UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 2, 2006
SERVICE CORPORATION INTERNATIONAL
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(Exact name of registrant as specified in its charter)
Texas 1-6402-1 74-1488375
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1929 Allen Parkway, Houston, TX 77019
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 522-5141
Not Applicable
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13.e-4(c)
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
THE AGREEMENT AND PLAN OF MERGER
On April 2, 2006, Service Corporation International, a Texas corporation
("SCI"), and Coronado Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of SCI ("Merger Sub"), entered into an Agreement and
Plan of Merger (the "Merger Agreement") with Alderwoods Group, Inc., a Delaware
corporation ("Alderwoods"). The Merger Agreement provides that, upon the terms
and subject to the conditions set forth in the Merger Agreement, Merger Sub will
merge with and into Alderwoods (the "Merger"), with Alderwoods continuing as the
surviving corporation ("Surviving Corporation") and a direct wholly owned
subsidiary of SCI. At the effective time and as a result of the Merger, each
share of Alderwoods common stock will be converted into the right to receive
$20.00 in cash.
Alderwoods has made customary representations, warranties and covenants in
the Merger Agreement, including, among others, covenants (i) to conduct its
businesses in the ordinary course between the execution of the Merger Agreement
and the consummation of the Merger and (ii) not to engage in certain kinds of
transactions during such period. In addition, Alderwoods has agreed to certain
additional customary covenants, including, among others, covenants, subject to
certain exceptions, (A) to cause a stockholder meeting to be held to consider
adopting the Merger Agreement, (B) for its Board of Directors to recommend
adoption by its stockholders of the Merger Agreement and the transactions
contemplated by the Merger Agreement, (C) not to solicit proposals relating to
alternative business combination transactions and (D) not to enter into
discussions concerning or provide confidential information in connection with
alternative business combination transactions.
The parties have agreed to use reasonable best efforts to cooperate in
connection with the consummation of the Merger, including by taking all
reasonable steps to obtain all necessary approvals from governmental entities.
In addition, SCI has agreed to take all actions necessary to avoid impediments
under antitrust laws so as to enable closing to occur as soon as reasonably
possible, and in no event later than April 2, 2007, provided that SCI is not
required to propose or agree to any divestiture or any operational restriction,
or take other action that, in the reasonable judgment of SCI could be expected
to:
o result in divestiture of, or operational restrictions on, business,
product lines or assets (of Alderwoods or SCI) having aggregate
revenues in the twelve months ending December 31, 2005, in excess of
$200 million;
o limit the right of SCI to own or operate all or any portion of Rose
Hills;
o result in a limitation or restriction on the ability of SCI (following
the closing) to terminate or otherwise reduce or change the employment
of more than 100 administrative employees of Alderwoods; or
o require investments or payments by, or result in costs to, SCI or
Alderwoods in excess of $5 million.
Consummation of the Merger is subject to customary conditions, including,
among others, (i) approval of the stockholders of Alderwoods, (ii) expiration or
termination of the applicable Hart-Scott-Rodino Act waiting period, (iii)
absence of any order or injunction prohibiting the consummation of the Merger
and (iv) subject to certain exceptions, the accuracy of representations and
warranties with respect to SCI's and Alderwoods' businesses and compliance by
SCI and Alderwoods with their respective covenants contained in the Merger
Agreement.
The Merger Agreement contains certain termination rights for both
Alderwoods and SCI. Upon termination of the Merger Agreement under specified
circumstances, Alderwoods may be required to pay SCI a termination fee of $25
million. Upon termination of the Merger Agreement under other specified
circumstances, SCI may be required to pay Alderwoods a termination fee of $25
million. The termination fee is payable by SCI only in specified circumstances
where a termination is based on or related to antitrust laws but is not based on
or related to certain litigation that is currently pending.
The foregoing description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement,
which is filed as Exhibit 2.1 hereto, and is incorporated into this report by
reference.
THE FINANCING COMMITMENT LETTER
On April 2, 2006, SCI entered into a commitment letter providing a
commitment for a $850 million senior bridge facility with Chase Lincoln First
Commercial Corporation and J.P. Morgan Securities Inc. (the "Commitment Letter")
in connection with the financing of the Merger.
The bridge facility described in the Commitment Letter includes $850
million of one-year term loans (the "Initial Loans") to be borrowed at the time
of consummation of the Merger (the "Closing"). Lenders holding Initial Loans
have the option, subject to certain exceptions, to exchange such loans at
maturity for notes maturing on a later date, but no later than the tenth
anniversary of the Closing (the "Exchange Notes").
The proceeds from the bridge facility may be used by SCI (i) to finance
the Alderwoods acquisition pursuant to the Merger Agreement; (ii) to refinance
certain existing indebtedness of Alderwoods or SCI; and (iii) to pay costs and
expenses related to the Merger, the financing of the Merger, and related
transactions.
The Initial Loans, if utilized, will bear interest at the greater of (a)
LIBOR plus 3.50% and (b) a treasury rate plus 3.75%, in each case increasing by
100 basis points on the date that is six months after the Closing and by an
additional 50 basis points at the end of each three-month period thereafter, but
in no event shall the Initial Loans bear interest at a rate that is higher than
10.00% per annum on or prior to November 30, 2006 and 10.50% per annum
thereafter, and in no event shall the Initial Loans bear interest at a rate that
is lower than 8.50% per annum. The Exchange Notes, if utilized, will bear
interest on the one-year anniversary of the Closing at the greatest of (a) the
interest rate borne by the Initial Loans on the day before the one-year
anniversary plus 0.50%, (b) LIBOR plus 5.50% and (c) a treasury rate plus 5.75%,
in each case increasing by 50 basis points at the end of each three-month period
after the one-year anniversary of the Closing, but in no event shall the
Exchange Notes bear interest at a rate that is lower than 8.50% per annum and in
no event shall the Exchange Notes bear interest at a rate that is higher than
10.50% per annum.
The lender's financing commitment under the Commitment Letter is subject
to certain limited conditions set forth in the Commitment Letter.
The foregoing description of the Commitment Letter does not purport to be
complete and is qualified in its entirety by reference to the Commitment Letter,
which is attached as Exhibit 10.1 hereto, and is incorporated herein by
reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
2.1 Agreement and Plan of Merger, dated April 2, 2006, by and among
Service Corporation International, Coronado Acquisition Corporation
and Alderwoods Group, Inc.
10.1 Commitment Letter, dated as of April 2, 2006, by and among Service
Corporation International, Chase Lincoln First Commercial Corporation
and J.P. Morgan Securities Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SERVICE CORPORATION INTERNATIONAL
Date: April 5, 2006 By: /s/ James M. Shelger
______________________________
Name: James M. Shelger
Title: Senior Vice President
General Counsel and Secretary
EXHIBIT INDEX
2.1 Agreement and Plan of Merger, dated April 2, 2006, by and among Service
Corporation International, Coronado Acquisition Corporation and Alderwoods
Group, Inc.
10.1 Commitment Letter, dated as of April 2, 2006, by and among Service
Corporation International, Chase Lincoln First Commercial Corporation and
J.P. Morgan Securities Inc.
Exhibit 2.1
[Merger Agreement]
Exhibit 10.1
[Commitment Letter]