1
NEWS National Convenience Stores
Incorporated
100 Waugh Drive
Houston, Texas 77007
Contact: Brian Fontana
Chief Financial Officer
(713) 863-2434
NCS #274
NATIONAL CONVENIENCE STORES REJECTS CIRCLE K
ACQUISITION PROPOSAL, SIGNS ATM AGREEMENT WITH
NATIONSBANK AND ADOPTS STOCKHOLDER RIGHTS PLAN
HOUSTON, TEXAS -- August 31, 1995 -- National Convenience Stores
Incorporated (NYSE:NCS) announced today that its Board of Directors has
unanimously rejected The Circle K Corporation's unsolicited $17.00 cash
acquisition proposal. The Board believes that it is in the best interests of
the Company's stockholders to remain an independent public company and to
continue to pursue its strategic plan. The Board of Directors based its
judgment in part upon the opinion of Merrill Lynch & Co., the Company's
financial advisor, that the Circle K proposal is inadequate from a financial
point of view.
The Company's Board of Directors believes that remaining independent
is superior to the Circle K proposal for several reasons. The Company's
results of operations have only recently begun to reflect the impact of the
implementation of Project Breakthrough in its Dallas/Fort Worth market, and
this favorable trend is expected to continue as the project is rolled out
across the Company's entire store base. V.H. Van Horn, President and Chief
Executive Officer of the Company, said "We are off to a very strong start in
fiscal 1996, with operating results well above those for last year." He
further noted "In addition to the strong operating results, the Company today
signed an automated teller agreement with NationsBank which guarantees the
Company $16.5 million in operating income over the next six years."
- MORE -
2
NATIONAL CONVENIENCE STORES INCORPORATED
RELEASE #274
ADD 2
The strategic alliance with NationsBank of Texas, N.A. provides for
the installation of automated teller machines in the Company's 661 stores.
Under this agreement, NationsBank's 1.2 million cardholders in Texas will have
the convenience of conducting financial transactions in all the Company's
stores without the payment of a bank service charge. This arrangement, which
becomes effective in December 1995 upon expiration of the Company's current
automated teller machine contract, is expected to generate over 21 million
customer visits per year, and each visit represents an opportunity for the
Company to sell gasoline and merchandise. Based upon the Company's experience
with automated teller machines in less than half of its stores, the Company
believes that the new strategic alliance will generate at least $19.5 million
in additional store profits over the term of the contract. Additionally, the
Company anticipates incremental profits from associated gasoline and
merchandise sales. The Company and NationsBank intend to engage in an
extensive marketing campaign to promote the new strategic alliance.
The Company also announced that its Board of Directors has adopted a
Stockholder Rights Plan. The Plan is designed to protect the Company from
unfair or coercive takeover tactics and to assure that all of the Company's
stockholders receive fair treatment in the event of any takeover proposal. It
is not intended to prevent a takeover on terms beneficial to the Company's
stockholders. A brief summary of the terms and provisions of the Plan and the
mechanics of its implementation is set forth in Exhibit A hereto.
The Company also announced that its Board of Directors has fixed
October 2, 1995 as the record date for the Company's 1995 annual meeting that
will be held in Houston, Texas at 10:00 a.m., local time, on November 7, 1995.
The Board of Directors has also nominated Messrs. Charles J. Luellen, Lionel
Sosa, Richard C. Steadman and William Key Wilde to stand for re-election as
directors at the forthcoming annual meeting. As previously announced, Circle K
and Bedford Falls Investors, L.P. have submitted separate proposals to increase
the number of the Company's directors from the eight currently provided in the
bylaws and to run their own slates of candidates.
National Convenience Stores Incorporated employs approximately 4,800
people in Texas and is the leading convenience store operator in the geographic
area known as the "Texas Triangle" which encompasses Houston, Dallas/Fort Worth
and San Antonio.
- MORE -
3
EXHIBIT A
NATIONAL CONVENIENCE STORES INCORPORATED
SUMMARY OF STOCKHOLDER RIGHTS PLAN
The Stockholder Rights Plan of National Convenience Stores
Incorporated entails a dividend of one right for each outstanding share of the
Company's common stock. Each right will entitle the holder to buy
one-hundredth of a share of a new series of Preferred Stock for an exercise
price of $55. Each one-hundredth of a share of such preferred stock would be
essentially the economic equivalent of a share of the Company's common stock.
The rights will trade with the Company's common stock until exercisable. The
rights will not be exercisable until ten days following a public announcement
that a person or group has acquired 10% of the Company's common stock or until
ten business days after a person or group begins a tender offer that would
result in ownership of 10% of the Company's common stock, subject to certain
extensions by the Board.
In the event that an acquiror becomes a 10% stockholder, the Rights
"flip in" and become rights to buy the Company's common stock at a 50%
discount, and Rights owned by the 10% stockholder become void. In the event of
that the Company is merged and its common stock is exchanged or converted or if
50% or more of the Company's assets or earning power is sold or transferred,
the Rights "flip over" and entitle the holders to buy shares of the acquiror's
common stock at a 50% discount.
The rights may be redeemed by the Board of Directors for $.01 per
right at any time until 10 days following the first public announcement of a
10% acquisition of beneficial ownership of the Company's common stock. The
rights extend for 10 years and will expire August 31, 2005. The distribution
of the rights will be made to shareholders of record on September 11, 1995.
# # #