SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No. __________]
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Check the appropriate box:
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[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[X] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SAFETY-KLEEN CORP.
................................................................................
(Name of Registrant as Specified in Its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(1) Title of each class of securities to which transaction applies: ......
.................
(2) Aggregate number of securities to which transaction applies:
......................
(3) Per unit price or other underlying value of transaction computed
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FOR IMMEDIATE RELEASE Contact: Maureen Fisk
847-468-2452
SAFETY-KLEEN BOARD REJECTS
LAIDLAW ENVIRONMENTAL OFFER
December 22, 1997 -- Elgin, Illinois -- The Safety-Kleen Corp. Board of
Directors today announced that it has rejected Laidlaw Environmental Services,
Inc.'s hostile exchange offer.
In a letter to shareholders, Donald W. Brinckman, Chairman and Chief Executive
Officer of Safety-Kleen, said the Board had thoroughly reviewed the Laidlaw
offer and concluded that it does not provide value superior to the $27 all cash
agreement to merge Safety-Kleen with SK Parent Corp., a new company formed by
Philip Services Corp., and affiliates of Apollo Management, L.P. and affiliates
of Blackstone Management Partners III L.L.C.
Brinckman stated, "The Directors have significant concern as to the value
that Safety-Kleen shareholders will realize from the Laidlaw Environmental
common stock which would be issued to Safety-Kleen shareholders in this
transaction. In addition, the cash portion of the purchase price is subject to
reduction, which according to Laidlaw's own estimates, could amount to between
$1.28 and $2.14 per share. Under these circumstances, the Board was convinced
that the $27 all-cash merger agreement with the Philip Group, which it expects
can be closed shortly after shareholder approval at a meeting to be held
February 11, is superior for all shareholders and the Board remains committed to
seeking approval of that agreement. Furthermore," Brinckman added, "we believe
that the ultimate objective of Laidlaw Environmental's hostile exchange offer is
to allow Laidlaw, Inc., the parent company, to deconsolidate and remove the
liabilities and environmental exposure of Laidlaw Environmental from its
financial statements. If their deal were consummated, these risks would be
passed on to Safety-Kleen shareholders." Brinckman concluded.
The text of Brinckman's letter follows:
Dear Safety-Kleen Shareholder:
We, the Board of Directors, realize the enormous responsibility of
evaluating the offers for your Company. We believe that the $27 all-cash merger
agreement we have approved (the "Philip Merger") offers Safety-Kleen
shareholders value superior to the Laidlaw Environmental proposal. The Philip
Merger Agreement was entered into after your Board carefully evaluated the risks
and benefits of the alternatives available and unanimously agreed the Philip
Merger Agreement is in the best interests of the shareholders and other
constituencies which your Board considered.
Laidlaw Environmental Services claims that the offer it made on November 20
is worth $30 per share, consisting of $15 in Laidlaw Environmental stock and $15
cash, subject to certain adjustments. We firmly believe that it is not worth
$30 per share.
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Safety-Kleen Corp.
Add One
. The stock portion of their offer is uncertain and could be worth significantly
less than its claimed $15 value. Consider the following:
- Laidlaw says it expects to achieve an estimated $100-130 million of
"synergies". However, there is little overlap between Safety-Kleen's core
service business and Laidlaw's landfill and incineration business. As a
result, we do not believe that Laidlaw can accomplish even $50 million of
synergies without significant reductions in service quality, revenue and
profit.
- The value of the stock portion of Laidlaw Environmental's offer is
dependent upon its stock trading above $4.29 per share. As recently as
last week, the stock traded below the minimum level.
- We believe that Laidlaw Environmental has materially underestimated the
charges for depreciation and amortization that would result from its
transaction. Accordingly, Laidlaw's future earnings would be significantly
reduced.
- Up to approximately 200 million Laidlaw Environmental shares would be
issued in the transaction, which could quadruple the stock available in the
public markets. It is questionable whether the market could absorb this
substantial stock issuance without adversely affecting Laidlaw's stock
price.
. Laidlaw Environmental provides no guaranty as to how much will be paid in cash
to Safety-Kleen shareholders. The nominal $15 in cash portion is subject to
reduction, which based on Laidlaw's own estimates, could amount to between $1.28
and $2.14 per share.
. Considering the conditions in Laidlaw's offer, it is unlikely that its
proposed transaction would close before mid-1998 at the earliest.
Your Board also carefully considered the significant differences between
the business operations of Safety-Kleen and Laidlaw Environmental. Safety-Kleen
recycles; Laidlaw incinerates and puts wastes in the ground. The latter results
in much greater potential environmental liability. As a result of the
transaction, Laidlaw, Inc., the parent company, would remove the potential
liabilities and environmental risks of Laidlaw Environmental from its balance
sheet. Safety-Kleen shareholders, who could become owners of more than 50% of
Laidlaw Environmental if the transaction were completed, would become subject to
those risks.
We have called a special meeting of shareholders to approve the Philip
Merger which will be held on February 11, 1998. In the next few weeks, we will
forward to you proxy materials containing details on this merger.
The Board of Directors and management team at Safety-Kleen has, and will
continue to act with your best interests in mind. We appreciate your support
and confidence and will keep you fully informed of the process.
Sincerely,
Donald W. Brinckman
Founder, Chairman and Chief Executive Officer
For the Board of Directors
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PARTICIPANT INFORMATION
Safety-Kleen Corp. ("Safety-Kleen") and the persons named below may be
deemed to be participants in the solicitation of proxies in connection with the
merger of SK Acquisition Corp. (the "Purchaser"), a wholly-owned subsidiary of
SK Parent Corp. ("Parent"), with and into Safety-Kleen (the "Merger") and
pursuant to which each share of Safety-Kleen common stock (including each
associated common stock purchase right) (other than shares owned by Parent, the
Purchaser or any subsidiary thereof and treasury shares) will be converted in
the Merger into the right to receive $27.00 in cash, without interest. Parent is
a new corporation formed by Philip Services Corp. ("Philip"), affiliates of
Apollo Management, L.P. ("Apollo") and affiliates of Blackstone Management
Partners III L.L.C. ("Blackstone").
Safety-Kleen. Participants in this solicitation may include the directors
of Safety-Kleen (Donald W. Brinckman, Richard T. Farmer, Russell A. Gwillim,
Edgar D. Jannotta, Karl G. Otzen, Paul D. Schrage, Marcia E. Williams, and W.
Gordon Wood); the following executive officers of Safety-Kleen: Joseph Chalhoub,
David A. Dattilo, F. Henry Habicht II, Hyman K. Bielsky, Scott E. Fore, Scott D.
Krill, Clark J. Rose, Andrew A. Campbell, Laurence M. Rudnick, C. James Schulz
and Maureen Fisk (collectively, the "Safety-Kleen Participants"). The above-
referenced individuals beneficially own an aggregate of 3,580,944 shares of
Safety-Kleen common stock (including shares subject to stock options exercisable
within 60 days). Messrs. Brinckman and Otzen beneficially own 907,100 shares and
1,481,093 shares of Safety-Kleen common stock, respectively (including shares
subject to stock options exercisable within 60 days). None of the remaining
Safety-Kleen Participants beneficially owns in excess of 1% of Safety-Kleen's
outstanding equity securities. The address of each of the Safety-Kleen
participants is c/o Safety-Kleen Corp., One Brinckman Way, Elgin, Illinois
60123.
William Blair. Safety-Kleen has retained William Blair & Company, L.L.C.
("William Blair") to act as its financial advisors in connection with the
Merger, for which it has received and may receive substantial fees, as well as
reimbursement of reasonable out-of-pocket expenses. In addition, Safety-Kleen
has agreed to indemnify William Blair and certain related persons against
certain liabilities, including certain liabilities under the federal securities
laws, arising out of their engagement. Certain employees of William Blair may
also assist in the solicitation of proxies, including by communicating in
person, by telephone, or otherwise with a limited number of institutions,
brokers, or other persons who are stockholders of Safety-Kleen. William Blair
will not receive any separate fee for any such solicitation activities. William
Blair is an investment banking firm that provides a full range of financial
services for institutional and individual clients. William Blair does not admit
that it or any of its directors, officers or employees is a "participant" as
defined in Schedule 14A promulgated under the Exchange Act, in the solicitation,
or that Schedule 14A requires the disclosure of certain information concerning
William Blair. In the normal course of its business, William Blair regularly
buys and sells Safety-Kleen securities for its own account and for the accounts
of its customers which may result from time to time in William Blair and its
associates having a net "long" or net "short" position in Safety-Kleen
securities. Additionally, in the normal course of its business, William Blair
may finance its securities positions by bank and other borrowings and repurchase
and securities borrowing transactions. Employees of William Blair who may be
deemed "participants" in this solicitation include: E. David Coolidge III, John
L. Carton, Jeffrey W. Corum and Brent W. Felitto. The business address of such
persons is William Blair & Company, L.L.C., 222 West Adams Street, Chicago,
Illinois 60606.
Safety-Kleen anticipates that certain officers, directors, employees or
affiliates of Philip, Apollo, Blackstone, Parent and Merrill Lynch & Co.,
Parent's financial advisor ("Merrill Lynch"), may communicate in person, by
telephone or otherwise with shareholders of Safety-Kleen for the purpose of
assisting in the solicitation of proxies. These efforts would be in furtherance
of Parent's efforts to consummate the Merger. None of such persons will be
compensated by Safety-Kleen in connection with such solicitation activities.
Except as noted below with respect to Merrill Lynch, none of such persons
beneficially owns, individually or in the aggregate, in excess of 1% of Safety-
Kleen's outstanding common stock. Additional information concerning such
participants is set forth below.
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Philip Services Corp. Unless otherwise indicated, the information below
refers to such person's position with Philip Services Corp. The business
address of each executive officer is Philip Services Corp., 100 King Street
West, P.O. Box 2440, LCD #1, Hamilton, Ontario, L8N 4J6. Persons who may be
deemed to be participants in this solicitation include: Allen Fracassi,
President, Chief Executive Officer and Director; Philip Fracassi, Executive
Vice-President, Chief Operating Officer and Director; Howard Beck, Chairman and
Director; Roy Cairns, Director; Derrick Rolfe, Director; Norman Foster,
Director; Felix Pardo, Director; Herman Turkstra, Director; William E. Haynes,
Director; Robert Waxman, President, Metals Recovery Group and Director; Robert
L. Knauss, Director; Marvin Boughton, Executive Vice-President and Chief
Financial Officer; Robert M. Chiste, President, Industrial Services Group; Peter
Chodos, Executive Vice-President, Corporate Development; Colin Soule, Executive
Vice-President, General Counsel & Corporate Secretary (also a director of
Parent); Antonio Pingue, Executive Vice President, Corporate and Regulatory
Affairs; and John Woodcroft, Executive Vice-President, Operations.
Apollo. Persons who may be deemed to be participants in this solicitation
include: Apollo Management, L.P., Apollo Investment Fund III, L.P., Apollo
Overseas Partners III, L.P., Apollo (U.K.) Partners III, L.P., Antony P.
Ressler, Investment Manager and Director of Parent, and David B. Kaplan,
Investment Manager.
Blackstone. Persons who may be deemed to be participants in this
solicitation include: Blackstone Capital Partners III Merchant Banking Fund
L.P., Blackstone Offshore Capital Partners III L.P., Blackstone Management
Associates III L.P., Blackstone Management Partners III L.L.C., Howard A.
Lipson, Investment Manager, a Director of Parent, and Lawrence H. Guffey,
Investment Manager.
SK Parent Corp. Persons who may be deemed to be participants in this
solicitation include: Colin Soule (see Philip above), Antony P. Ressler (see
Apollo above), and Howard A. Lipson (see Blackstone above).
Merrill Lynch. Certain employees of Merrill Lynch & Co. may also assist in
the solicitation of proxies, including by communicating in person, by telephone,
or otherwise with a limited number of institutions, brokers, or other persons
who are stockholders of Safety-Kleen. Merrill Lynch will not receive any
separate fee for its solicitation activities. Merrill Lynch is an investment
banking firm that provides a full range of financial services for institutional
and individual clients. Merrill Lynch does not admit that it or any of its
directors, officers or employees is a "participant" as defined in Schedule 14A
promulgated under the Exchange Act, in the solicitation, or that Schedule 14A
requires the disclosure of certain information concerning Merrill Lynch. In the
normal course of its business, Merrill Lynch regularly buys and sells Safety-
Kleen securities for its own account and for the accounts of its customers which
may result from time to time in Merrill Lynch and its associates having a net
"long" or net "short" position in Safety-Kleen securities. Additionally, in the
normal course of its business, Merrill Lynch may finance its securities
positions by bank and other borrowings and repurchase and securities borrowing
transactions. Employees of Merrill Lynch who may be deemed "participants" in
this solicitation include: Mark Shafir and Drago Rajkovic. The business
address of such persons is Merrill Lynch & Co., 101 California Street, Suite
1200, San Francisco, California 94111.
* * *
CERTAIN ADDITIONAL INFORMATION
Certain members of Safety-Kleen's management and of the Board will receive
economic benefits as a result of the Philip Merger, including payments with
respect to stock options and limited stock appreciation rights, maintenance of
directors' and officers' insurance coverage and employee benefits by the
surviving corporation of the Philip Merger for specified periods of time,
indemnification rights, benefits under Change of Control Severance Agreements,
and possible continued employment by the surviving corporation of the Philip
Merger. They may also have the opportunity to make investments in the surviving
corporation of the Philip Merger.
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