EXHIBIT 2.3
BIDDING PROCEDURES
Set forth below are the bidding procedures (the "Bidding Procedures")
to be employed with respect to the Stock Purchase and Sale Agreement by and
between Burlington Industries, Inc. (the "Company") and Berkshire Hathaway Inc.
(the "Buyer") dated as of February 11, 2003 (including all exhibits attached
thereto, the "Agreement"),* for the sale (the "Sale"), pursuant to the Company's
Joint Plan of Reorganization (as it may be amended, the "Plan"), of all of the
issued and outstanding capital stock of the reorganized Company (the
"Transaction").
Prior to the Auction (as such term is defined below), notwithstanding
anything to the contrary contained herein, the Company may serve these (i)
Bidding Procedures, (ii) any order of the Bankruptcy Court or other notice
relating to these Bidding Procedures, (iii) a cover letter summarizing the
Bidding Procedures and the Transaction and providing contact information for the
Company and its advisors to respond to inquiries regarding the Bidding
Procedures or the Transaction and/or (iv) a form confidentiality agreement on:
(i) all parties required to be served with such documents under the Bankruptcy
Code, the Bankruptcy Rules or any order of the Bankruptcy Court; and (ii) any
other parties whom the Company or its advisors, in their sole discretion, deem
appropriate.
As set forth in the Agreement, the Company is permitted to continue to
review and pursue the WLR Proposal while implementing the Bidding Procedures and
conducting the Auction. As a result, the proponent of the WLR Proposal is not
required to participate in the Bidding Procedures.
Notwithstanding the selection of the Successful Bidder (as hereinafter
defined) and the execution of the Agreement (or the Marked Agreement (as
hereinafter defined)), as the case may be, the consummation of the Transaction
provided for therein shall be contingent upon, and made pursuant to,
confirmation of the Plan. The Transaction shall be made, (i) if no other
Qualified Bid (as defined below) is received, with the Buyer pursuant to the
terms and conditions set forth in the Agreement or (ii) if another Qualified Bid
is received by the Company, with the Buyer or such other Qualified Bidder (as
defined below) as the Company, in the exercise of its business judgment, may
determine to have made the highest or otherwise best offer in the Auction,
consistent with these Bidding Procedures (the Agreement of such higher or better
Qualified Bid being the "Successful Bid" and the Buyer or such other Qualified
Bidder being the "Successful Bidder").
The Company fully reserves the right to decide not to pursue the
Transaction with the Buyer or any other Successful Bidder and, instead, to
pursue the WLR Proposal; provided, however, that any termination of the
Transaction with the Buyer will be governed by the terms of the Agreement.
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* Unless otherwise defined herein, all capitalized terms shall have the
meanings set forth in the Agreement.
DETERMINATION BY THE COMPANY
The Company, in consultation with its advisors, shall (i) determine
whether any person in addition to the Buyer is a Qualified Bidder, (ii)
coordinate the efforts of Qualified Bidders in conducting their respective due
diligence investigations regarding the Company, (iii) receive bids from
Qualified Bidders, and (iv) negotiate any bid made to purchase the Company
(collectively, the "Bidding Process"). Any person who wishes to participate in
the Bidding Process must be a Qualified Bidder. Neither the Company nor its
representatives shall be obligated to furnish any information of any kind
whatsoever relating to the Company and the Transaction to any person who is not
a Qualified Bidder.
PARTICIPATION REQUIREMENTS
To participate in the Bidding Process, each interested person (a
"Potential Bidder") must deliver the following (unless previously delivered) to
the Company no later than 4:00 p.m. (New York time) on March 17, 2003:
(i) An executed confidentiality agreement in form and substance
satisfactory to the Company, which is no less favorable to
the Company or more favorable to the Potential Bidder than
the confidentiality agreement executed by the Buyer; and
(ii) The most current audited and latest unaudited financial
statements (collectively, "Financials") of the Potential
Bidder, or, if the Potential Bidder is an entity formed for
the purpose of the Transaction, (x) Financials of the equity
holder(s) of the Potential Bidder or such other form of
financial disclosure as is acceptable to the Company and (y)
the written commitment acceptable to the Company of the
equity holder(s) of the Potential Bidder to be responsible
for the Potential Bidder's obligations in connection with
the Transaction.
A "Qualified Bidder" is a Potential Bidder that delivers the documents
described in subparagraphs (i) and (ii) above, whose Financials demonstrate the
financial capability to consummate the Sale in the opinion of the Company and
that the Company, in consultation with its advisors, determines is able to
consummate the Sale, if selected as the Successful Bidder, taking into account
all legal, regulatory and business considerations that the Company determines
are relevant. The Buyer is a Qualified Bidder.
Within two (2) business days after the Company receives from a
Potential Bidder all of the materials required by subparagraphs (i) and (ii)
above, the Company shall determine, in consultation with its advisors, and shall
notify the Potential Bidder in writing (with a copy to the Buyer), whether the
Potential Bidder is a Qualified Bidder. At the same time that the Company
notifies the Potential Bidder that it is a Qualified Bidder, the Company shall
deliver (unless previously delivered) to the Qualified Bidder (i) a confidential
memorandum containing information and financial data relating to the Company
(the "Confidential Memorandum") and (ii) a copy of the Agreement.
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OBTAINING DUE DILIGENCE ACCESS
To obtain due diligence access or additional information from the
Company, a Qualified Bidder (other than the Buyer) must first provide the
Company with a written non-binding expression of interest ("Expression of
Interest") regarding (i) the Transaction, (ii) the purchase price range, (iii)
the structure and financing of the transaction (including the amount of cash to
be committed and sources of financing), (iv) any conditions to closing that it
may wish to impose, and (v) the nature and extent of additional due diligence it
may wish to conduct. If, based on the Expression of Interest and such additional
factors as the Company determines are relevant, the Company, in its business
judgment and in consultation with its advisors, determines that the Qualified
Bidder is reasonably likely to make a bona fide higher or otherwise better offer
for the Company than offered by the Buyer, the Company shall afford such
Qualified Bidder reasonable due diligence.
Neither the Company nor any of its affiliates (or any of their
respective representatives) are obligated to furnish any information relating to
the Company and the Transaction to any person except to the Buyer, and a
Qualified Bidder who makes an Expression of Interest acceptable to the Company.
The Company shall give the Buyer any Confidential Memorandum and access to all
due diligence information provided to any other Qualified Bidder.
The Company shall coordinate all reasonable requests for additional
information and due diligence access from Qualified Bidders. No conditions
relating to the completion of due diligence shall be permitted to exist after
the Bid Deadline (as defined below).
BID DEADLINE
The deadline for submitting bids by a Qualified Bidder shall be 4:00
p.m. (New York time) on April 14, 2003 (the "Bid Deadline"). The Company may
extend the Bid Deadline once or successively, but is not obligated to do so. Any
such extension shall not have the effect of extending any deadlines or other
dates in the Agreement without the Buyer's prior approval. If the Company
extends the Bid Deadline, it shall promptly notify all Qualified Bidders and the
Buyer of the extension.
A Qualified Bidder that desires to make a bid shall deliver written
copies of its bid to the Company at (i) BURLINGTON INDUSTRIES, INC., 3330 West
Friendly Avenue, Greensboro, North Carolina 27410 (Attn: John D. Englar, Esq.)
(facsimile: (336) 379-4504); and (ii) counsel to Burlington, JONES DAY, North
Point, 901 Lakeside Avenue, Cleveland, Ohio 44114 (Attn: David G. Heiman, Esq.,
and Michelle Morgan Harner, Esq.) (facsimile: (216) 579-0212) and RICHARDS,
LAYTON & FINGER, One Rodney Square, Wilmington, Delaware 19801 (Attn: Daniel J.
DeFranceschi, Esq.) (facsimile: (302) 658-6548), not later than the Bid
Deadline, who shall then distribute a copy of the bid to the Buyer and counsel
for the Buyer.
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DUE DILIGENCE FROM BIDDERS
The Company and its advisors shall be entitled to due diligence from
the Qualified Bidder, upon execution of a confidentiality agreement that, in the
good faith judgment of the Company, is no more favorable to the Qualified Bidder
or less favorable to the Company than the confidentiality agreement executed by
the Buyer. The Qualified Bidder shall comply with all reasonable requests for
additional information and due diligence access by the Company or its advisors.
Failure by the Qualified Bidder to fully comply with requests for additional
information and due diligence access will be a basis for Company to determine
that a bid made by the Qualified Bidder is not a Qualified Bid.
BID REQUIREMENTS
A bid must be a written irrevocable offer from a Qualified Bidder (i)
stating that the Qualified Bidder offers to consummate the Transaction as
contemplated by the Agreement, upon the terms and conditions (other than the
Termination Fee) set forth in a copy of the Agreement, marked to show those
amendments and modifications to the Agreement, including price and terms, that
the Qualified Bidder proposes (the "Marked Agreement"); (ii) confirming that the
offer shall remain open until the completion of the closing under a Plan
incorporating the bid of the Successful Bidder (other than the bidder); (iii)
enclosing a copy of the proposed Marked Agreement; and (iv) accompanied with (a)
a certified or bank check, or wire transfer, in the amount of $14,000,000
payable to the order of the Company as a good-faith deposit (the "Good Faith
Deposit"), unless such Qualified Bidder can establish that it has the same or
higher credit rating from Standard & Poors and Moody's Investors Services as the
Buyer, and (b) written evidence of a commitment for financing or comparable
evidence of the bidder's ability to consummate the Sale, subject to no closing
conditions other than those in d. below, in either event satisfactory to the
Company.
In addition to the foregoing requirements, the Company will consider a
bid only if the bid:
a. provides for an aggregate purchase price for the Company of
at least $5,000,000 over the sum of (x) the aggregate
purchase price offered by the Buyer in the Agreement (which
shall be evaluated based, among other things, on the cash
purchase price, the Excluded Assets and working capital
adjustment set forth in the Marked Agreement), and (y) the
Termination Fee;
b. provides that all cash and securities which are components
of the purchase price are denominated in U.S. dollars only;
c. is on terms that are not materially more burdensome or
conditional than the terms of the Agreement;
d. is not conditioned on obtaining financing or the outcome of
unperformed due diligence by the bidder with respect to the
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Company, but may be subject to the same conditions, but only
those conditions, set forth in the Agreement;
e. does not request or entitle the bidder to any Termination
Fee, expense reimbursement or similar type of payment; and
f. fully discloses the identity of each entity that will be
bidding for the Company or otherwise participating in
connection with such bid, and the complete terms of any such
participation.
A bid received from a Qualified Bidder that meets the requirements set
forth in the preceding two paragraphs will be considered a "Qualified Bid." For
purposes hereof, the Agreement executed by the Buyer shall constitute a
Qualified Bid, but under no circumstances will the Buyer be required to make a
Good Faith Deposit, nor will the Buyer be required to have its offer, bid(s) or
obligations under the Agreement remain open or otherwise binding except as
expressly set forth in the Agreement, notwithstanding any provisions hereof,
including provisions regarding the Next Highest Bid (as defined below). Upon
receipt of a Qualified Bid, the Company shall provide the Buyer with a copy of
the Qualified Bid and the Marked Agreement.
INCORPORATION OF SUCCESSFUL BID INTO PLAN
The terms of the Successful Bid shall be incorporated into the Plan,
which, together with the Disclosure Statement, shall be amended to the extent
required to give effect thereto. The closing of the Sale shall be contingent
upon confirmation of the Plan and the occurrence of the effective date of the
Plan. The Plan may provide that if the Sale to the Successful Bidder does not
close on or before July 31, 2003 (or, if the Buyer is the Successful Bidder,
such other date as provided in the Agreement), the Company may enter into a
Transaction with the bidder making the Next Highest Bid (as defined below),
without further notice or solicitation, provided that all conditions to the
closing of the Next Highest Bid in the Marked Agreement in connection therewith
are satisfied.
AUCTION
If a Qualified Bid (other than the Agreement with the Buyer) is
received by the Bid Deadline, the Company will conduct an auction (the
"Auction") with respect to the Transaction. The Auction shall take place at
10:00 a.m. (New York time) on April 21, 2003 at the offices of Jones Day, 222
East 41st Street, New York, New York 10017. The Company may adjourn or
reschedule the Auction once or successively, but is not obligated to do so. Any
such adjournment or rescheduling shall not have the effect of extending any
deadlines or other dates in the Agreement without the Buyer's prior approval. If
the Company adjourns or reschedules the Auction, it shall promptly notify all
Qualified Bidders and the Buyer of the new date and time of the Auction.
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Only a Qualified Bidder who has submitted a Qualified Bid will be
eligible to participate at the Auction. Only the authorized representatives of
each of the Qualified Bidders, the official committee of unsecured creditors
appointed in the Company's chapter 11 case, the Company's prepetition and
postpetition secured lenders, Buyer and the Company shall be permitted to attend
the Auction. At the Auction, Qualified Bidders will be permitted to increase
their bids. The bidding at the Auction shall start at the purchase price stated
in the highest or otherwise best Qualified Bid, as determined in the Company's
sole discretion, after consultation with its advisors, and as disclosed to all
Qualified Bidders prior to commencement of the Auction, and continue in
increments of at least $3,000,000.
The Company may adopt rules for the Auction at the Auction that, in
its reasonable judgment, will better promote the goals of the Auction and that
are not inconsistent with any of the provisions of the Bankruptcy Court order
approving the Bidding Procedures or the Agreement. All such rules will provide
that: (i) the procedures must be fair and open, with no participating Qualified
Bidder disadvantaged in any material way as compared to any other Qualified
Bidder; (ii) all bids shall be made and received in one room, on an open basis,
and all other bidders shall be entitled to be present for all bidding with the
understanding that the true identity of each bidder (i.e., the principals
submitting each bid) shall be fully disclosed to all other bidders and that all
material terms of each Qualified Bid will be fully disclosed to all other
bidders throughout the entire Auction; and (iii) unless otherwise agreed to by
the Company, no Qualified Bidder will be permitted more than one hour to respond
to the previous bid at the Auction.
Immediately prior to the conclusion of the Auction, the Company, in
consultation with its advisors, shall (i) review each Qualified Bid on the basis
of its financial and contractual terms and the factors relevant to the sale
process and the best interests of the Company's estate, including, without
limitation, those factors affecting the speed and certainty of consummating the
Sale and antitrust and competition law considerations, (ii) identify the
Successful Bid, and (iii) identify the next highest or otherwise best offer
after the Successful Bid (the "Next Highest Bid"). Any bid submitted after the
conclusion of the Auction shall not be considered by the Company unless an order
of the Bankruptcy Court is entered directing the Company to consider the bid and
the Company shall have no obligation to seek such an order from the Bankruptcy
Court.
ACCEPTANCE OF QUALIFIED BIDS
The Company may (and if the Buyer is the Successful Bidder, the
Company shall) also present the results of the Auction and the Agreement or the
Marked Agreement, as the case may be, to the Bankruptcy Court at a hearing (the
"Approval Hearing"), at which the Company will request that the Bankruptcy Court
make certain findings regarding the Auction as set forth in the Agreement, but
including among other things (i) that the Company conducted the Auction and
selected the Successful Bidder in accordance with these Bidding Procedures, (ii)
that the Auction was fair in substance and procedure, and (iii) that the
Agreement or the Marked Agreement, as the case may be, constitutes the highest
and best offer for the Company.
Neither (i) the Company's inclusion of the Successful Bid in the Plan
or the Disclosure Statement, or presentation of the Successful Bid and the
Agreement or Marked
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Agreement, as applicable, at an Approval Hearing, nor (ii) the entry of an order
approving the Disclosure Statement (or any other order approving the Agreement
or the Marked Agreement before confirmation of the Plan) by the applicable
Court, shall obligate the Company to consummate the Transaction unless and until
the Plan has been confirmed and the effective date thereof occurs.
In the event that the Successful Bidder fails to close the Agreement
or the Marked Agreement, as the case may be, with the Company for any reason,
then the Company shall be authorized, but not required, to close with the
Qualified Bidder that submitted the Next Highest Bid, without notice to any
other party or further court order; provided that in no event will the Buyer, if
it submitted the Next Highest Bid, have any obligation to close.
The Company may (a) determine, in its business judgment, which
Qualified Bid, if any, is the Successful Bid and the Next Highest Bid; and (b)
reject at any time before entry of an order approving the Auction Approval
Motion, any bid that, in the Company's sole discretion, is (i) inadequate or
insufficient, (ii) not in conformity with the requirements of the Bankruptcy
Code, the Bidding Procedures, or the terms and conditions of Sale, or (iii)
contrary to the best interests of the Company and its estate (provided, however,
that the Company may terminate the Agreement only in accordance with its terms).
RETURN OF GOOD FAITH DEPOSIT
Except as otherwise provided in this paragraph, the Good Faith
Deposits of all Qualified Bidders required to submit such a deposit under the
Bidding Procedures shall be retained by the Company until 48 hours after the
entry of a final order resolving the Auction Approval Motion. Upon entry of such
final order, (i) the Good Faith Deposit of the Successful Bidder shall be held
until the closing of the Transaction and applied in accordance with the
Agreement or Marked Agreement, as applicable; and (ii) the Good Faith Deposit of
the Next Highest Bidder shall be retained by the Company until 48 hours after
the closing of the Transaction. Pending the closing of the Transaction, the Good
Faith Deposit of the Successful Bidder and the Next Highest Bidder shall be
maintained by the Company in an interest-bearing escrow account and any interest
earned on the Good Faith Deposit shall be applied or transferred in the same
manner as the Good Faith Deposit; provided, however, that neither the Successful
Bidder nor the Next Highest Bidder shall have any claim, cause of action or any
similar right against the Company relating to or arising out of the investment
of the Good Faith Deposit. If the closing does not occur, the disposition of the
Good Faith Deposit shall be as provided in the Agreement or Marked Agreement, as
applicable.
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