuff International
stockholders. See Section 8, "The Tender Offer - - Merger; Dissenters' Rights;
Rule 13e-3." As a result of the Offer and the Merger, Schuff International would
be wholly owned by the stockholders of SAC and the Shares would no longer trade
publicly on the American Stock Exchange.
The Schuff International board of directors must file with the Securities
and Exchange Commission and provide to the Schuff International stockholders a
"Solicitation/Recommendation Statement on Schedule 14D-9" within ten business
days from the date of this document. SAC expects that the Schuff International
board of directors will appoint a special committee of independent directors
authorized, as appropriate, to consider and to make recommendations with respect
to the Offer, including making a recommendation with respect to the position
that the full Schuff International board of directors should take in connection
with the Schedule 14D-9. SAC encourages you to review carefully the Schedule
14D-9 when it becomes available.
2
This Offer to Purchase and the documents incorporated by reference in this
Offer to Purchase include certain forward-looking statements. These statements
appear throughout this Offer to Purchase and include statements regarding SAC's
intent, belief, or current expectations of, including statements concerning
SAC's plans with respect to, the acquisition of all of the Shares. Such
forward-looking statements are not guarantees of future performance or events
and involve risks and uncertainties. Actual results may differ materially from
those described in such forward-looking statements as a result of various
factors. Factors that might affect such forward-looking statements include,
among other things:
- general economic, capital market, and business conditions;
- changes in government regulation;
- changes in tax law requirements, including tax rate changes,
new tax laws, and revised tax law interpretations;
- competitive factors in the industries in which Schuff
International operates;
- the ability to execute fully SAC's business strategy after
taking Schuff International private;
- the risks and uncertainties described in Schuff
International's filings with the SEC under the Exchange Act;
and
- terrorist attacks on the United States or international
targets.
There may also be other factors that are currently identifiable or
quantifiable, but may arise or become known in the future. Forward-looking
statements speak only as of the date the statement was made. SAC is not
obligated to update publicly or revise any forward-looking statements, whether
as a result of new information, future results, or for any other reason.
Except as otherwise indicated, the information contained in this Offer to
Purchase concerning Schuff International was obtained from publicly available
sources. SAC does not take any responsibility for the accuracy of such
information.
THE OFFER IS CONDITIONED UPON THE SATISFACTION OR WAIVER OF THE CONDITIONS
DESCRIBED IN SECTION 11, "THE TENDER OFFER - - CERTAIN CONDITIONS OF THE OFFER."
THE OFFER WILL EXPIRE AT 5:00 P.M., DENVER TIME, ON FRIDAY, MAY 28, 2004, UNLESS
SAC EXTENDS IT.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY
DECISION WITH RESPECT TO THE OFFER.
3
SPECIAL FACTORS
BACKGROUND OF THE OFFER
On August 23, 2002, the surety and Schuff International entered into a new
indemnity agreement that included an indemnity of 19th Avenue/Buchanan Limited
Partnership. The surety further required personal indemnities of David A. Schuff
and his wife and Scott A. Schuff, however, that personal indemnity was limited
to the assets of 19th Avenue/Buchanan Limited Partnership and its stock in
Schuff International. As a result of the decline in financial performance of
Schuff International, any further encumbrance of the 19th Avenue/Buchanan
Limited Partnership was prohibited without the consent of the surety. During
2003, as the financial performance of Schuff International continued to decline,
the surety sought to impose more strict collateral requirements on Schuff
International and to obtain full personal indemnities of David A. Schuff, Scott
A. Schuff, their spouses, 19th Avenue/Buchanan Limited Partnership, and their
affiliates, as set forth in an indemnity agreement dated November 5, 2003. Only
the personal residences of the Schuffs were excluded from the indemnity
agreement.
During 2003 and through the first quarter of 2004, the commercial
construction industry, the commercial steel fabrication business, and joist
manufacturing continued to experience difficult conditions as a result of the
macroeconomic climate and higher steel costs due to increased foreign demand for
scrap steel. These factors, as well as extreme pricing pressure from local and
regional competitors, resulted in longer selling cycles and reduced demand for
Schuff International's products and services. In addition, in an attempt to
maximize capacity utilization and cover fixed operating costs, Schuff
International completed projects at historically low gross margins. These
conditions directly effected the operating strategy of Schuff International in
all key areas, ultimately resulting in a record consolidated net loss before
cumulative effect of a change in accounting principle of $6.0 million, or
$(0.85) per share, for the year ended December 31, 2003.
From time to time during 2003, the Schuff family explored the possibility
of privatizing Schuff International, and included the surety in these informal
discussions. During September 2003, the surety and the Schuffs discussed a new
bonding program and increased personal requirements of the Schuffs. At that
time, the surety requested a letter from Scott A. Schuff requesting confirmation
of the August 23, 2002 indemnity agreement, and particularly to obtain the
Schuffs' assurance that they did not intend to use 19th Avenue/Buchanan Limited
Partnership as a source of funds in connection with a "going private"
transaction for Schuff International. Scott A. Schuff sent a letter to the
surety dated October 15, 2003 indicating the following: (a) privatization of
Schuff International was an option if the appropriate economic conditions
existed; (b) affirmation of the existing indemnity agreement with the surety;
and (c) the Schuff family would not further encumber 19th Avenue/Buchanan
Limited Partnership without consent of the surety. The current indemnity
agreement dated November 5, 2003, does not require the surety's consent to
encumber further the assets of 19th Avenue/Buchanan Limited Partnership, but
greatly expands the reach of the personal indemnities. As the founders of Schuff
International believe that such personal indemnities are inconsistent with the
nature of stock ownership in the company, Schuff International has become
concerned that the founders may not continue to personally indemnify the
obligations of Schuff International. The failure of the founders to personally
indemnify the obligations of Schuff International could have a material adverse
effect on its business and prospects.
During recent years, the price of, and amount of trading in, shares of
Schuff International common stock has steadily declined. As a result of the
added cost and management time associated with being a public company, in recent
years, management of Schuff International had begun questioning the value of
remaining a public company. Management of Schuff International, together with
its outside legal counsel and independent public accountants, have continued to
analyze the impact on Schuff International required by the Sarbanes-Oxley Act of
2002, together with recently adopted rules and regulations of the SEC and the
American Stock Exchange. These new laws and regulations have required increased
corporate responsibility and accountability, enhanced financial disclosure, and
increased audit costs. As a result, management has noted that it is becoming
more expensive for small corporations such as Schuff International to remain
publicly held and traded. As a result, management of Schuff International has
continued to explore strategic alternatives. Because they felt any such
transaction would have a substantial effect on the Schuff family (as the
majority stockholders of Schuff International), David A. Schuff, Scott A.
Schuff, and their affiliates engaged legal counsel to advise them regarding
possible strategic alternatives.
4
Notwithstanding Schuff International's current listing on the American
Stock Exchange, and because the trading volume of Schuff International's share
of common stock is relatively low, management of Schuff International has
recognized that its stockholders may not really have what is considered one of
the main advantages of owning shares in a publicly traded company - a liquid
market for their shares. Recently, it has been unlikely that Schuff
International could raise additional capital by issuing additional shares of
common stock because of the shares' low trading price, low trading volume, and
lack of liquidity. From time to time, management has been concerned that the
shares could eventually be delisted involuntarily because of Schuff
International's consistently decreasing market capitalization and stock price.
Thus, while management had expended substantial time and money to maintain its
status quo as a public company, it had been unable to realize the principle
benefits associated therewith.
During April 2004, certain principal stockholders of Schuff International
met with legal counsel to discuss the possibility of commencing a tender offer
to acquire the shares of Schuff International common stock not owned by David A.
Schuff, Scott A. Schuff, and their affiliates and subsequently deregister Schuff
International as a public company under the Exchange Act.
REASONS FOR AND PURPOSE OF THE OFFER AND THE MERGER
During April 2004, David A. Schuff, Scott A. Schuff, and their affiliates
developed a plan pursuant to which SAC would acquire all of the Shares of Schuff
International that David A. Schuff, Scott A. Schuff, and their affiliates did
not already own. In arriving at their decision to develop such a transaction,
SAC considered the factors set forth below. Except as otherwise indicated, the
discussion below assumes the contribution by David A. Schuff, Scott A. Schuff,
and their affiliates of shares of common stock of Schuff International to SAC,
which is expected to occur immediately prior to the purchase of shares pursuant
to this Offer.
Benefits and Detriments to Schuff International of the Offer and the
Merger. In determining whether to make the Offer and thereafter effect the
Merger, SAC considered the current and potential financial performance and
profitability of Schuff International. SAC also considered the following
factors:
- the elimination of the additional burdens on management associated
with public reporting and other tasks resulting from Schuff
International's public company status, including, for example, the
dedication of time and resources by Schuff International's
management and board of directors necessary to respond to
stockholder and analyst inquiries and maintain investor and public
relations;
- the decrease in costs, particularly those associated with being a
public company (such as the costs, including independent accounting
firm fees for audit services and legal fees, associated with filing
quarterly, annual, and other periodic reports with the SEC, the
expense of publishing and distributing annual reports and proxy
statements to stockholders, and the increased costs anticipated as a
result of enactment of the Sarbanes-Oxley Act of 2002 and recently
enacted rules and regulations of the SEC);
- the possibility that the founders of Schuff International, who have
personally guaranteed certain obligations of Schuff International,
may not continue to guaranty such obligations, the failure of which
could have a material adverse effect on Schuff International's
business and prospects;
- the greater ability of Schuff International's management to focus on
long-term business goals, as opposed to quarterly earnings, as a
non-reporting company, particularly in light of the volatility of
Schuff International's quarterly results;
- public capital market trends affecting micro-cap companies,
including perceived lack of interest by institutional investors in
companies with a limited public float; and
- the reduction in the amount of public information available to
competitors about Schuff International's businesses that would
result from the termination of Schuff International's obligations
under the SEC's reporting requirements under the Securities and
Exchange Act of 1934.
5
Consideration of Liquidity and Share Price; Timing. SAC considered the
relatively low volume of trading in the Shares and considered that the Offer and
the Merger would result in immediate liquidity for the stockholders that are
unaffiliated with David A. Schuff, Scott A. Schuff, and their affiliates. SAC
also considered recent trends in the price of the Shares.
Alternative Structure Considered. Prior to April 2004, SAC considered
alternatives to structuring the transaction as a tender offer followed by a
short-form merger. In determining to structure the transaction as a tender offer
followed by a short-form merger, as opposed to a long-form merger, SAC
considered the following:
- In the Offer, each unaffiliated stockholder would individually
determine whether to accept cash in exchange for their Shares.
- Unless at least 90% of the outstanding Shares are owned by SAC, it
could not effect a short-form merger.
- Unlike a long-form merger, the approval of Schuff International's
board of directors is not required to complete a short-form merger.
- A tender offer followed by a later short-form merger would permit
SAC to acquire the minority interest in Schuff International on an
expeditious basis and provide the stockholders that are unaffiliated
with SAC with a prompt opportunity to receive cash in exchange for
their Shares.
- Unaffiliated stockholders that do not tender their Shares in the
Offer could (upon delisting of Schuff International's common stock
from the American Stock Exchange) preserve their dissenters' rights
in the merger under Section 262 of the DGCL.
After discussing among themselves the advantages and disadvantages of the
various structures for acquiring the minority stockholder interest in Schuff
International, including the alternative method of acquiring such interests
through a long-form merger, SAC decided to structure the transaction as a tender
offer for all of the Shares of Schuff International not already owned by David
A. Schuff, Scott A. Schuff, or their affiliates, to be followed by a short-form
merger.
SAC'S PLANS FOR SCHUFF INTERNATIONAL
If the Offer is successful and SAC obtains at least 90% of the outstanding
Shares, SAC will effect the Merger. As a result of the Offer and the Merger,
Schuff International will be wholly owned by SAC and the Shares would no longer
trade publicly on any stock exchange.
If, after the Offer is completed but prior to consummation of the Merger,
the aggregate ownership by SAC and its affiliates of the outstanding Shares
should fall below 90% for any reason, SAC may decide to acquire additional
Shares in the open market or in privately negotiated transactions to the extent
required for such ownership to equal or exceed 90%. Any such purchases would be
made at market prices or privately negotiated prices at the time of purchase,
which may be higher or lower than or the same as the Offer Price.
Following completion of the Offer and prior to the Merger, SAC expects
that Schuff International will cause the Shares to be delisted from the American
Stock Exchange. Accordingly, stockholders who are not affiliated with SAC will
not have the opportunity to participate in the earnings and growth of Schuff
International and will not have any right to vote on corporate matters.
Similarly, after completion of the Merger, former stockholders will not face the
risk of losses resulting from Schuff International's operations or from any
decline in the value of Schuff International.
Except as otherwise described in this Offer to Purchase, SAC has no
current plans or proposals or negotiations that relate to or would result in any
of the following:
- an extraordinary corporate transaction, such as a merger
(other than the Merger described in this document),
reorganization, or liquidation involving Schuff International
or any of its subsidiaries;
6
- any purchase, sale, or transfer of a material amount of assets
of Schuff International or any of its subsidiaries;
- any material change in Schuff International's present dividend
policy, indebtedness, or capitalization;
- any change in the management of Schuff International (other
than SAC's intention to appoint a board of directors
consisting solely of stockholders of SAC after the Merger) or
any change in any material term of the employment contract of
any executive officer;
- any other material change in Schuff International's corporate
structure or business; or
- any changes in Schuff International's charter, bylaws, or
other governing instruments or other actions that could impede
the acquisition of control of Schuff International.
SAC expressly reserves the right to change SAC's business plans with respect to
Schuff International based on future developments.
SAC'S POSITION REGARDING THE FAIRNESS OF THE OFFER AND THE MERGER
SAC believes that the Offer and the Merger are both financially and
procedurally fair to Schuff International's stockholders who are not affiliated
with David A. Schuff, Scott A. Schuff, and their affiliates. SAC bases its
belief on observations of the following factors, each of which supports its
views as to the fairness of the Offer and the Merger.
- Each Schuff International stockholder can individually determine
whether to tender Shares in the Offer, and SAC believes that the
Schuff International stockholders are capable of evaluating the
fairness of the Offer.
- The $2.17 per Share cash consideration payable in the Offer
represents a 11% premium to the closing price on April 27, 2004, the
last trading day prior to public announcement of SAC's proposal to
acquire the Shares. During fiscal year 2003, Schuff International's
common stock traded in the range of $1.20 - $2.05.
- The Offer is conditioned on the tender of at least a sufficient
number of Shares such that, after the Shares are purchased pursuant
to the Offer, SAC would own at least 90% of the Shares. Accordingly,
approximately 1,334,610 or 65% of the Shares not owned by SAC would
need to be tendered to satisfy the Minimum Condition. In no event,
however, will SAC purchase Schuff International shares in the Offer
if less than a majority of the outstanding Schuff International
shares, excluding shares beneficially owned by SAC and the executive
officers and directors of Schuff International, are validly tendered
in the Offer and not withdrawn. Approximately 958,070 shares held by
stockholders other than SAC and Schuff International's executive
officers and directors would need to be tendered to satisfy this
condition. Acceptance of the Offer by this many unaffiliated Schuff
International stockholders would provide meaningful procedural
protection for Schuff International stockholders.
- Schuff International stockholders that elect not to tender their
Shares in the Offer will receive the same consideration in the
Merger that SAC pays in the Offer, subject to their right to dissent
from the Merger and demand payment of the fair value of their Shares
under the DGCL.
- SAC believes the Offer Price to be fair considering Schuff
International's current financial performance, profitability, and
growth prospects. In addition, the Offer and the Merger would shift
the risk of the future financial performance of Schuff International
from the public stockholders, who do not have the power to control
decisions made as to Schuff International's business, entirely to
SAC, which would have the power to control Schuff International's
business and which has the resources to manage and bear the risks
inherent in the business over the long term.
- SAC considered the terms of the Offer and the Merger, including (1)
the amount and form of the consideration, (2) the tender offer
structure, which would provide an expeditious means for the Schuff
International stockholders to receive the Offer Price, (3) the
Minimum Condition, and (4) the requirement that a majority of the
outstanding shares, excluding the shares beneficially owned by SAC
and the executive officers and directors of Schuff International,
are validly tendered and not withdrawn.
7
- The Offer provides the opportunity for the Schuff International
stockholders to sell their shares without incurring brokerage and
other costs typically associated with market sales.
- SAC believes that each of the foregoing observations is relevant to
all of the Schuff International stockholders that are not affiliated
with SAC.
SAC determined that the following factors were not relevant indicators of
the value of the Shares:
- net book value of Schuff International; and
- to SAC's knowledge, no firm offers have been made with respect to
Schuff International regarding a merger or other business
combination, or the sale of all or of any substantial part of the
assets of securities of Schuff International and that Schuff
International's prior efforts to find a third party interested in
acquiring it were unsuccessful.
SAC also considered the following factors, each of which it considered
negative, in its deliberations concerning the fairness of the terms of the Offer
and the Merger:
- Following the successful completion of the Offer and the Merger, the
Schuff International stockholders would cease to participate in the
future earnings or growth, if any, of Schuff International or
benefit from increases, if any, in the value of their holdings of
Schuff International.
- The financial interests of SAC are adverse as to the Offer Price to
the financial interests of the Schuff International stockholders. In
addition, officers and directors of Schuff International have actual
or potential conflicts of interest in connection with the Offer and
the Merger.
The foregoing discussion of the information and factors considered by SAC
is not intended to be exhaustive but includes all material factors SAC
considered. In view of the variety of factors considered in connection with
their evaluation of the Offer and the Merger, SAC did not find it practicable
to, and did not, quantify or otherwise assign relative weights to the specific
factors considered in reaching their determination and recommendation. Neither
SAC, David A. Schuff, Scott A. Schuff, nor any of its or their affiliates has
received any report, opinion, or appraisal from an outside party that is
materially related to the Offer or Merger.
SAC's view as to the fairness of the Offer and the Merger should not be
construed as a recommendation as to whether or not you should tender your
Shares.
SCHUFF INTERNATIONAL FINANCIAL PROJECTIONS
Schuff International does not as a matter of course make public forecasts
as to future revenues, earnings, or other financial information. Schuff
International did, however, prepare certain projections in the normal course of
business that it provided to the board of directors in connection with its 2004
year plan. The projections set forth below are included in this document solely
because such information was provided to David A. Schuff and Scott A. Schuff in
their capacities as affiliates of Schuff International.
The projections set forth below were not prepared by Schuff International
with a view to public disclosure or compliance with published guidelines of the
SEC or the American Institute of Certified Public Accountants regarding
prospective financial information. In addition, the projections were not
prepared with the assistance of or reviewed, compiled, or examined by
independent accountants. While prepared with numerical specificity, the
projections reflect numerous estimates and hypothetical assumptions, all made by
Schuff International's management, with respect to industry performance, general
business, economic market, interest rate, and financial conditions and other
matters, which may not be accurate, may not be realized, and are inherently
subject to significant business, economic, and competitive uncertainties and
contingencies all of which are difficult to predict and many of which are beyond
Schuff International's control. Accordingly, there can be no assurance that the
assumptions made in preparing the projections set forth below will provide
accurate, and actual results may be materially different from those contained in
the projections set forth below.
8
In light of the uncertainties inherent in forward-looking information of
any kind, SAC cautions against undue reliance on this information. The inclusion
of this information should not be regarded as an indication that anyone who
received this information considered it a reliable predictor of future events,
and this information should not be relied on as such. While Schuff International
has prepared these projections with numerical specificity, neither SAC nor
Schuff International has made, and does not make, any representation to any
person that the projections will be met. Neither SAC nor Schuff International
intends to update or revise such projections to reflect circumstances existing
after the date they were prepared or to reflect the occurrence of future events,
unless required by law.
FISCAL YEAR
ENDING DECEMBER 31,
2004
-------------------
(in 000's)
Revenue.................................... $249,200
Gross profit............................... 36,600
Gross profit percentage.................... 14.7%
General and administrative expenses........ 24,800
Operating income........................... 11,800
Operating ratio............................ 4.7%
Net income........................ 1,200
Cash flows from operations................. $ 3,800
Total assets............................... 129,800
Equity..................................... 10,685
TRANSACTIONS BETWEEN DAVID A. SCHUFF, SCOTT A. SCHUFF, THEIR AFFILIATES, AND
SCHUFF INTERNATIONAL
MERGER OF SCHUFF STEEL COMPANY AND SCHUFF INTERNATIONAL. On June 29, 2001,
a holding company form of organizational structure was adopted by Schuff
International to provide a framework that generally allows for greater
administrative and operational flexibility. The new structure was consummated by
the merger of Schuff Merger Company into Schuff Steel Company, which was the
surviving corporation. Prior to the merger, Schuff Merger Company was a
wholly-owned subsidiary of Schuff International, Inc., a holding company and
initially a wholly owned subsidiary of Schuff Steel Company. As a result of the
merger, Schuff Merger Company ceased to exist, and Schuff Steel Company became a
wholly-owned subsidiary of Schuff International, Inc., with all of Schuff Steel
Company's outstanding common stock converted, on a share for share basis, into
common stock of Schuff International, Inc.
TRANSACTIONS WITH AFFILIATES. Since its inception, Schuff International
has maintained business relationships and engaged in certain transactions with
the affiliated companies and parties described below. Since the closing of its
initial public offering in July 1997, all transactions between Schuff
International and its affiliated entities, executive officers, directors, or
significant stockholders have been approved by a majority of the non-employee
directors of Schuff International. Schuff International also believes these
transactions were on terms that were no less favorable to it than it could have
obtained from non-affiliated parties.
Lease of Fabrication and Office Facilities. Schuff International leases
some of its fabrication and office facilities from 19th Avenue/Buchanan Limited
Partnership. The general and limited partners of the 19th Avenue/Buchanan
Limited Partnership are David A. Schuff, Scott A. Schuff, and certain of their
family members. David A. Schuff is a co-founder and the Chairman of the Board of
Directors of Schuff International, and Scott A. Schuff is a Director and the
President and Chief Executive Officer of Schuff International. David A. Schuff
and Scott A. Schuff together currently are the beneficial owners of
approximately 71% of the issued and outstanding common stock of Schuff
International.
Schuff International has three leases with the 19th Avenue/Buchanan
Limited Partnership for its principal fabrication and office facilities, the
property and equipment acquired in the 1997 acquisition of B&K Steel, and
additional office facilities adjacent to Schuff International's principal office
and shop facilities. Each lease has a 20-
9
year term and is subject to increases every five years based on increases in the
Consumer Price Index. Schuff International's annual rental payments for the
three leases were $1.0 million in 2003. During 2002, Schuff International
amended all three leases. The annual rent was reduced to $800,000 from $1.1
million. Effective July 1, 2003, the 19th Avenue/Buchanan Limited Partnership
increased the rent to the original amount.
CONDUCT OF SCHUFF INTERNATIONAL'S BUSINESS IF THE OFFER IS NOT COMPLETED
If the Offer is not completed because the Minimum Condition or another
condition is not satisfied or waived, SAC expects that Schuff International's
current management will continue to operate the business of Schuff International
substantially as currently operated. However, in the event, SAC elects to waive
the Minimum Condition and complete the Offer, SAC will re-evaluate the role of
Schuff International within the overall strategy being pursued by SAC. In
particular, SAC may consider the following:
- engaging in open market or privately negotiated purchases of
Shares to increase SAC's aggregate ownership of the Shares to
at least 90% of the then outstanding Shares and then effecting
a short-form merger;
- proposing that SAC and Schuff International enter into a
merger agreement, which would require the approval of Schuff
International board of directors (which probably would refer
the matter to a committee of independent directors) and the
vote of Shares in favor of the merger; or
- keeping outstanding the public minority interest in Schuff
International.
If SAC or its affiliates were to pursue any of these alternatives, it
might take considerably longer for the public stockholders of Schuff
International to receive any consideration for their Shares (other than through
sales in the open market) that if they had tendered their Shares in the Offer.
Any such transaction may result in proceeds per Share to the public stockholders
of Schuff International that are more or less than or the same as the Offer
Price.
10
THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions set forth in the Offer
(including the terms and conditions set forth in Section 11, "The Tender Offer -
- - Certain Conditions of the Offer," and if the Offer is extended or amended, the
terms and conditions of such extension or amendment (the "Offer Conditions")),
SAC will accept for payment, and pay for shares validly tendered on or prior to
the Expiration Date (as defined herein) and not withdrawn as permitted by
Section 4, "The Tender Offer - - Rights of Withdrawal." The term "Expiration
Date" means 5:00 p.m., Denver Time, on Friday, May 28, 2004, unless and until
SAC shall have extended the period for which the Offer is open, in which event
the term "Expiration Date" shall mean the latest time and date on which the
Offer, as so extended by SAC, shall expire. The period until 5:00 p.m. Denver
Time, on Friday, May 28, 2004, as such may be extended is referred to as the
"Offering Period."
Subject to the applicable rules and regulations of the SEC, SAC expressly
reserves the right, in its sole discretion, at any time or from time to time, to
extend the Offering Period by giving oral or written notice of such extension to
the Depositary. During any such extension of the Offering Period, all shares
previously tendered and not withdrawn will remain subject to the Offer, subject
to the right of a tendering stockholder to withdraw such stockholder's Shares.
See Section 4, "The Tender Offer - - Rights of Withdrawal."
Subject to the applicable regulations of the SEC, SAC also expressly
reserves the right, in its sole discretion, at any time or from time to time
prior to the Expiration Date,
- to delay acceptance for payment of or (regardless of whether
such Shares were theretofore accepted for payment) payment
for, any tendered Shares, or to terminate or amend the Offer
as to any Shares not then paid for, on the occurrence of any
of the event specified in Section 11, "The Tender Offer - -
Certain Conditions of the Offer;" and
- to waive any condition and to set forth or change any other
term and condition of the Offer except as otherwise specified
in Section 11, "The Tender Offer - - Certain Conditions of the
Offer;"
in each case, by giving oral or written notice of such delay, termination, or
amendment to the Depositary and by making a public announcement thereof. If SAC
accepts any shares for payment pursuant to the terms of the Offer, it will
accept for payment all Shares validly tendered during the Offering Period and
not withdrawn, and, on the terms and subject to the conditions of the Offer,
including but no limited to the Offer Conditions, it will promptly pay for all
Shares so accepted for payment and will immediately accept for payment and
promptly pay for all Shares as they are tendered in any Subsequent Offering
Period (as defined herein). SAC confirms that its reservation of the right to
delay payment for Shares that it has accepted for payment is limited by Rule
14e-1(c) under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after the
termination or withdrawal of a tender offer.
Any extension, delay, termination, or amendment of the Offer will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be issued no later than 9:00 a.m.,
Eastern Standard 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 Exchange Act, which require that any material change in the
information published, sent, or given to stockholders in connection with the
Offer be promptly disseminated to stockholders in a manner reasonably designed
to inform stockholders of such change) and without limiting the manner in which
SAC may choose to make any public announcement; SAC shall have no obligation to
publish, advertise, or otherwise communicate any such public announcement other
than by issuing a press release or other announcement.
If, during the Offering Period, SAC in its sole discretion, shall decrease
the percentage of Shares being sought or increase or decrease the consideration
offered to holders of Shares, such increase or decrease shall be applicable to
all holders whose Shares are accepted for payment pursuant to the Offer and, if
at the time notice of any increase or decrease is first published, sent or given
to the holders of Shares, the Offer is scheduled to expire at any time earlier
than the tenth business day from and including the date that such notice is
first so published, sent, or
11
given, the Offer will be extended until the expiration of such ten business day
period. SAC confirms that if it makes a material change in the terms of the
Offer or the information concerning the Offer, or if it waives a material
condition of the Offer, SAC will extend the Offer to the extent required by
Rules 14d-4(d), 14d-6, and 14e-1 under the Exchange Act. The minimum period
during which the Offer must remain open following material changes in the terms
of the Offer or information concerning the Offer, other than a change in price
or change in percentage of securities sought, will depend upon the relevant
facts and circumstances then existing, including the relative materiality of the
changed terms or information. In a public release, the SEC has stated its views
that an Offer must remain open a minimum period of time following a material
change in the terms of the Offer. The release states that an Offer should remain
open for a minimum of five business days from the date a material change is
first published or sent or given to security holders and that, if material
changes are made with respect to information that approaches the significance of
price and percentage of shares sought, a minimum of ten business days may be
required to allow for adequate dissemination to stockholders and investor
response. For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday, or federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, Eastern Standard Time.
SAC may elect, in its sole discretion, to provide a subsequent offering
period of three to 20 business days (the "Subsequent Offering Period"). A
Subsequent Offering Period, if one is provided, is not an extension of the
Offering Period. A Subsequent Offering Period would be in an additional period
of time, following the expiration of the Offering Period, in which stockholders
may tender Shares not tendered during the Offering Period. If SAC decides to
provide for a Subsequent Offering Period, SAC will make an announcement to that
effect by issuing a press release no later than 9:00 a.m., Eastern Standard
Time, on the next business day after the previously scheduled Expiration Date.
All Offer Conditions must be satisfied or waived prior to the commencement of
any Subsequent Offering Period. If SAC elects to provide a Subsequent Offering
Period, it expressly reserves the right, in its sole discretion, at any time or
from time to time, to extend the Subsequent Offering Period (not beyond a total
of 20 business days) by giving oral or written notice of such extension to the
Depositary. During a Subsequent Offering Period, tendering stockholders will not
have withdrawal rights. See Section 4, "The Tender Offer - - Rights of
Withdrawal."
SAC has exercised its rights as stockholders of Schuff International to
request Schuff International's stockholder list and security position listings
for the purpose of disseminating the Offer to stockholders. Schuff International
has provided SAC with Schuff International's stockholder list and security
position listings for the purpose of disseminating the Offer to holders of
Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, banks, and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, that are listed as participants in a
clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including the
Offer Conditions and, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), SAC will accept for payment, and
will pay for Shares validly tendered and not withdrawn as promptly as
practicable after the expiration of the Offering Period. If there is a
Subsequent Offering Period, all Shares tendered during the Offering Period will
be immediately accepted for payment and promptly paid for following the
expiration thereof and Shares tendered during a Subsequent Offering Period will
be immediately accepted for payment and paid for as they are tendered. Subject
to applicable rules of the SEC, SAC expressly reserves the right to delay
acceptance for payment of or payment for Shares in order to comply, in whole or
in part, with any applicable law. See Section 11, "The Tender Offer - - Certain
Conditions of the Offer." In all cases, payment for shares tendered and accepted
for payment pursuant to the Offer will be made only after timely receipt by the
Depositary of the following:
(i) certificates evidencing such Shares (or a confirmation of a
book-entry transfer of such Shares (a "Book-Entry Confirmation")
into the Depositary's account at The Depositary Trust Company (the
"Book-Entry Transfer Facility"));
(ii) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees or, in
the case of a book-entry transfer, an Agent's Message (as defined
herein) in lieu of the Letter of Transmittal; and
12
(iii) any other required documents.
For purposes of the Offer, SAC will be deemed to have accepted for payment
Shares validly tendered and not withdrawn as, if, and when SAC gives oral or
written notice to the Depositary of its acceptance for payment of such shares
pursuant to the Offer. Payment for Shares accepted for payment pursuant to the
Offer will made by deposit of the purchase price therefor with the Depositary,
which will act as agent for the tendering stockholders for the purpose of
receiving payments from SAC and transmitting such payments to the tendering
stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR
TENDERED SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares tendered by book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, "The Tender Offer - - Procedure for Tendering Shares," such Shares
will be credited to an account maintained with the Book-Entry Transfer
Facility), as soon as practicable following expiration or termination of the
Offer.
SAC reserves the right to transfer or assign in whole or in part from time
to time to one or more of its affiliates the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve SAC of its obligations under the Offer and will in
no way prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
VALID TENDER. To tender Shares pursuant to the Offer,
(i) a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions of the Letter
of Transmittal, with any required signature guarantees, certificates
for Shares to be tendered, and other documents required by the
Letter of Transmittal, must be received by the Depositary prior to
the Expiration Date at one of its addresses set forth on the back
cover of this Offer to Purchase;
(ii) such Shares must be delivered pursuant to the procedures for
book-entry transfer described below (and the Book-Entry Confirmation
of such delivery received by the Depositary, including an Agent's
Message (as defined herein) if the tendering stockholder has not
delivered a Letter of Transmittal), prior to the Expiration Date; or
(iii) the tendering stockholder must comply with the guaranteed delivery
procedures set forth below.
The term "Agent's Message" means a message transmitted electronically by the
Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgement from the participant in the
Book-Entry Transfer Facility tendering the Shares, which are the subject of such
Book-Entry Confirmation, that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that SAC may enforce such
agreement against the participant.
BOOK-ENTRY DELIVERY. The Depositary will establish accounts with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry transfer of Shares by causing the Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with the Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer, either
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in lieu of the Letter of Transmittal, and any other required documents, must, in
any case, be transmitted to and received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase by the
Expiration Date, or the
13
tendering stockholder must comply with the guaranteed delivery procedures
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Except as otherwise provided below, all signatures
on a Letter of Transmittal must be guaranteed by a financial institution
(including most commercial banks, savings and loan associations, and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program, or the Stock
Exchange Medallion Program or by any other "Eligible Guarantor Institution," as
such term is defined in Rule 17Ad-15 under the Exchange Act (each, an "Eligible
Institution"). Signature on a Letter of Transmittal need not be guaranteed (i)
if the Letter of Transmittal is signed by the registered holders (which term,
for purposes of this section, includes any participant in the Book-Entry
Transfer Facility's system whose name appears on a security position listing as
the owner of the Shares) of Shares tendered therewith and such registered holder
has not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii) if
such Shares are tendered for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made, or certificates for Shares
not tendered or not accepted for payment are to be returned, to a person other
than the registered holder of the certificates surrendered, then the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as described above. If the Letter of Transmittal or
stock powers are signed or any certificate is endorsed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations, or
others acting in a fiduciary or representative capacity, such persons should so
indicate when signing and, unless waived by SAC, proper evidence satisfactory to
SAC or their authority to so act must be submitted. See Instructions 1 and 5 of
the Letter of Transmittal.
GUARANTEED DELIVERY. A stockholder that desires to tender Shares pursuant
to the Offer and whose certificates for Shares are not immediately available, or
that cannot comply with the procedure for book-entry transfer on a timely basis,
or that cannot deliver all required documents to the Depositary prior to the
Expiration Date, may tender such Shares by following all of the procedures set
forth below:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by SAC, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificate for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's
Message in lieu of the Letter of Transmittal), and any other
required documents, are received by the Depositary within three
trading days after the date of execution of Notice of Guaranteed
Delivery. A "trading day" is any day on which the American Stock
Exchange is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or mailed to
the Depositary or transmitted by telegram or facsimile transmission to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THE SHARES, THE LETTER OF TRANSMITTAL, AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL
BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS
BY MAIL, IT IS RECOMMENDED THAT THE STOCKHOLDER USE PROPERLY INSURED REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
OTHER REQUIREMENTS. Notwithstanding any provision hereof, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (i) certificates
14
evidencing such Shares or a timely Book-Entry Confirmation with respect to such
shares into the Depositary's account at the Book-Entry Transfer Facility, (ii) a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal),
and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for shares of Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST ON THE PURCHASE PRICE OF THE TENDERED SHARES BE PAID BY SAC, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
TENDER CONSTITUTES AN AGREEMENT. The valid tender of Shares pursuant to
one of the procedures described above will constitute a binding agreement
between the tendering stockholder and SAC upon the terms and subject to the
conditions of the Offer.
APPOINTMENT OF PROXIES. By executing a Letter of Transmittal as set forth
above, the tendering stockholder irrevocably appoints designees of SAC as such
stockholder's attorneys-in-fact and proxies, each with full power of
substitution, to the full extent of such stockholder's rights with respect to
the Shares tendered by such stockholder and accepted for payment by SAC (and
with respect to any and all other Shares or other securities issued or issuable
in respect of such Shares on or after the date of this Offer to Purchase). All
such powers of attorney and proxies will be considered coupled with an interest
in the tendered Shares. Such appointment is effective when, and only to the
extent that, SAC deposits the payment for such Shares with the Depositary. Upon
the effectiveness of such appointment, all prior powers of attorney, proxies,
and consents given by such stockholder will be revoked, and no subsequent powers
of attorney, proxies, and consents may be given (and, if given, will not be
deemed effective). SAC's designees will, with respect to the Shares for which
the appointment is effective, be empowered to exercise all voting and other
rights of such stockholder as they, in their sole discretion, may deem proper at
any annual, special, or adjourned meeting of the stockholders of Schuff
International, by written consent in lieu of any such meeting or otherwise. SAC
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon SAC's payment for such Shares, SAC must be able to
exercise full voting rights with respect to such Shares.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt), and acceptance of any tender of Shares
will be determined by SAC in its sole discretion, which determination will be
final and binding. SAC reserves the absolute right to reject any and all tenders
determined by it not to be in proper form or the acceptance for payment of or
payment for which may, in the opinion of SAC's counsel, be unlawful. SAC also
reserves the absolute right to waive any defect or irregularity in the tender of
any Shares of any particular stockholder whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
relating thereto have been cured or waived to the satisfaction of SAC. None of
SAC, the Depositary, the Information Agent, or any other person will be under
any duty to give notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification. SAC's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and Instructions thereto) will be final and binding.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 30%. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained by
filing a tax return with the IRS. All stockholders that are U.S. persons
surrendering Shares pursuant to the Offer should complete and sign the main
signature form and the Substitute Form W-9 included as part of the Letter of
Transmittal to provide the information and certification necessary to avoid
backup withholding (unless an applicable exemption exists and is proved in a
manner satisfactory to SAC and the Depositary). Certain stockholders (including,
among others, all corporations and certain foreign individuals and entities) are
not subject to backup withholding. Non-corporate foreign stockholders should
complete and sign the main signature form and a
15
statement, signed under penalties of perjury, attesting to that stockholder's
exempt status (such forms may be obtained from the Depositary), in order to
avoid backup withholding. See Instruction 9 to the Letter of Transmittal.
4. RIGHTS OF WITHDRAWAL.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
expiration of the Offering Period and, unless theretofore accepted for payment
by SAC pursuant to the Offer, may also be withdrawn at any time after May 28,
2004. There will be no withdrawal rights during any Subsequent Offering Period
for Shares tendered during the Subsequent Offering Period.
For a withdrawal to be effective, a written, telegraphic, telex, or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person
having tendered the Shares to be withdrawn, the number or amount of Shares to be
withdrawn, and the names in which the certificate(s) evidencing the Shares to be
withdrawn are registered, if different from that of the person that tendered
such Shares. The signature(s) on the notice of withdrawal must be guaranteed by
an Eligible Institution, unless such Shares have been tendered for the account
of any Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry tender as set forth in Section, "The Tender Offer --
Procedure for Tendering Shares," any notice of withdrawal must specify the name
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares. If certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, the name of the registered
holder and the serial numbers of the particular certificates evidencing the
Shares to be withdrawn must also be furnished to the Depositary as aforesaid
prior to the physical release of such certificates. All questions as to the form
and validity (including time of receipt) of any notice of withdrawal will be
determined by SAC, in its sole discretion, which determination shall be final
and binding. None of SAC, the Depositary, the Information Agent, or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give such notification.
Withdrawals of tenders of Shares may not be rescinded, and any Shares
properly withdrawn will be deemed not to have been validly tendered for purposes
of the Offer. However, withdrawn Shares may be rendered by following one of the
procedures described in Section 3, "The Tender Offer -- Procedure for Tendering
Shares," at any time prior to the Expiration Date or during a Subsequent
Offering Period if one is provided.
If SAC extends the Offer, is delayed in its acceptance for payment of
Shares, or is unable to accept for payment Shares pursuant to the Offer, for any
reason, then, without prejudice to SAC's rights under this Offer, the Depositary
may, nevertheless, on behalf of SAC, retain tendered Shares, and such Shares may
not be withdrawn except to the extend that tendering stockholders are entitled
to withdrawal rights as set forth in this Section. Any such delay will be
accompanied by an extension of the Offer to the extent required by law.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER.
The following is a summary of certain U.S. federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted into the right to receive cash in the
Merger. The summary is based on the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), applicable current and proposed U.S. Treasury
Regulations issued thereunder, judicial authority, and administrative rulings
and practice, all of which are subject to change, possibly with retroactive
effect, at any time and, therefore, the following statements and conclusions
could be altered or modified. The discussion does not address holders of Shares
in whose hands Shares are not capital assets, nor does it address holders who
hold Shares as part of a hedging, "straddle," conversion, or other integrated
transaction, or that received Shares upon conversion of securities or exercise
of warrants or other rights to acquire Shares or pursuant to the exercise of
employee stock options or otherwise as compensation, or to holders of restricted
shares received as compensation or to holders of Shares who are in special tax
situations (such as insurance companies, tax-exempt organizations, financial
institutions, U.S. expatriates, or non-U.S. persons). Furthermore, the
discussion does not address the tax treatment of holders who exercise
dissenters' rights in the merger, nor does it address any aspect of state,
local, or foreign taxation or estate and gift taxation.
16
The U.S. federal income tax consequences set forth below are included for
general informational purposes only and are based upon current law. The
following summary does not purport to consider all aspects of United States
federal income taxation that might be relevant to stockholders of Schuff
International. Because individual circumstances may differ, each holder of
Shares should consult such holder's own tax advisor to determine the
applicability of the rules discussed below to such stockholder and the
particular tax effects of the Offer and the merger, including the application
and effect of state, local, and other tax laws.
The receipt of cash for Shares pursuant to the Offer or the merger will be
a taxable transaction for U.S. federal income tax purposes (and also may be a
taxable transaction under applicable state, local, foreign, and other income tax
laws). In general, for U.S. federal income tax purposes, a holder of Shares will
recognize gain or loss equal to the difference between the holder's adjusted tax
basis in the Shares sold pursuant to the Offer or converted to cash in the
merger and the amount of cash received therefor. Gain or loss must be determined
separately for each block of Shares (i.e., Shares acquired at the same cost in a
single transaction) sold pursuant to the Offer or converted to cash in the
merger. If the Shares exchanged constitute capital assets in the hands of the
stockholder, gain or loss will be capital gain or loss. In general, capital
gains recognized by an individual will be subject to a maximum U.S. federal
income tax rate of 20% if the Shares were held for more than one year on the
date of sale (or, if applicable, the date of the merger), and if held for one
year or less they will be subject to tax at ordinary income tax rates. Certain
limitations may apply on the use of capital losses.
Payments in connection with the Offer or the merger may be subject to
"backup withholding" at a 30% rate. Backup withholding generally applies if a
holder (a) fails to furnish its social security number or other TIN, (b)
furnishes an incorrect TIN, (c) fails properly to include a reportable interest
or dividend payment on its U.S. federal income tax return, or (d) under certain
circumstances, fails to provide a certified statement, signed under penalties of
perjury, that the TIN provided is its correct number and that it is not subject
to backup withholding. Backup withholding is not an additional tax but merely an
advance payment, which may be refunded to the extent it results in an
overpayment of tax. Certain persons generally are entitled to exemption from
backup withholding, including corporations, financial institutions, and certain
foreign stockholders if such foreign stockholders submit a statement, signed
under penalties of perjury, attesting to their exempt status. Certain penalties
apply for failure to furnish correct information and for failure to include
reportable payments in income. Each stockholder should consult such
stockholder's own tax advisor as to its qualification for exemption from backup
withholding and the procedure for obtaining such exemption.
All stockholders who are U.S. persons surrendering Shares pursuant to the
Offer should complete and sign the main signature form and the Substitute Form
W-9 included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to SAC and the
Depositary). Non-corporate foreign stockholders should complete and sign the
main signature form and a statement, signed under penalties of perjury,
attesting to that stockholder's exempt status (such forms can be obtained from
the Depositary), in order to avoid backup withholding.
THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE TO STOCKHOLDERS IN SPECIAL
SITUATIONS, SUCH AS STOCKHOLDERS THAT RECEIVED THEIR SHARES UPON THE EXERCISE OF
EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND STOCKHOLDERS THAT ARE
NOT U.S. PERSONS. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER,
INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN, OR OTHER
TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS; OWNERSHIP OF AND TRANSACTIONS IN SHARES.
PRICE RANGE OF SHARES. The Shares are listed and principally traded on the
American Stock Exchange under the symbol "SHF." The following table sets forth,
for the calendar quarters indicated, the high and low sales prices for the
Shares as reported by the American Stock Exchange:
17
MARKET PRICE
------------
HIGH LOW
---- ---
FISCAL YEAR 2002:
First Quarter........................ $3.30 $2.28
Second Quarter....................... 2.95 2.45
Third Quarter........................ 2.75 1.25
Fourth Quarter....................... 1.65 1.10
FISCAL YEAR 2003:
First Quarter........................ $1.40 $1.20
Second Quarter....................... 1.90 1.25
Third Quarter........................ 2.05 1.35
Fourth Quarter....................... 2.03 1.41
FISCAL YEAR 2004:
First Quarter........................ $2.15 $1.70
Second Quarter (through April 27, 2004) 2.10 1.72
On April 27, 2004, the last full trading day before the public
announcement of SAC's proposal to acquire the Shares, the reported closing price
of the Shares on the American Stock Exchange was $1.95 per Share. STOCKHOLDERS
ARE URGED TO OBTAIN A CURRENT QUOTATION FOR THE SHARES.
DIVIDENDS. Except for certain distributions to Schuff International's then
current stockholders while it was subject to taxation under subchapter S of the
Code and certain other distributions, including those made in connection with
the closing of its initial public offering in July 1997 to its stockholders
prior to the offering, Schuff International has not made distributions or
declared dividends on its common stock.
OWNERSHIP OF SHARES. The following table sets forth the beneficial
ownership of Shares by David A. Schuff, Scott A. Schuff, and their affiliates.
The table below does not assume the contribution by David A. Schuff, Scott A.
Schuff, and their affiliates of shares of common stock of Schuff International
to SAC, which is expected to occur immediately prior to the purchase of shares
pursuant to this Offer.
SHARES
SUBJECT
SHARES TO
BENEFICIALLY UNEXERCISED PERCENTAGE
NAME & ADDRESS OF BENEFICIAL OWNER OWNED OPTIONS(1) OWNED
---------------------------------- ----- ---------- -----
David A. Schuff and Nancy A. Schuff....... 2,553,000(2) -- 36.1%
Scott A. Schuff and Teryl A. Schuff....... 2,469,200(3) -- 35.0
19th Avenue/Buchanan Limited Partnership.. 7,100 -- *
Schuff Acquisition Corp................... --(4) -- --
* Represents less than 1% of the Schuff International's outstanding common
stock.
(1) The number of Shares beneficially owned include Shares subject to
unexercised options which are exercisable on April 28, 2004, or within 60
days thereafter.
(2) 2,053,000 of these shares are owned by the Schuff Family Trust Under Trust
Agreement dated June 28, 1983, as amended, and 500,000 of these shares are
owned by the Schuff Irrevocable Trust Under Trust Agreement Dated December
31, 1996. David A. Schuff and Nancy A. Schuff, husband and wife, are
co-trustees of each of the trusts and exercise voting and investment power
over such shares.
(3) 2,269,200 of these shares are owned by the Scott A. Schuff Family Trust
Under Trust Agreement dated March 12, 1992, as amended, and 200,000 of
these shares are owned by the Scott A. Schuff Irrevocable Trust Under
18
Trust Agreement dated December 31, 1996, as amended. Scott A. Schuff and
Teryl A. Schuff, husband and wife, are co-trustees of each of these trusts
and exercise voting and investment power over such shares.
(4) Mr. David A. Schuff, Mr. Scott A. Schuff, The Scuff Irrevocable Trust, the
Scott A. Schuff Irrevocable Trust, and 19th Avenue/Buchanan Limited
Partnership intend to contribute shares of common stock of Schuff
International beneficially owned by them to SAC, which is expected to
occur immediately prior to the purchase of shares pursuant to this Offer.
TRANSACTIONS IN SHARES. In the past two years, neither SAC, David A.
Schuff, Scott A. Schuff, or any of their affiliates have purchased or sold any
securities of Schuff International.
7. CERTAIN INFORMATION CONCERNING SCHUFF INTERNATIONAL.
The information concerning Schuff International contained in this Offer to
Purchase has been taken from or based upon publicly available documents and
records on file with the SEC and other public sources and is qualified in its
entirety by reference thereto. Although SAC and the Information Agent have no
knowledge that would indicate that any statements contained herein based on such
documents and records are untrue, SAC and the Information Agent cannot take
responsibility for the accuracy or completeness of the information contained in
such documents and records, or for any failure by Schuff International to
disclose events that may have occurred or may affect the significance or
accuracy of any such information but which are unknown to SAC or the Information
Agent.
GENERAL. Schuff International is a Delaware corporation with its principal
corporate offices located at 1841 West Buchanan Street, Phoenix, Arizona 85007
(telephone number (602) 252-7787). Schuff International has described its
business as follows:
Schuff International is a fully integrated fabricator and erector of
structural steel and heavy steel plate. Schuff International fabricates
and erects structural steel for commercial and industrial construction
projects such as high- and low-rise buildings and office complexes, hotels
and casinos, convention centers, sports arenas, shopping malls, hospitals,
dams, bridges, mines, and power plants. Schuff International also
manufactures short- and long-span joists, trusses, and girders as well as
specializes in the fabrication and erection of large-diameter water pipe,
water storage tanks, pollution control scrubbers, tunnel liners, pressure
vessels, strainers, filters, separators, and a variety of customized
projects.
Schuff International seeks to differentiate its operations by
offering complete, turnkey steel construction services featuring
design-build consultation, engineering, detailing, shop fabrication, and
field erection. By offering an integrated package of steel construction
services from a single source, Schuff International believes it is able to
respond more efficiently to the design and construction challenges
associated with large, complex, "fast track" construction projects.
Schuff International currently operates primarily in the
southwestern and southeastern United States with a concentration in
Arizona, Nevada, Texas, Florida, Georgia, southern California, and
Colorado.
Schuff International offers its integrated steel construction
services primarily to general contractors and engineering firms --
including, among others, Hunt Construction, Fluor Daniel, Inc., Bechtel
Group Inc., and Perini Corporation -- that focus on a wide variety of
projects, including hotels and casinos, office complexes, hospitals,
manufacturing plants, shopping malls and centers, sports stadiums, power
plants, restaurants, convention facilities, entertainment complexes,
airports, schools, churches, and warehouses.
INTENT TO TENDER; RECOMMENDATION; SCHUFF INTERNATIONAL OPINION. As of the
date hereof, (i) neither SAC, David A. Schuff, Scott A. Schuff, or any of their
affiliates know whether any executive officer, director, or
19
affiliate of Schuff International (other than those named herein) intend to
tender Shares in the Offer, (ii) none of Schuff International, its executive
officers, directors, or affiliates (other than those named herein) have made any
public recommendation with respect to the Offer, and (iii) Schuff International
has not made public any appraisal, report, or opinion on the fairness of this
transaction.
AVAILABLE INFORMATION. Schuff International is subject to the information
and reporting requirements of the Exchange Act and in accordance therewith is
obligated to file reports and other information with the SEC relating to its
business, financial condition, and other matters. Information, as of particular
dates, concerning Schuff International's directors and officers, their
remuneration, stock options granted to them, the principal holders of Schuff
International's securities, any material interests of such persons in
transactions with Schuff International and other matters is required to be
disclosed in proxy statements distributed to Schuff International stockholders
and filed with the SEC. Such reports, proxy statements, and other information
should be available for inspection at the public reference room at the SEC's
offices at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies may be
obtained, by mail, upon payment of the SEC's customary charges, by writing to
its principal office at 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549 and can be obtained electronically on the SEC's website at
http://www.sec.gov.
20
FINANCIAL INFORMATION
SCHUFF INTERNATIONAL, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth summary historical consolidated financial
data for Schuff International as of and for each of the years ended December 31,
2002 and 2003.
This data and the comparative per share data set forth below are extracted
from, and should be read in conjunction with, the audited consolidated financial
statements and other financial information contained in Schuff International's
Annual Report on Form 10-K for the year ended December 31, 2003. More
comprehensive financial information is included in such reports (including
management's discussion and analysis of financial condition and results of
operations) and other documents filed by Schuff International with the SEC, and
the following summary is qualified in its entirety by reference to such reports
and other documents and all of the financial information and notes contained
therein. Copies of such reports and other documents may be examined at or
obtained from the SEC in the manner set forth above. These documents are
incorporated by reference in this Offer to Purchase. See "--Available
Information" on page 20.
YEARS ENDED DECEMBER 31,
------------------------
2002 2003
---- ----
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
STATEMENT OF INCOME DATA:
Revenues.......................... $ 230,985 $ 174,245
Cost of revenues.................. 197,299 151,897
--------- ---------
Gross profit...................... 33,686 22,348
General and administrative
expenses........................ 24,869 23,635
Goodwill amortization............. -- --
--------- ---------
Operating income.................. 8,817 (1,287)
Interest expense.................. (10,542) (10,111)
Other income...................... 1,626 1,831
--------- ---------
Income (loss) before income tax
provision (benefit), minority
interest and cumulative effect
of a change in accounting
principle....................... (99) (9,567)
Income tax provision (benefit).... (287) 3,505
--------- ---------
Income (loss) before minority
interest and cumulative effect
of a change in accounting
principle....................... 188 (6,062)
Minority interest in loss of
subsidiaries.................... 32 72
--------- ---------
Income (loss) before cumulative
effect of a change in
accounting principle............ 220 (5,990)
Cumulative effect of a change in
accounting principle............ (29,591) --
--------- ---------
Net income (loss)................. $ (29,371) $ (5,990)
========= =========
Basic income (loss) per share:
Income (loss) per share before
cumulative effect of a change
in accounting principle......... $0.03 $ (0.85)
21
Cumulative effect per share of a
change in accounting principle.. (4.11) --
--------- ---------
Net income (loss) per share....... $ (4.08) $ (0.85)
========= =========
Diluted income (loss) per share:
Income (loss) per share before
cumulative effect of a change
in accounting principle......... $0.03 $ (0.85)
Cumulative effect per share of a
change in accounting principle.. (4.11) --
--------- ---------
Net income (loss) per share....... $ (4.08) $ (0.85)
========= =========
Weighted average shares used in
computation:
-- basic .................... 7,199 7,009
-- diluted .................. 7,199 7,009
OPERATING DATA:
Backlog(2)........................ 112,559 113,281
BALANCE SHEET DATA:
Cash and cash equivalents......... $ 10,755 $ 7,645
Restricted funds on deposit(3).... 3,468 7,513
Costs and recognized earnings in
excess of billings on
uncompleted contracts(4)........ 16,139 10,723
Billings in excess of costs and
recognized earnings on
uncompleted contracts(4)........ 13,521 8,464
Property and equipment, net....... 27,132 24,394
Total assets...................... 148,345 130,282
Long term debt, excluding current
portion......................... 91,170 87,040
Stockholders' equity.............. $ 15,354 $ 9,485
- ----------
(1) Gives effect to the acquisitions of Addison and Quincy on June 4, 1998,
Six on August 31, 1998, and Bannister on October 15, 1998, which were
accounted for under the purchase method of accounting. Financial
information relating to Addison, Quincy, Six and Bannister has been
included subsequent to the respective acquisition dates.
(2) Backlog is the amount of potential future revenues to be recognized upon
performance of contracts, letters of intent, notices to proceed, and
purchase orders awarded to Schuff International. Backlog increases as new
contract commitments, letters of intent, notices to proceed, and purchase
orders are received, decreases as revenues are recognized, and increases
or decreases to reflect modifications in the work to be performed under a
contract or potential contract. Of the $113.3 million backlog as of
December 31, 2003, approximately $33.2 million was attributable to the
TSA/Arizona Cardinals Multipurpose Facility.
(3) Restricted funds on deposit represent funds on deposit in interest bearing
escrow accounts. In 1999, they were maintained in lieu of retention for
specific contracts. Retentions on contract receivables are amounts due
which are withheld until the completed project has been accepted by the
customer in accordance with the contract. In 2003 and 2002, they were
maintained as security for $9.9 million and $3.1 million, respectively, of
the letters of credit outstanding for the benefit of Schuff
International's performance bond surety and workers' compensation
insurance carrier.
(4) Schuff International recognizes revenues and costs from construction
projects using the percentage of completion accounting method. Under this
method, revenues are recognized based upon either the ratio of the costs
incurred to date to the total estimated costs to complete the project or
the ratio of labor hours incurred to date to the total estimated labor
hours, commencing when work begins. Construction contracts with customers
22
generally provide that billings are to be made monthly in amounts which
are commensurate with the extent of performance under the contracts. Costs
and recognized earnings in excess of billings on uncompleted contracts
primarily represent revenues earned under the percentage of completion
method which have not been billed. Billings in excess of costs and
recognized earnings on uncompleted contracts represent amounts billed on
contracts in excess of the revenues allowed to be recognized under the
percentage of completion method on those contracts.
8. CERTAIN INFORMATION CONCERNING SAC.
GENERAL. SAC is an Arizona corporation that currently does not conduct any
business, except its intent to hold shares of common stock of Schuff
International, and upon contribution of shares of common stock beneficially
owned by them, will be wholly owned by David A. Schuff, Chairman of the Board of
Schuff International, Inc., Scott A. Schuff, President and Chief Executive
Officer of Schuff International and their affiliates, the Schuff Irrevocable
Trust, the Scott A. Schuff Irrevocable Trust, and 19th Avenue/Buchanan Limited
Partnership, an Arizona limited partnership. The principal executive offices of
SAC are located at 1841 West Buchanan, Phoenix, Arizona 85007 (telephone number
(602) 452-4497). David A. Schuff and Scott A. Schuff are the sole directors and
executive officers of SAC.
David A. Schuff is a U.S. citizen who resides in the state of Arizona. Mr.
David A. Schuff has served as Chairman of the Board of Directors of Schuff
International since its formation and is the co-founder of Schuff International.
David A. Schuff served as President and Chief Executive Officer of Schuff
International from its founding in 1976 to 1995. David A. Schuff has been
involved in the steel fabrication and erection business in a number of
capacities since 1958. David A. Schuff in the father of Scott A. Schuff.
Scott A. Schuff is a U.S. citizen who resides in the state of Arizona.
Scott A. Schuff is the President and Chief Executive Officer of Schuff
International, Schuff Steel Company, and a co-founder of Schuff International.
Scott A. Schuff has served in numerous capacities with Schuff International
since its founding in 1976, and has been the President and Chief Executive
Officer since 1995. Scott A. Schuff is the son of David A. Schuff.
During the last five years, neither SAC, David A. Schuff, Scott A. Schuff,
nor any of their affiliates have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), nor have any of them
been a party to any judicial or administrative proceeding that resulted in a
judgment, decree, or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation with respect to such laws.
Except as set forth in this Offer of Purchase, none of (1) SAC, (2) David
A. Schuff, (3) Scott A. Schuff, or (4) any affiliate thereof or associate or
majority-owned subsidiary of SAC beneficially owns any equity security of Schuff
International.
Except as set forth in this Offer of Purchase, neither SAC, David A.
Schuff, Scott A. Schuff, nor any of their affiliates have any agreement,
arrangement, understanding, or relationship with any other person with respect
to any securities of Schuff International, including, without limitation, any
agreement, arrangement, understanding, or relationship concerning the transfer
or the voting of any securities of Schuff International, joint ventures, loan or
option arrangements, puts or calls, guaranties of loans, guaranties against
loss, or the giving or withholding of proxies, consents, or authorizations.
Neither SAC, David A. Schuff, Scott A. Schuff, nor any of their affiliates
have any security of Schuff International that is pledged or otherwise subject
to a contingency that would give another person the power to direct the voting
or disposition of such security, except that the obligations under the Credit
and Security Agreement by and between 19th Avenue/Buchanan Limited Partnership
and Wells Fargo Credit, Inc. is secured by a pledge from David and Nancy Schuff,
Scott and Teryl Schuff, the David A. Schuff Family Trust U/T/A/ Dated June 28,
1983, and the Scott A. Schuff Family Trust U/T/A/ Dated March 12, 1992, with
respect to their interests in the common stock of Schuff International.
23
Except as set forth in this Offer to Purchase, there have been no
transactions during the past two years between SAC, David A. Schuff, Scott A.
Schuff, and Schuff International or any of Schuff International's affiliates
that are not natural persons where the aggregate value of the transactions was
more than 1% of SAC's consolidated revenues for the year ended 2002 for
transactions in 2002, for the year ended 2003 for transactions in 2003 and for
the past portion of 2004 for transactions in 2004.
Except as set forth in this Offer to Purchase, there have been no
transactions during the past two years between SAC, David A. Schuff, Scott A.
Schuff, or their affiliates and any executive officer, director, or affiliate of
Schuff International that is a natural person where the aggregate value of the
transaction or series of similar transactions with that person exceeded $60,000.
SAC has made no arrangements in connection with the Offer to provide
holders of Shares access to SAC's corporate files or to obtain counsel or
appraisal services at their expense. For discussion of dissenters' appraisal
rights, see Section 9, "The Tender Offer--Merger; Dissenters' Rights; Rule
13e-3."
Except as set forth in this Offer to Purchase, there have been no
negotiations, transactions, or material contracts during the past two years
between SAC or its affiliates on the one hand, and Schuff International or its
affiliates, on the other hand, concerning a merger, consolidation, or
acquisition, a tender offer or other acquisition of any class of Schuff
International's securities, an election of Schuff International's directors, or
a sale or other transfer of a material amount of assets of Schuff International,
nor, to the best knowledge of SAC, there have been no negotiations or material
contacts between (i) any affiliates of Schuff International or (ii) Schuff
International or any of its affiliates and any person not affiliated with Schuff
International who would have a direct interest in such matters. Except as set
forth in this Offer to Purchase, neither SAC, David A. Schuff, Scott A. Schuff,
or their affiliates have since the date hereof had any transaction with Schuff
International or any of its executive officers, directors, or affiliates that
would require disclosure under the rules and regulations of the SEC applicable
to the Offer.
INTENT TO TENDER. As of the date hereof, neither David A. Schuff, Scott A.
Schuff, nor their affiliates intend to tender his or its shares in the Offer.
9. MERGER; DISSENTERS' RIGHTS; RULE 13E-3.
MERGER. If, pursuant to the Offer, SAC acquires shares that, together with
shares beneficially owned by SAC and its affiliates, after contribution of such
shares by David A. Schuff, Scott A. Schuff, and their affiliates, constitute at
least 90% of the outstanding shares, SAC currently intends to consummate a
"short-form" merger pursuant to Section 10-1104 of the Arizona Business
Corporation Act, or ABCA. Section 10-1104 of the ABCA provides that if SAC owns
at least 90% of each class of the outstanding shares of Arizona Corporation
Commission, SAC may merge Schuff International into itself. In order to
accomplish the Merger, (i) the board of directors of SAC must adopt a plan of
merger, (ii) SAC must mail a copy or summary of the plan of merger to each
stockholder of Schuff International other than SAC, who does not waive the
mailing requirement in writing, and (iii) SAC must deliver articles of merger to
the Arizona Corporation Commission no earlier than thirty days after the date
that the plan of merger was mailed to the remaining stockholders of Schuff
International. Under Section 10-1104 of the ABCA, such a merger of Schuff
International with SAC would not require the approval or any other action on the
part of the board of directors, the special committee, or the holders of Schuff
International. SAC intends to effect the Merger without a meeting of holders of
Shares. The Merger is currently expected to occur approximately one month after
completion of the Offer.
If, after the Offer is completed but prior to consummation of the Merger,
the aggregate beneficial ownership by SAC of the outstanding shares should fall
below 90% for any reason, SAC may decide to acquire additional shares on the
open market or in privately negotiated transactions to the extent required for
such ownership to equal or exceed 90%. Any such purchases would be made at
market prices or privately negotiated prices at the time of purchase, which may
be higher or lower than or the same as the Offer Price.
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR CONSENTS. ANY
SUCH SOLICITATION WHICH SAC MIGHT MAKE WILL BE MADE PURSUANT TO SEPARATE PROXY
OR CONSENT SOLICITATION MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION
14(A) OF THE EXCHANGE ACT.
24
DISSENTERS' RIGHTS. Under Delaware law, Schuff International stockholders
do not have appraisal rights in connection with the Offer. If the Offer is
successfully completed, holders of Schuff International common stock that (a) do
not tender Shares into the Offer and hold common stock at the effective time of
the short-form merger, (b) do not wish to accept the consideration provided for
in that Merger, and (c) comply with the procedures provided for in Section 262
of the DGCL, will be entitled to have their shares of Schuff International
common stock appraised by the Delaware Court of Chancery and to receive a
payment in cash of the "fair value" of those shares as determined by the court.
Within 10 days after the effective time of the Merger, Schuff International, as
the surviving corporation of the Merger, will send notice of the effective time
of the Merger and the availability of appraisal rights to each holder of its
common stock. To exercise appraisal rights, the record holder of Schuff
International's common stock must, within 20 days after the date Schuff
International mails the notice referred to above , deliver a written demand for
appraisal to Schuff International. This demand must reasonably inform Schuff
International of the identity of the holder of record and that the stockholder
demands appraisal of his, her, or its shares of Schuff International common
stock.
Only a record holder of Schuff International's common stock is entitled to
demand appraisal rights. The demand must be executed by or for the record
holder, fully and correctly, as the holder's name appears on the holder's stock
certificates. Within 120 days after the effective time of the Merger, Schuff
International or any stockholder that has satisfied the foregoing conditions may
file a petition in the Delaware Court of Chancery demanding a determination of
the fair value of Schuff International's common stock. Neither SAC nor Schuff
International will have any obligation to file such a petition. Stockholders
seeking to exercise appraisal rights should initiate all necessary action to
perfect their rights within the time periods prescribed by Delaware law.
Within 120 days after the effective time of the Merger, any stockholder
that has complied with the requirements under Section 262 of the DGCL for
exercise of appraisal of rights may make a written request to receive from
Schuff International a statement of the total number of shares of Schuff
International's common stock with respect to which demands for appraisal have
been received and the total number of holders of these shares. Schuff
International will be required to mail these statements within ten days after it
receives a written request. If a petition for an appraisal is timely filed,
after a hearing on the petition, the Delaware Court of Chancery will determine
which of the stockholders are entitled to appraisal rights. The court will
appraise the shares of common stock owned by the stockholders and determine
their fair value. In determining fair value, the court may consider a number of
factors, including market values of Schuff International's stock, asset values,
and other generally accepted valuation considerations, but will exclude any
element of value arising from the accomplishment or expectation of the Merger.
The court will also determine the amount of interest, if any, to be paid upon
the value of the common stock to the stockholders entitled to appraisal.
The value determined by the court for Schuff International's common stock
could be more than, less than, or the same as the Merger consideration, but the
form of the consideration payable as a result of the appraisal proceeding would
be cash. The court may determine the costs of the appraisal proceeding and
allocate them to the parties as the court determines to be equitable under the
circumstances. The court may also order that all or a portion of any
stockholder's expenses incurred in connection with an appraisal proceeding,
including reasonable attorneys' fees and expenses and reasonable fees and
expenses of experts utilized in the appraisal proceeding, be charged, on a pro
rata basis, against the value of all of Schuff International's common stock
entitled to appraisal.
Any stockholder that has duly demanded an appraisal in compliance with
Delaware law will not, after the effective time of the Merger, be entitled to
vote the shares subject to the demand for any purpose. The shares subject to the
demand will not be entitled to dividends or other distributions, other than
those payable or deemed to be payable to stockholders of record as of a date
prior to the effective time.
Holders of Schuff International's common stock will lose the right to
appraisal if no petition for appraisal is filed within 120 days after the
effective time of the Merger. A stockholder will also lose the right to an
appraisal by delivering to Schuff International a written withdrawal of the
stockholder's demand for an appraisal. Any attempt to withdraw that is made more
than 60 days after the effective time of the Merger requires Schuff
International's written approval. If appraisal rights are not perfected or a
demand for appraisal rights is timely withdrawn, a stockholder will be entitled
to receive the consideration otherwise payable pursuant to the Merger, without
interest. The amount of cash delivered to such stockholder will be the same as
in the Merger.
25
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL, which is attached as Schedule A to this Offer
to Purchase. If you fail to take any action required by Delaware law, your
rights to an appraisal in connection with the Merger will be waived or
terminated.
RULE 13E-3. Because SAC, David A. Schuff, Scott A. Schuff, and their
affiliates are affiliates of Schuff International, the transactions contemplated
herein constitute a "going private" transaction under Rule 13e-3 under the
Exchange Act. Rule 13e-3 requires, among other things, that certain financial
information concerning Schuff International and certain information relating to
the fairness of the Offer and the Merger and the consideration offered to
minority stockholders be filed with the SEC and disclosed to minority
stockholders prior to consummation of the Merger. SAC has provided such
information in this Offer to Purchase.
10. SOURCE AND AMOUNT OF FUNDS.
19th Avenue/Buchanan Limited Partnership has entered into a credit and
security agreement with Wells Fargo Credit, Inc. that refinanced existing Bank
One indebtedness of 19th Avenue/Buchanan Limited Partnership and will provide
financing to complete this Offer. The term facility consists of a $7.0 million
secured real estate loan, secured by cash and discounted marketable securities
of up to $1.5 million, first deeds of trust on real estate owned by 19th
Avenue/Buchanan Limited Partnership, and assignments of rents and assumption of
lease agreements from Schuff International. The amount available under the
facility is up to $7.0 million, consisting of either (a) 100% of $1.5 million
cash pledged to Wells Fargo, or (b) 100% of $750,000 in cash plus 90% of
$1,000,000 of marketable securities, plus up to 50% of appraised value of the
real property owned by 19th Avenue/Buchanan Limited Partnership. 19th Avenue is
required to repay $1.0 million six months after the closing date and $600,000 on
the first anniversary date of the closing date. The principal amounts
outstanding under the term facility accrue interest at a base rate plus 2.5% per
annum floating, payable monthly in arrears, and carry a default rate of interest
3% higher than the rate otherwise payable. The term loan is amortized with
principal payments of $45,000 per month plus interest, maturing three years from
date of closing. The maturity date of the Schuff International credit facility
must be amended to match the maturity date of the Wells Fargo term facility.
Scott A. Schuff, David A. Schuff, and their spouses have personally guaranteed
amounts outstanding under the credit facility.
Upon initial closing of the financing, 19th Avenue/Buchanan Limited
Partnership paid a closing fee of 1% of the credit facility limit. The credit
facility may be prepaid, in whole or in part, at any time at the option of 19th
Avenue/Buchanan Limited Partnership, however, a prepayment fee will be due based
on a percentage of the credit limit of the facility and the amount of time the
facility has been outstanding. In connection with the credit facility, 19th
Avenue/Buchanan Limited Partnership entered into certain loan documents,
including a Credit and Security Agreement that sets forth the terms and
conditions of the facility. The agreement sets forth the representations,
warranties, and covenants of 19th Avenue/Buchanan Limited Partnership and
contains certain financial covenants as deemed appropriate by Wells Fargo,
including Schuff International's financial performance (including minimum net
worth, earnings, and debt service capability), limitations on acquisitions,
investments, additional debt, intercompany accounts, bonuses, dividends, change
in ownership, change in senior management, capital expenditures, and disposition
of assets.
The first advance of $3.0 million under the credit facility will be funded
on April 29, 2004. The second advance of the remaining amount available under
the credit facility will be subject to the satisfaction of certain closing
conditions, including the following:
- all filings made or required to be made by SAC with the SEC in
connection with this Offer shall be made;
- evidence that all filings required to be made by SAC in
connection with this Offer have been made with the SEC; and
- evidence that no injunction or stop order has been issued with
respect to this Offer or the Merger by any court or agency
having jurisdiction.
26
The commitment by Wells Fargo to fund the second advance will expire if the
closing conditions described above are not completed by October 31, 2004.
This summary of the credit facility does not purport to be complete and is
qualified in its entirety by reference to the Credit and Security Agreement by
and between 19th Avenue/Buchanan Limited Partnership and Wells Fargo Credit,
Inc. dated April 22, 2004, which is filed as an exhibit to this Offer to
Purchase and to which is incorporated herein by reference, and any further
documents or instruments that SAC or 19th Avenue may enter into in connection
with the credit facility. SAC does not have alternative financing arrangements
or alternative financing plans in the event 19th Avenue does not secure the
second advance under the credit facility described above.
11. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, SAC shall not be
required to accept for payment or pay for any Shares, may postpone the
acceptance for payment or pay for tendered Shares, and may, in its sole
discretion, terminate or amend the Offer as to any Shares not then paid for if
at the expiration of the Offering Period, the Minimum Condition has not been
satisfied, or if, at or prior to the time of the expiration of the Offer, any of
the following events shall occur:
(a) any preliminary or permanent judgment, order, decree, ruling,
injunction, action, proceeding, or application shall be pending or
threatened before any court, government, or governmental authority
or other regulatory or administrative agency or commission, domestic
or foreign, which would or might restrain, prohibit, or delay
consummation of, or materially alter or otherwise materially affect,
the Offer or the Merger or materially impair the contemplated
benefits of the Offer or the Merger to SAC; or
(b) any statute, including without limitation any state anti-takeover
statute, rule, regulation, or order or injunction shall be sought,
proposed, enacted, promulgated, entered, enforced, or deemed or
become applicable or asserted to be applicable to the Offer or the
Merger, which would or might restrain, prohibit, or delay
consummation of, or materially alter or otherwise materially affect,
the Offer or the Merger or materially impair the contemplated
benefits of the Offer or the Merger to SAC; or
(c) any change (or any condition, event, or development involving a
prospective change) shall have occurred or be threatened that has or
might have a materially adverse effect on the business, properties,
assets, liabilities, capitalization, stockholders' equity, financial
condition, operations, results of operations, or prospects of Schuff
International or any of its subsidiaries; or
(d) there shall have occurred (i) any general suspension of, or
limitation on times or prices for, trading in securities on any
national securities exchange or in the over-the-counter market, (ii)
a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States, (iii) the outbreak or
escalation of a war (whether or not declared), acts of terrorism,
armed hostilities, or other international or national calamity
directly or indirectly involving the United States, (iv) any
limitation (whether or not mandatory) by any governmental authority
on, or any other event which might affect the extension of credit by
banks or other lending institutions, (v) a suspension of or
limitation (whether or not mandatory) on the currency exchange
markets or the imposition of, or material changes in, any currency
or exchange control laws in the United States, or (vi) in the case
of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof; or
(e) any tender or exchange offer with respect to some or all of the
outstanding shares of common stock of Schuff International (other
than the Offer), or a merger, acquisition, or other business
combination proposal for Schuff International (other than the Offer
and the Merger), shall have been proposed, announced, or made by any
person, entity, or group; or
27
(f) Schuff International and SAC shall have reached an agreement or
understanding that the Offer be terminated or amended or SAC (or one
of its affiliates) shall have entered into a definitive agreement or
an agreement in principle to acquire Schuff International by merger
or similar business combination, or purchase of shares or assets of
Schuff International; or
(g) there shall have occurred or be in existence any other event,
circumstance, or condition, which, in the reasonable judgment of
SAC, would prevent SAC from effecting the Merger following the
completion of the Offer; or
(h) which in the reasonable judgment of SAC with respect to each and
every matter referred to above makes it inadvisable to proceed with
the Offer or with the Merger.
The foregoing conditions are for the sole benefit of SAC and may be
asserted by SAC regardless of the circumstances (including any action or
inaction by SAC) giving rise to any such conditions or may be waived by SAC in
whole or in part at any time from time to time in its reasonable discretion. The
determination as to whether any condition has occurred shall be in the sole and
reasonable judgment of SAC and will be final and binding on all parties. The
failure by SAC at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time. Notwithstanding
the foregoing, SAC will not purchase shares in the Offer if less than a
majority of the outstanding Shares, excluding Shares beneficially owned by SAC
and the executive officers and directors of Schuff International, are validly
tendered in the Offer and not withdrawn.
A public announcement will be made of a material change in, or waiver of,
such conditions, and the Offer may, in certain circumstances, be extended in
connection with any such change or waiver. All Offer Conditions must be
satisfied or waived prior to the commencement of any Subsequent Offering Period.
12. DIVIDENDS AND DISTRIBUTIONS.
If, on or after the date hereof, Schuff International should (i) split,
combine, or otherwise change the Shares or its capitalization, (ii) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares, or (iii) issue or sell additional Shares, shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants, or options, to acquire any of the
foregoing, other than Shares issued pursuant to the exercise of stock options
outstanding as of the date hereof, then, subject to the provisions of Section
11, "The Tender Offer--Certain Conditions of the Offer," SAC, in its sole
discretion, may make such adjustments as it deems appropriate in the Offer Price
and other terms of the Offer, including, without limitation, the number or type
of securities offered to be purchased.
If, on or after the date hereof, Schuff International should declare or
pay any cash dividend on the Shares, or issue with respect to the Shares any
additional Shares, shares of any other class of capital stock, other voting
securities or any securities convertible into, or rights, warrants, or options,
conditional or otherwise, to acquire any of the foregoing, payable or
distributable to stockholders of record on a date prior to the transfer of the
Shares purchased pursuant to the Offer to SAC or its nominee or transferee on
Schuff International's stock transfer records, then, subject to the provisions
of Section 11, "The Tender Offer--Certain Conditions of the Offer,"
- the Offer Price and other terms of the Offer may, in the sole
discretion of SAC, be reduced by the amount of any such cash
dividend or cash distribution, and
- the whole of any such noncash dividend, distribution, or
issuance to be received by the tendering stockholders will (a)
be received and held by the tendering stockholders for the
account of SAC and will be required to be promptly remitted
and transferred by each tendering stockholder to the
Depository for the account of SAC, accompanied by appropriate
documentation of transfer, or (b) at the direction of SAC, be
exercised for the benefit of SAC, in which case the proceeds
of such exercise will promptly be remitted to SAC.
Pending such remittance and subject to applicable law, SAC will be entitled to
all rights and privileges as owner of any such noncash dividend, distribution,
issuance, or proceeds and may withhold the entire Offer Price or deduct from the
Offer Price the amount or value thereof, as determined by SAC in its sole
discretion.
28
13. CERTAIN LEGAL MATTERS.
GENERAL. Except as otherwise disclosed herein, based upon an examination
of publicly available filings with respect to Schuff International, SAC is not
aware of any licenses or other regulatory permits which appear to be material to
the business of Schuff International and which might be adversely affected by
the acquisition of Shares by SAC pursuant to the Offer or of any approval or
other action by any governmental, administrative, or regulatory agency or
authority which would be required for the acquisition or ownership of Shares by
SAC pursuant to the Offer. Should any such approval or other action be required,
it is currently contemplated that such approval or action would be sought or
taken. However, SAC does not intend to delay the purchase of Shares tendered
pursuant to the Offer pending the outcome of any action or the receipt of any
such approval. There can be no assurance that any such approval or action, if
needed, would be obtained or, if obtained, that it will be obtained without
substantial conditions or that adverse consequences might not result to Schuff
International's or SAC's business or that certain parts of Schuff
International's or SAC's business might not have to be disposed of in the event
that such approvals were not obtained or such other actions were not taken, any
of which could cause SAC to elect to terminate the Offer without the purchase of
the Shares thereunder. SAC's obligation under the Offer to accept for payment
and pay for Shares is subject to certain conditions. See Section 11, "The Tender
Offer--Certain Conditions of the Offer."
ANTITRUST COMPLIANCE. Under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), certain acquisition transactions may
not be consummated unless certain information has been furnished to the
Antitrust Division of the Department of Justice and the Federal Trade Commission
and certain waiting period requirements have been satisfied. As explained more
fully below, however, the Offer is not a reportable transaction under the HSR
Act.
Under HSR Act reporting regulations, SAC is deemed in "control" of Schuff
International. In particular, these regulations provide that the term "control"
means holding 50% or more of the outstanding voting securities of an issuer.
Therefore, because SAC holds approximately 71% of Schuff International's voting
securities, SAC does not believe any filing is required in connection with the
Offer and the Merger.
SECTION 203 OF THE DGCL. In general, Section 203 of the DGCL prohibits a
publicly held Delaware corporation from engaging, under certain circumstances,
in a "business combination" with an "interested stockholder" for a period of
three years after the date of the transaction in which the person becomes an
interested stockholder, unless
- prior to the date at which the stockholder became an interested
stockholder, the Board of Directors approved either the business
combination or the transaction in which the stockholder becomes an
interested stockholder;
- upon consummation of the transaction in which the stockholder
becomes an interested stockholder, the stockholder owned at least
85% of the outstanding voting stock of the corporation (excluding
shares held by directors who are officers or held in certain
employee stock plans); or
- the business combination is approved by the Board of Directors and
by two-thirds of the outstanding voting stock of the corporation
(excluding shares held by the interested stockholder) at a meeting
of stockholders (and not by written consent) held on or subsequent
to the date of the business combination.
An "interested stockholder" is a person who, together with affiliates and
associates, owns (or at any time within the prior three years did own) 15% or
more of the corporation's voting stock. Section 203 defines a "business
combination" to include mergers, consolidations, stock sales, asset based
transactions, and other transactions resulting in a financial benefit to the
interested stockholder. Section 203 of the DGCL does not apply to any
stockholder who became an interested stockholder at a time when the corporation
was not publicly held. SAC does not believe that Section 203 of the DGCL applies
to this Offer or the proposed Merger.
29
FEDERAL RESERVE BOARD REGULATIONS. Regulations T, U, and X (the "Margin
Regulations") promulgated by the Federal Reserve Board place restrictions on the
amount of credit that may be extended for the purpose of purchasing margin stock
(including the Shares) if such credit is secured directly or indirectly by
margin stock.
STATE TAKEOVER STATUTES. A number of states have adopted laws that
purport, to varying degrees, to apply to attempts to acquire corporations that
are incorporated in, or that have substantial assets, stockholders, principal
executive offices, or principal places of business or whose business operations
otherwise have substantial economic effects in, such states. Schuff
International, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted such laws.
SAC has not determined whether any of these state takeover laws and regulations
will by their terms apply to the Offer or the Merger, and, except as set forth
above, SAC has not recently attempted to comply with any state takeover statute
or regulation. SAC reserves the right to challenge the applicability or validity
of any state law purportedly applicable to the Offer or the Merger and nothing
in this Offer to Purchase or any action taken in connection with the Offer or
the Merger is intended as a waiver of such right. If it is asserted that any
state takeover statute is applicable to the Offer or the Merger and if an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer or the Merger, SAC might be required to file certain
information with, or to receive approvals from, the relevant state authorities,
and SAC might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in consummating the Offer or the Merger. In
such case, SAC may not be obliged to accept for payment or pay for any Shares
tendered pursuant to the Offer. See Section 11, "The Tender Offer--Certain
Conditions of the Offer."
SHORT-FORM MERGER. Section 10-1104 of the ABCA provides that, if a parent
corporation owns at least 90% of the outstanding shares of each class of a
subsidiary corporation, it may, without the approval of the stockholders of the
subsidiary corporation merge the subsidiary into itself, by effecting a plan of
merger adopted by the board of directors of parent corporation and the
appropriate filings with the Arizona Corporation Commission. Under the ABCA, if
SAC acquires at least 90% of the outstanding Shares, SAC will be able to effect
the Merger without a vote of the other stockholders of Schuff International.
14. CERTAIN EFFECTS OF THE OFFER.
PARTICIPATION IN FUTURE GROWTH. If you tender your Shares in the Offer,
you will not have the opportunity to participate in the future earnings,
profits, and growth of Schuff International and will not have the right to vote
on corporate matters relating to Schuff International. If the Offer and the
Merger are completed, SAC, who will own 100% of the shares, will own a 100%
interest in the net book value and net earnings of Schuff International and will
benefit from any future increase in the value of Schuff International.
Similarly, SAC will bear the risk of any decrease in the value of Schuff
International and you will not face the risk of a decline in the value of Schuff
International. Upon the completion of the Merger, SAC's aggregate beneficial
interests in Schuff International's net book value and net loss would increase
from approximately 71% to 100%.
MARKET FOR SHARES. The purchase of Shares by SAC pursuant to the Offer
will reduce the number of Shares that might otherwise trade publicly and may
reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
STOCK QUOTATIONS. Depending on the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the listing requirements of the
American Stock Exchange ("AMEX"). According to the AMEX's published guidelines,
AMEX would consider delisting the Shares if the number of public stockholders
(exclusive of holdings of officers, directors, controlling stockholders, or
other family or concentrated (i.e. 10% or greater) holdings (the "AMEX Excluded
Holdings")) falls below 300, the number of publicly held Shares (exclusive of
AMEX Excluded Holdings) falls below 200,000, or the aggregate market value of
publicly held Shares (exclusive of AMEX Excluded Holdings) falls below
$1,000,000 for more than 90 consecutive days. If, as a result of the purchase of
Shares pursuant to the Offer or otherwise, the Shares no longer meet the
requirements of the AMEX for continued listing and the listing of the Shares is
discontinued, the market for the Shares could be adversely affected.
If the AMEX were to delist the Shares, it is possible that the Shares
would continue to trade on another securities exchange or in the
over-the-counter market and that price or other quotations would be reported by
such exchange or other sources. The extent of the public market for the Shares
and the availability of the quotations would depend, however, upon factors such
as the number of stockholders and the aggregate market value of the
30
Shares remaining at that time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of registration
under the Exchange Act, as described below, and other factors. SAC cannot
predict whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future market prices to be
higher or lower than the Offer Price.
MARGIN REGULATIONS. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve Board (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of the Shares. Depending upon factors similar
to those described above regarding listing and market quotations, the Shares
might no longer constitute "margin securities" for the purposes of the Federal
Reserve Board's margin regulations in which event the Shares would be ineligible
as collateral for margin loans made by brokers.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by Schuff International upon
application to the SEC if the outstanding Shares are not listed on a national
securities exchange and if there are fewer than 300 holders of record of Shares.
Termination of registration of the Shares under the Exchange Act would reduce
the information required to be furnished by Schuff International to its
stockholders and to the SEC and would make certain provisions of the Exchange
Act, such as the short-swing profit recovery provisions of Section 16(b) and the
requirement to furnish a proxy statement in connection with stockholders'
meetings pursuant to Section 14(a) and the related requirement to furnish an
annual report to stockholders, no longer applicable with respect to the Shares.
Furthermore, the ability of "affiliates" of Schuff International and persons
holding "restricted securities" of Schuff International to dispose of such
securities pursuant to Rule 144 under the Securities Act of 1933, as amended,
may be impaired or eliminated. If registration of the Shares under the Exchange
Act were terminated, the Shares would no longer be eligible for continued
inclusion on the Federal Reserve Board's list of "margin securities." SAC
intends to seek to cause Schuff International to apply for termination of
registration of the Shares as soon as possible after consummation of the Offer
if the requirements for termination of registration are met.
15. FEES AND EXPENSES.
Except as set forth below, SAC will not pay any fees or commissions to any
broker, dealer, or other person for soliciting tenders of Shares pursuant to the
Offer.
SAC has appointed Julie Hall of SAC to act as the Information Agent in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph, and personal interviews and may request
brokers, dealers, and other nominee stockholders to forward materials relating
to the Offer to beneficial owners of Shares. The Information Agent may receive
reasonable and customary compensation for such services, plus reimbursement of
out-of-pocket expenses, and SAC will indemnify the Information Agent against
certain liabilities and expenses in connection with the Offer, including
liabilities under the federal securities laws.
SAC has retained Computershare Trust Company, Inc. to act as the
Depository in connection with the Offer. SAC will pay the Depository reasonable
and customary compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depository
against certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. Brokers, dealers, commercial
banks, and trust companies will be reimbursed by SAC for customary mailing and
handling expenses incurred by them in forwarding material to their customers.
In addition, Schuff International will incur its own fees and expenses in
connection with the Offer.
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The following is an estimate of the fees and expenses to be incurred by
SAC:
TYPE OF FEE AMOUNT
----------- ------
Filing Fees................................. $ 886
Legal Fees and Expenses..................... 75,000
Depositary Fees............................. 10,000
Information Agent Fees...................... 1,000
Printing and Mailing........................ 8,000
Miscellaneous............................... 2,114
------
Total.................................... $97,000
=======
16. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. SAC may, however, in its sole discretion, take such action as it
may deem necessary to make the Offer in any such jurisdiction and extend the
Offer to holders of Shares in such jurisdiction.
SAC is not aware of any jurisdiction in which the making of the Offer or
the acceptance of Shares in connection therewith would not be in compliance with
the laws of such jurisdiction.
SAC has filed with the SEC a Tender Offer Statement on Schedule TO
pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange
Act, furnishing certain additional information with respect to the Offer, and
may file amendments thereto. Such Statement includes within it the information
required by the SEC's Statement on Schedule 13e-3 relating to "going private"
transactions. Such Statement and any amendments thereto, including exhibits, may
be examined and copies may be obtained from the principal office of the SEC in
Washington, D.C. in the manner set forth in Section 7, "The Tender Offer --
Certain Information Concerning Schuff International."
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF SAC NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Dated: April 30, 2004 Schuff Acquisition Corp.
32
SCHEDULE A
SECTION 262 OF GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
RELATING TO THE RIGHTS OF DISSENTING STOCKHOLDERS
SECTION 262. APPRAISAL RIGHTS.
(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
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the
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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
of 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, then either a constituent corporation before
the effective date of the merger or consolidation or the surviving or resulting
corporation within 10 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. 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
A-2
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
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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.
(l) 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.
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Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly executed, will be accepted. Letters of Transmittal and
certificates for Shares and any other required documents should be sent or
delivered by each stockholder of Schuff International or his or her broker,
dealer, commercial bank, trust company, or other nominee to the Depositary at
one of its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
COMPUTERSHARE TRUST COMPANY, INC.
By Mail: By Hand: By Overnight Delivery:
Computershare Trust Computershare Trust Computershare Trust
Company, Inc. Company, Inc. Company, Inc.
Attn: Reorganization Dept. Attn: Reorganization Dept. Attn: Reorganization
P.O. Box 1596 350 Indiana Street, #800 Dept.
Denver, Colorado 80201-1596 Golden, Colorado 80401 350 Indiana Street, #800
Golden, Colorado 80401
By Facsimile Transmission
(For Eligible Institutions Only):
(303) 262-0606
Confirmation Receipt of Facsimile by
Telephone Only
(303) 262-0600 ext. 4732
Any questions or requests for assistance may be directed to the
Information Agent at its address and telephone numbers set forth below. Requests
for additional copies of this Offer to Purchase, the Letter of Transmittal, and
the Notice of Guaranteed Delivery may be directed to the Information Agent or
the Depositary. Stockholders may also contact their brokers, dealers, commercial
banks, trust companies, or other nominees for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
Schuff Acquisition Corp.
Attention: Julie Hall
1841 West Buchanan
Phoenix, Arizona 85007
Email: julie.hall@schuff.com
or
CALL: (602) 452-4497