1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
SCHEDULE 13E-3
(Amendment No. 4)
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
WIZTEC SOLUTIONS LTD.
(Name of Issuer)
CONVERGYS ISRAEL INVESTMENTS LTD.
CONVERGYS CORPORATION
(Name of Persons Filing Statement)
Ordinary Shares, New Israeli Shekel 1 Par Value
(Title of Class of Securities)
M98105-105
(CUSIP Number of Class of Securities)
William D. Baskett III
General Counsel and Secretary
Convergys Corporation
201 East Fourth Street
Cincinnati, Ohio 45202
(513) 723-2444
(Name, Address and Telephone Number of Person Authorized to Receive Notice
and Communications on Behalf of Persons Filing Statement)
COPY TO:
Neil Ganulin
Frost & Jacobs LLP
2500 PNC Center
Cincinnati, Ohio 45202
(513) 651-6800
This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of
1933.
c. [ ] A tender offer.
d. [ X ] None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [ ]
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRANSACTION VALUATION* AMOUNT OF FILING FEE
- -------------------------------------------------------------------------------------
$63,146,144(1).............................................. $12,629.23(2)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. For purposes of calculating the filing fee only. Pursuant to, and as
provided by, Rule 0-11(d), this amount is calculated by multiplying
$21.28, the average of the high and low prices of Ordinary Shares reported
on May 19, 1999, by 2,967,394 Ordinary Shares, New Israeli Shekel 1 par
value, which represents all Ordinary Shares outstanding as of May 19, 1999
not owned directly or indirectly by the persons filing this statement and
assumes the exercise of all warrants and options to purchase Ordinary
Shares which were outstanding as of May 19, 1999.
2. The amount of the filing fee, calculated in accordance with Rule 0-11(d)
of the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate cash value for such number of shares.
[ X ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: $11,152.51
Form or Registration No.: Schedule 14D-1
Filing Party: Convergys Corporation, Convergys Israel Investments Ltd. and
Convergys Information Management Group Inc.
Date Filed: April 1, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
INTRODUCTION
Convergys Corporation, an Ohio corporation ("Parent"), and Convergys Israel
Investments Ltd., a company limited by shares duly registered under the laws of
the State of Israel and a wholly owned subsidiary of Parent ("Sub"), hereby
amend and supplement their Transaction Statement on Schedule 13E-3 originally
filed on April 1, 1999, as amended. As previously indicated, with respect to the
recently completed offer to purchase all of the outstanding Ordinary Shares, New
Israeli Shekel 1 Par Value (the "Shares"), of Wiztec Solutions Ltd., a company
limited by shares duly registered under the laws of the State of Israel (the
"Company"), Sub purchased and currently owns 4,829,939 Shares (of which
4,750,000 Shares were tendered by an affiliate of Sub) or approximately 68.2% of
the Shares outstanding, at the purchase price of $18.30 per Share, net to the
Seller in cash. Since holders of at least 90% of the Shares did not accept the
recently completed tender offer, as set forth in the previously distributed
offer to purchase materials, in order to increase Sub's Share ownership, Sub is
electing to engage, from time to time, in its sole discretion, in open market
and privately negotiated purchases of Shares and warrants to purchase Shares, at
prices which may be greater or less than the Offer Price of $18.30 per Share.
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(b) The class of equity securities and the amount of such outstanding
securities being sought are 2,252,994 Ordinary Shares, New Israeli Shekel 1 Par
Value, of the Company and 714,400 Ordinary Shares which may be issued as a
result of the exercise of any of the warrants and options to purchase Shares
which were outstanding as of May 19, 1999. There were 7,082,933 shares
outstanding as of May 19, 1999. As of May 20, 1999 there were 33 holders of
record of Ordinary Shares.
(c) The following table supplements the information previously supplied
regarding the high and low closing sales price per Share on the Nasdaq National
Market as reported in published financial sources.
1999 SHARE PRICE
------------------
HIGH LOW
------- -------
First Quarter........................................... $19.375 $12.357
Second Quarter (through May 19, 1999)................... $21.438 $18.063
(f) The information set forth in "Item 10 -- Interest in Securities of
Issuer" of Schedule 13E-3, Amendment No. 3, and in "Special Factors --
Background of the Offer" and "The Tender Offer -- Section 6: Price Range of the
Shares; Dividends on the Shares" of the Offer to Purchase, is incorporated
herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a) - (b) The information set forth in the "Introduction" of Schedule
13E-3, Amendment No. 3, and in the "Introduction," "Special
Factors -- Background of the Offer," "Special Factors -- Related Party
Transactions," and "The Tender Offer -- Section 9: Certain Information
Concerning Parent and Sub" of the Offer to Purchase, is incorporated herein by
reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth in the "Introduction" of this Schedule 13E-3,
Amendment No. 4, is incorporated herein by reference.
(b) Not applicable.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) - (g): Parent ultimately wishes to increase its ownership of Shares to
100%. Parent's philosophy and policy is to own the entire equity interests of
its subsidiaries in order to simplify the management of its subsidiaries and to
eliminate the possibility of any potential conflicts of interest between itself
and any shareholders of its subsidiaries. The open market and privately
negotiated purchases of Shares and warrants to purchase Shares will increase
Parent's indirect share ownership. Other than the purchases described herein and
as described below, Parent, Sub and the persons set forth in Schedule I of the
Offer to Purchase have no current
2
3
plans or proposals which relate to or would result in the following: (a) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company; (b) a sale or transfer of a material amount
of the assets of the Company; (c) any change in the present board of directors
and management of the Company including, but not limited to, any plan or
proposal to change the number or term of directors, to fill any existing vacancy
on the board or to change any material term of the employment contract of any
executive officer; (d) any material change in the present dividend rate or
policy or indebtedness or capitalization of the Company; or (e) any other
material change in the Company's corporate structure or business.
Notwithstanding the above, Parent and Sub reserve the right to replace all or
some of the current directors of the Company. Also Parent intends to continue a
review of the Company in order to best integrate the activities of the Company
and Parent and its affiliates, and Parent expressly reserves the right to make
any changes that it deems necessary or appropriate in light of its review or in
light of future developments.
Parent and Sub are considering and, in the future, may initiate a plan or
an arrangement between themselves, the Company and the Company's shareholders,
in accordance with Section 233 of the Companies Ordinance, pursuant to which
Parent and Sub would acquire the remaining Shares of the Company. Pursuant to
Section 233 of the Companies Ordinance, an Israeli court is authorized, upon
motion of the Company, to convene a meeting of shareholders of the Company to
adopt an acquisition arrangement by the affirmative vote of both (i) the
majority of the shareholders represented at the meeting, in person or by
properly executed proxy, and voting thereon, and (ii) the holders (including
Sub) of not less than 75% of the voting power of the Shares represented at the
meeting, in person or by properly executed proxy, and voting thereon. If the
acquisition arrangement would be approved at such a meeting pursuant to Section
233 of the Companies Ordinance, the Company would file with the court a second
motion requesting that the court issue an order approving the acquisition
arrangement. The court has broad discretion under Section 233 of the Companies
Ordinance in approving or rejecting such shareholder approval of the acquisition
arrangement, and objections to the approval of the acquisition arrangement may
be submitted to the court by shareholders and other parties. The court is
authorized, at its discretion, to issue an order approving the acquisition
arrangement, rejecting the acquisition arrangement or approving the acquisition
arrangement subject to modifications. Assuming the court issues an order
approving the acquisition arrangement, Parent and Sub would take the necessary
steps to effectuate the acquisition arrangement and, at its consummation, all of
the Shares issued and outstanding at such time would be deemed transferred to
Parent and Sub and they would own 100% of the outstanding Shares of the Company.
In addition, at such time as the requirements for termination of
registration of the Shares under the Securities Exchange Act of 1934 are met,
Sub will seek to cause the Company to terminate the registration of the Shares
under such Act. Also, Sub will seek to cause the Company to de-list the Shares
at such time as the Shares may no longer be eligible for listing on the Nasdaq
National Market.
ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a) Sub will obtain all funds for the open market and privately negotiated
purchases of Shares from Parent in the form of capital contributions, loans or
advances. Parent anticipates funding the capital contributions or advances
through one or more of a combination of cash on hand and other internally
generated funds, commercial paper, privately placed notes and arranged bank
credit facilities.
(b) Sub believes that the only expenses to be incurred in connection with
the open market and privately negotiated purchases of Shares and warrants to
purchase Shares are brokerage fees and commissions related to the sale and
purchase of the Shares. Since the amount of such brokerage fees and commissions
will vary depending on the rates charged and the number of Shares purchased, it
is not possible to estimate at this time the amount of expenses that will be
incurred.
(c) The information set forth in "The Tender Offer -- Section 10: Sources
and Amount of Funds" of the Offer to Purchase is incorporated herein by
reference.
(d) Not applicable.
3
4
ITEM 7. PURPOSE(S), ALTERNATIVE REASONS AND EFFECTS.
(a) - (d) The information set forth in the Introduction of this Schedule
13E-3, Amendment No. 4, and in the "Introduction," "Special
Factors -- Background of the Offer" and "Special Factors -- Purpose of the
Offer; Reasons of Parent and Sub for Offer," of the Offer to Purchase, is
incorporated herein by reference. As a result of the purchases described herein,
the direct and indirect interest of Parent in the Company's net book value and
net earnings will increase as its percentage of Share ownership increases. For
example, on a pro forma basis, if the purchases described herein had been
completed as of December 31, 1998 and had resulted in increasing the share
ownership from approximately 68% to 80%, Parent's interest in the Company's net
book value would have increased from approximately $16,548,000 to approximately
$19,468,000 and in the Company's net earnings from approximately $3,824,000 to
approximately $4,498,000.
Certain U.S. Tax Considerations. The following is a general summary of
certain U.S. Federal income tax consequences that are relevant to a beneficial
holder of Shares subject to tax in the U.S. whose Shares are purchased in open
market and privately negotiated transactions (a "Holder"). The discussion is
based on the Internal Revenue Code of 1986, as amended (the "Code"), regulations
issued thereunder, judicial decisions and administrative rulings, all of which
are subject to change, possibly with retroactive effect. The following
discussion does not address the U.S. Federal income tax consequences to all
categories of Holders that may be subject to special rules (e.g., holders who
acquired their Shares pursuant to the exercise of employee stock options or
other compensation arrangements with the Company, foreign holders, insurance
companies, tax-exempt organizations, dealers in securities and persons who have
acquired the Shares as part of a straddle, hedge, conversion transaction or
other integrated investment). Holders should consult their own tax advisors
regarding the U.S. Federal, state, local and foreign income and other tax
consequences of their sale of Shares.
The receipt of cash for Shares sold in open market and privately negotiated
transactions will be a taxable transaction for U.S. Federal income tax purposes
and may also be a taxable transaction under applicable state, local and foreign
income and other tax laws. In general, a Holder who sells Shares will recognize
gain or loss for Federal income tax purposes equal to the difference, if any,
between the amount of cash received and the Holder's tax basis in the Shares
sold in such transactions. Gain or loss will be determined separately for each
block of Shares (i.e., Shares acquired at the same cost in a single transaction)
sold in such transactions. Such gain or loss will be long-term capital gain or
loss if the Holder either has held the Shares for more than one year at the time
of the consummation of such transactions or received the shares by gift or
inheritance and may treat the shares as having been held for more than one year.
Capital gains recognized by an individual investor (or an estate or certain
trusts) upon a disposition of a Share that has been held for more than one year
generally will be subject to a maximum tax rate of 20% or, in the case of a
Share that has been held for one year or less, will be subject to tax at
ordinary income rates. In determining the amount of capital gain subject to tax,
capital gain may be offset by capital losses. Certain limitations apply to the
use of capital losses.
Certain Israeli Tax Considerations. The following is a summary of certain
Israeli tax considerations applicable to the Company's shareholders in
connection with the receipt of cash for Shares sold in such transactions. The
following summary is not intended and should not be construed as legal or
professional tax advice and does not cover all possible tax considerations. The
following summary is addressed only to shareholders that hold the Shares as
capital assets (generally, assets held for investment) and may not apply to all
shareholders.
Israeli law generally imposes a capital gains tax on the sale of shares in
an Israeli company like the Company by both residents and non-residents of
Israel, unless a specific exemption is available or unless a treaty between
Israel and the country of the non-resident provides otherwise. The law
distinguishes between the "Real Gain" and the "Inflationary Surplus". The Real
Gain is the excess of the total capital gain over the Inflationary Surplus. The
Inflationary Surplus is computed on the basis of the increase in the Israeli
Consumer Price Index between the date of purchase and the date of sale. The Real
Gain is added to ordinary income which is taxed at an individual's marginal rate
(up to 50%) and 36% for companies. The Inflationary Surplus accumulated through
December 31, 1993 is generally taxed at a rate of 10%, while the Inflationary
Surplus accumulated from December 31, 1993 is exempt from capital gains tax.
4
5
Pursuant to the Income Tax Order (Exemption from Tax on Capital Gains From
the Sale of Shares) (the "Exemption Order"), capital gains from the sale, by
both residents and non-residents of Israel, of shares of an Industrial Company
which are traded on a recognized foreign stock exchange (including the Nasdaq
National Market) are exempt from taxation. There are various exceptions to the
exemption which, generally speaking, deny the exemption with regard to capital
gains realized when a share in a company has been sold for the first time after
the registration of the shares of that company on a recognized foreign stock
exchange. Sub believes that the Company currently qualifies as an Industrial
Company within the meaning of the Exemption Order; however, such qualification
has never been established definitively. The exemption under the Exemption Order
is not applicable to companies that report in accordance with the Income Tax Law
(Inflationary Adjustment) -- 1985.
In addition to the exemption provided by the Exemption Order, pursuant to
the Convention Between the Government of the United States and the Government of
Israel with respect to Taxes on Income (the "Treaty"), the sale, exchange or
disposition of Shares by a person who qualifies as a resident of the United
States within the meaning of the Treaty (a "Treaty Resident") will not be
subject to Israeli capital gains tax unless such Treaty Resident holds, directly
or indirectly, Shares representing 10% or more of the voting power of the
Company during any part of the 12-month period preceding the sale, exchange or
disposition. A sale, exchange or disposition of Shares by a Treaty Resident who
holds, directly or indirectly, Shares representing 10% or more of the voting
power of the Company during such 12-month period will be subject to such Israeli
capital gains tax; however, under the Treaty, such Treaty Resident would be
permitted to claim a credit for such taxes against the U.S. income tax imposed
with respect to such sale, exchange or disposition, subject to the limitations
applicable to the foreign tax credits.
Income from the sale of shares which an employee was issued as the result
of the exercise of options awarded under an employee option plan in the
framework of Section 102 of the Income Tax Ordinance (a "Section 102 Plan")
generally is computed at the difference between the sale price and the exercise
price and is taxed at the employee's marginal tax rate. In a Section 102 Plan,
an employee, who sells shares issued as the result of the exercise of options
before two years have elapsed from the award of the options, is subject to
taxation according to the highest tax of three possibilities: the tax which
would have been owing upon award of the options, the tax owing at the time of
the sale and the tax which would have been owing two years after the award of
the options.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL
TAX CONSEQUENCES RELATING TO THE DISPOSITION OF SHARES. HOLDERS OF SHARES ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE TAX CONSEQUENCES OF THEIR
PARTICULAR SITUATIONS.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) - (b) Parent and Sub reasonably believe that the open market purchases
and privately negotiated transactions will be fair to unaffiliated security
holders because the purchases of Shares will be at arms-length between a willing
seller and a willing buyer in the open market or through negotiated purchases.
Thus, any price at which Shares are purchased will be determined without
negotiations with or input by the Company.
(c) - (e) Since the transactions are open market and privately negotiated
transactions, the approval of at least a majority of unaffiliated security
holders is not required, and a majority of the directors who are not employees
of the Company (i) has not retained an unaffiliated representative to act solely
on behalf of unaffiliated security holders for the purpose of negotiating the
terms of such transactions or preparing a report concerning the fairness of such
transactions and (ii) has not approved or disapproved such transactions.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) Neither Parent or Sub nor the Company has received any report, opinion
or appraisal from an outside party which is materially related to the open
market and privately negotiated transactions described herein.
5
6
(b) Not applicable.
(c) Not applicable.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b): The information set forth in the "Introduction" of this
Schedule 13E-3, Amendment No. 4, and in the "Introduction," "Special
Factors -- Background of Offer," "Special Factors -- Interests of Certain
Persons in Offer" and "Special Factors -- Beneficial Ownership of Shares" of the
Offer to Purchase, is incorporated herein by reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
(a) At the present time, none of the executive officers, directors or
affiliates of the Company unrelated to Parent and Sub have indicated whether
they will sell any Shares owned by them in open market or privately negotiated
transactions.
(b) The Company's Board of Directors has expressed no opinion and has not
made any recommendation, and will not make any recommendation, as to whether
shareholders should sell their Shares in open market or privately negotiated
transactions. Each shareholder should make its own determination as to whether
it wishes to sell its Shares.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION
(a) Since the proposed transactions are open market purchases and privately
negotiated purchases of Shares, appraisal rights are not applicable to these
transactions and, thus, are not available to security holders.
(b) Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) The information set forth in "The Tender Offer -- Section 8: Certain
Information Concerning the Company" and in Schedule II to the Offer to Purchase
is incorporated herein by reference. The table below sets forth information for
the quarters ended March 31, 1999 and 1998.
WIZTEC SOLUTIONS LTD.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
QUARTER ENDED
MARCH 31,
----------------
1999 1998
------ ------
Statement of Operations Data:
Revenues................................................ $7,335 $3,510
Net Income.............................................. 3,006 681
Earnings Per Share:
Basic................................................... $0.445 $0.103
Diluted................................................. 0.412 0.098
Weighted Average Common Shares Outstanding:
Basic................................................... 6,755 6,600
Diluted................................................. 7,303 6,924
6
7
AT MARCH 31, AT DECEMBER 31,
1999 1998
------------ ---------------
Balance Sheet Data:
Total Current Assets.......................... $27,425 $22,479
Total Assets.................................. 33,524 28,442
Total Current Liabilities..................... 4,007 3,853
Total Liabilities............................. 4,293 4,107
Shareholders' Equity.......................... 29,231 24,335
Book Value per Diluted Share.................. $ 4.00 $ 3.51
(b) Not applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) Not applicable.
(b) The information set forth in subparagraph (b) of Item 6 -- "Source and
Amount of Funds or Other Consideration" of this Schedule 13E-3, Amendment No. 4,
is incorporated herein by reference.
ITEM 16. ADDITIONAL INFORMATION.
Not applicable.
ITEM 17. MATERIALS TO BE FILED AS EXHIBITS.
(d)(11) Letter to security holders in connection with the open market and
privately negotiated transactions.
7
8
SIGNATURES
After due inquiry and to the best of my knowledge and belief, each of the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Date: May 24, 1999 Convergys Israel Investments Ltd.
By: /s/ WILLIAM D. BASKETT III
---------------------------------------
William D. Baskett III
Vice President
Convergys Corporation
By: /s/ WILLIAM D. BASKETT III
---------------------------------------
William D. Baskett III
General Counsel and Secretary
8
9
EXHIBIT INDEX
EXHIBITS
- --------
(d)(11) Letter to security holders in connection with the open
market and privately negotiated transactions
9