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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
BUTLER MANUFACTURING COMPANY
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
5) Total fee paid:
--------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------------
3) Filing Party:
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4) Date Filed:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
The letter attached hereto as Exhibit A was received by Butler Manufacturing
Company on April 16, 2004 from Robertson-Ceco Corporation. The press release
attached hereto as Exhibit B was issued by Butler Manufacturing Company on April
19, 2004.
EXHIBIT A
April 16, 2004
Mr. Jonathan E. Baum
President
George K. Baum Advisors LLC
As Advisor to the Board of Directors
of Butler Manufacturing Company
Kansas City, Missouri 64105
Dear John:
This letter renews the proposal set forth in the letter of
Robertson-Ceco Corporation ("RCC") to the Board of Directors of Butler
Manufacturing Company, dated April 13, 2004. In addition, this letter identifies
the financing sources for the proposed transaction.
Enclosed is a copy of a proposal from the Longleaf Partners Small-Cap
Fund to provide up to $100 million of capital to facilitate the purchase of
Butler shares from shareholders who make the cash election. Also enclosed is a
proposal from LaSalle Bank National Association to provide up to $225 million of
financing in connection with the proposed combination.
RCC is prepared to deliver to Butler audited financial statements for
its five past fiscal years, upon receipt of a customary confidentiality
agreement.
RCC believes that its proposal is a "Superior Proposal" under Butler's
Agreement and Plan of Merger with BlueScope Steel Limited and requests Butler to
cooperate with the identified capital sources and RCC to confirm the available
funding, and ultimately to withdraw its recommendation that the Butler
shareholders vote for approval of the BlueScope proposal.
Very truly yours,
Robertson-Ceco Corporation
[LOGO]
SOUTHEASTERN ASSET
MANAGEMENT, INC.
April 14, 2004
Robertson-Ceco Corporation
5600 Three First National Plaza
Chicago, Illinois 60602
Attn: Mr. Michael Heisley
Dear Mr. Heisley:
We are pleased to present, for your consideration, our proposal for an
investment by Longleaf Partners Small-Cap Fund of between sixty million dollars
($60,000,000) and one hundred million dollars ($100,000,000) in Butler
Manufacturing Company ("Butler") concurrently with a proposed transaction for
the combination of Butler with the three operating divisions of Robertson Ceco
Corporation as described in the proposal letter attached hereto as Exhibit A
(the "Transaction). As set forth in more detail in the attached term sheet, the
investment would be made concurrently with the closing of the Transaction.
The term sheet attached hereto as Exhibit B is for discussion purposes
only and, except as set forth therein, is not binding. The completion of the
transactions contemplated by the term sheet would be subject, among other
things, to our satisfactory completion of financial and legal due diligence, as
well as the execution of definitive agreements acceptable to us with respect to
the proposed investment and the Transaction.
We are excited about the proposed investment and very much look forward
to working with you in implementing a transaction that would be in the best
interests of all parties involved.
Very truly yours,
LONGLEAF PARTNERS SMALL-CAP FUND
By: /s/ G. Staley Cates
-------------------------------
Name: G. Staley Cates
Title: Co-Portfolio Manager
INVESTMENT ADVISOR TO
[LOGO]
LONGLEAF
PARTNERS FUNDS 6410 POPLAR AVE. - SUITE 900 - MEMPHIS, TN 38119 - (901)761-2474
Exhibit A
April 13, 2004
CONFIDENTIAL
The Board of Directors
Butler Manufacturing Company
1540 Genessee Street
Kansas City, Missouri 64102
Gentlemen:
This letter sets forth a proposal for the combination of the businesses
of Butler Manufacturing Company, a Delaware corporation ("Butler"), and the
three operating divisions of Robertson Ceco Corporation, a Delaware corporation
("RCC"), and an opportunity for liquidity for Butler shareholders who desire it.
The three operating divisions of RCC, each of which is engaged in North America
in the design, fabrication and sale of pre-engineered buildings, are Star
Building Systems ("Star"), Ceco Building Systems ("Ceco") and Robertson Building
Systems Canada ("RBS").
Under our proposal, Butler shareholders will have the right to elect to
receive in cash $23 per share or alternatively to continue their ownership of
shares in the combined company. We believe the shares in the publicly traded,
combined company will have a long term value significantly above $23 per share.
We have arranged to refinance outstanding Butler debt, including
letters of credit. We are prepared to purchase all three series of the 8.02%,
the 6.57% and the 7.87% Senior Notes issued by Butler and further extend the
Noteholder Amendment and Acknowledgement Agreements. In connection therewith, we
are prepared to offer the existing noteholders a value of par plus accrued
interest plus the "make-whole" payment at the completion of the transaction.
We believe that our proposal as set forth below is superior to the
BlueScope buyout proposal. Accordingly, we respectfully suggest that the Butler
Board of Directors should determine in fulfillment of its fiduciary duties to
withdraw its recommendation that the Butler shareholders vote for approval of
the BlueScope proposal.
The combined net sales and EBITDA of Star, Ceco and RBS for the year
ended December 31, 2003, and the average annual combined net sales and EBITDA of
Star, Ceco and RBS for the five years ended December 31, 2003 are as follows:
Board of Directors
Butler Manufacturing Company
April 13, 2004
Page 2
Average Annual for Five Years
Year Ended December 31, 2003 Ended December 31, 2003
---------------------------- -----------------------
Net sales $287.6 million $291.9 million
EBITDA $ 16.6 million $ 27.3 million
A combined balance sheet for the three divisions at December 31, 2003, excluding
all assets and liabilities to be retained by RCC, is attached hereto as Exhibit
A.
We propose to combine the operating divisions of RCC and Butler in a
transaction that values the shares of Butler common stock at $26,00 per share.
The RCC operating divisions would be valued at 6.7x the average EBITDA of the
divisions for the five years ended December 31, 2003. The multiple of 6.7x
EBITDA when applied to Butler's average annual EBITDA for the same period
results in a value of $22,50 per Butler common share, as proposed to be paid by
BlueScope. Based on these values, we believe the combination of Butler and the
RCC operating divisions is immediately accretive to Butler's shareholders. See
Exhibit B, As part of the transaction proposed by us, Butler shareholders who do
not wish to continue their ownership of shares in the combined enterprise would
be given the opportunity to receive $23.00 per Butler common share in cash.
We propose that the transaction will be effected as follows:
1. RCC will transfer all of the operating assets and
liabilities of each of Star, Ceco and RBS to newly
formed corporations for each respective division. In
addition, each division will assume any currently
outstanding indebtedness relating to its business and
assets. RCC will retain certain intercompany
obligations owed to it by affiliates and certain
liabilities (including contingent claims) relating to
discontinued operations.
2. RCC will transfer the stock of the newly formed
corporations to a newly formed corporation ("Newco"),
and Newco will form an acquisition subsidiary ("Newco
Acquisition").
3. Butler will commit to issue shares of its common
stock at a price of $23.00 per share immediately
prior to the merger described below, in an amount
sufficient to fund the cash portion of the merger
described in item 4 below, but not less than $60
million of newly issued shares. RCC has identified
investors who are prepared to commit to purchase the
shares to be issued.
4. Newco Acquisition will merge with and into Butler.
Butler shareholders will elect to either receive cash
at $23 per share or receive one registered Newco
share for each Butler share. Newco will own 100% of
Butler, will change its name to Butler ("New
Butler"), and will become the public
Board of Directors
Butler Manufacturing Company
April 13, 2004
Page 3
reporting company. It is anticipated that following
the merger, a minimum of approximately 43.1% of the
New Butler shares will be held by RCC and 16.6% by
the new investors.
5. Following the merger, RCC nominees will constitute a
majority of the board of directors of New Butler. At
least three (3) current Butler directors will be
asked to continue as members of the board of New
Butler.
6. The Butler management contracts will be honored.
7. Outstanding indebtedness of Butler will be
refinanced.
8. RCC will continue in existence with substantial net
worth and will discharge its liabilities as they come
due.
As a result of (a) the refinancing of Butler debt, (b) the synergies
derived from the combined operations, (c) value associated with the successful
conclusion of the Louisiana Pacific litigation and (d) input from RCC designated
board members, we believe that the market value of the New Butler shares will
significantly exceed the current BlueScope valuation of $22.50 per share.
Recognizing that the business cycle for the pre-engineered metal buildings
businesses in which Butler and RCC participate was at a five-year low in 2003,
we expect that Butler shareholders would also benefit from being able to
continue their share ownership when the business cycle improves. For these
reasons, we believe our proposal is superior for Butler shareholders than the
current BlueScope buyout proposal.
RCC is ready to immediately negotiate and sign a definitive agreement
for the transaction, without contingencies. We believe that HSR clearance should
be obtained expeditiously. We suggest that any review by Butler of the Star,
Ceco and RBS businesses could be commenced immediately and concluded during the
next week or so while definitive agreements are prepared. Because we have also
conducted significant due diligence during our participation in your sale
process in late 2003, we have substantially completed our review of Butler. We
believe the transaction structure proposed herein allows us to put a value on
Butler above our valuation arrived at during the 2003 sales process.
Board of Directors
Butler Manufacturing Company
April 13, 2004
Page 4
Provided that Butler's Board of Directors withdraws not later than
April 23, 2004 its recommendation that its shareholders approve the BlueScope
buyout proposal, our proposal will remain open until the close of business on
April 30, 2004. Please contact the undersigned at (312) 419-8220 to indicate
your acceptance of our proposal and with any questions you may have.
Very truly yours,
E.A. Roskovensky
President
EAR:idt
ROBERTSON CECO
CORPORATION
CECO BUILDINGS, STAR BUILDINGS, HH ROBERTSON
OPERATING DIVISIONS
PROPOSED COMBINED
BALANCE SHEET
DECEMBER 31, 2003
(IN THOUSANDS)
ASSETS
Current Assets:
Cash and cash equivalents 9,449
Accounts and notes receivable 30,202
Inventories 16,985
Deferred taxes - current 1,079
Other current assets 566
-------
Total current assets 58,281
Property, plant & equipment, net 38,370
Notes receivable from affiliates 0
Goodwill 3,123
Deferred taxes 6,413
Other noncurrent assets 876
-------
TOTAL ASSETS 107,063
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion - long-term debt 6,697
Accounts payable 16,194
Accrued payroll and benefits 6,357
Other accrued liabilities 8,455
-------
Total Current assets 37,703
Long - term debt 9,298
Minimum pension liability 18,293
Long - term warranty 3,219
Other long - term liabilities 3,320
Stockholders' Equity:
Capital surplus 77,354
Accumulated deficit (30,183)
Accumulated and comprehensive income (11,941)
-------
Total stockholders' equity 35,230
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 107,063
=======
Exhibit B
1 Blue Scope Multiple Paid of Butlers last 5 years EBITDA 6.7x
2 RCC 5 years average EBITDA 27.3
EBITDA Multiple 6.7
---------
RCC Enterprise Value 183
Less Debt 7
---------
Equity Value 176 mm
New Butler shares issued to
RCC @26 6.77 mm
Value of shares issued @ $23 (1) 155.7 mm
Value transfer to Butler shareholders $ 20 mm
(Approximate $3 per share)
(1) implies an EDITDA multiple of 5.97 times
[UBS INVESTMENT BANK LOGO]
EXHIBIT B
SUMMARY OF TERMS
PROPOSED INVESTMENT
APRIL 13, 2004
This term sheet ("Term Sheet") summarizes the principal terms of a
proposed investment by Longleaf Partners Small-Cap Fund (the "Investor") of
between sixty million dollars ($60,000,000) and one hundred million dollars
($100,000,000) in Butler Manufacturing Company ("Butler") concurrently with a
proposed transaction for the combination of Butler with the three operating
divisions of Robertson Ceco Corporation as described in the proposal letter
attached hereto as Attachment A (the "Transaction"), This Term Sheet is for
discussion purposes only and, except as set forth in the "Publicity" provisions,
is not binding. The binding provisions will survive any termination or
expiration of this Term Sheet, may be amended or modified only by a writing
executed by both parties and constitute the entire agreement between the parties
with respect to the subject matter thereof. The transaction contemplated hereby
is subject, among other things, to the Investor's satisfactory completion of
financial and legal due diligence, as well as the definitive agreements relating
to the Transaction and the proposed investment being reasonably acceptable to
the Investor.
OFFERING TERMS
Issuer: Butler
Investor: Longleaf Partners Small-Cap Fund
Securities To Be Issued: Between 2,608,695 and 4,347,825 shares (the
"Common Shares") of Common Stock of Butler
at the Per Share Purchase Price (as defined
below).
Aggregate Proceeds to Butler: Between sixty million dollars ($60,000,000)
and one hundred million dollars ($
100,000,000).
Use of Proceeds: To fund a cash election in the Merger for
existing Butler shareholders to receive $23
per share and/or to repay existing
indebtedness of Butler.
Per Share Purchase Price: $23.00
Expected Closing Date: Concurrent with the closing of the
Transaction.
Expenses: Each party shall bear its own expenses in
connection with the transactions
contemplated by this Term Sheet.
Documentation: Robertson Ceco will have responsibility for
negotiating the terms and conditions of the
definitive agreements relating to the
Transaction and the Investor will be
responsible for drafting the definitive
agreements relating to the proposed
investment.
TERMS OF STOCK PURCHASE AGREEMENT
Representations and Warranties: Standard representations and warranties by
Butler with respect to Butler and Robertson
Ceco with respect to the Contributed
Entities and their assets and liabilities.
Additional representations by Robertson
Ceco with respect to its solvency both
before and after the closing (e.g. the
value of its assets exceeds those of its
liabilities, its ability to pay its present
and anticipated liabilities as they come
due (including contingent, unliquidated
and/or disputed liabilities and demands
with respect to, inter alia, asbestos) and
the amount, availability and sufficiency of
its capital).
Conditions to Closing: Standard conditions to closing, including,
without limitation: (i) consummation of the
Transaction without any material waiver not
approved by the Investor (which approval
will not be unreasonably withheld by the
Investor); (ii) the absence of any material
adverse change in the businesses of the
Contributed Entities or Butler; (iii) the
accuracy in all material respects of
Butler's and Robertson Ceco's
representations and their compliance in all
material respects with the covenants and
other obligations contained in the
definitive agreements; (iv) the Investor
having completed a due-diligence review
with respect to Butler and the Contributed
Entities, which due diligence review does
not reveal any facts, developments or
circumstances that are reasonably likely to
cause a material adverse effect, including
with respect to the nature, number,
historical payouts, available insurance
coverage and trends with respect to
Robertson Ceco's asbestos claims; (v)
obtaining all necessary governmental
consents, including under the
Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended; (vi) Butler being
in compliance with all applicable rules and
regulations of the New York Stock Exchange
(both before and after giving effect to the
Transaction); (vii) the Common Shares to be
purchased having been listed for quotation
on the New York Stock Exchange; (viii)
approval of the investment by the
Investor's board of trustees; (ix)
execution of the investor rights agreement
on terms and conditions reasonably
satisfactory to the Investor; (x) receipt
of any and all necessary shareholder
approvals with respect to the Transaction
and share issuance; (xi) the effectuation
of the necessary amendments to the
organizational documents of Butler to
effect the Transaction; (xii) no action,
injunction or order being in place which
prohibits the consummation of the
Transaction or the share issuance; and
(xiii) receipt of appropriate officers'
certificates and legal opinion.
2
Indemnification: The Investor to receive customary
indemnification from Butler and
Robertson Ceco.
TERMS OF INVESTOR RIGHTS AGREEMENT
Registration Rights: (a) Resale Registration. At any time
after the closing, if requested by the
Investor, to the extent Butler is
eligible to file a registration
statement on Form S-3, Butler shall file
a registration statement c overing the
resale of the Common Shares (each such
registration statement, a "Shelf
Registration Statement"). Butler shall
use its reasonable best efforts to cause
each Shelf Registration Statement to be
effective promptly after receiving any
such request from the Investor. Expenses
shall be paid by Butler.
(b) Demand Rights. Beginning immediately
upon the closing, two demand
registrations for underwritten public
offerings (or block trades), provided
the anticipated aggregate offering price
in each demand registration shall be at
least $20,000,000. Expenses of the
registration shall be paid by Butler.
(c) Piggyback Rights. The Investor shall
have unlimited piggyback registration
rights with respect to primary-
offerings of the Common Shares, subject
to cutback at the underwriter's
discretion; provided Rule 144 sales are
not available. Expenses incurred in
connection therewith shall be paid by
Butler
Restriction on Transfer by
Robertson Ceco: Robertson Ceco will be prohibited from
transferring or disposing of the RC
Shares without the Investor's consent as
long as the Investor continues to hold
at least 1,000,000 of the Common Shares.
The parties will discuss an appropriate
mechanism to permit limited dispositions
of the RC Shares following an agreed
upon period.
Minority Protections: Supermajority approval (i.e., majority
approval of shareholders other than
Robertson Ceco) in the case of
transactions involving Robertson Ceco,
such as a going private transaction.
Consulting Rights: Butler will consult with the Investor
before making material capital
allocation decisions, including, the
incurrence of significant indebtedness,
the sale or purchase of assets above
designated thresholds and the issuance
or redemption of equity securities.
Financial Information: Butler shall provide to the Investor, on
the same day as filed with the
Securities and Exchange Commission
("SEC"), copies of its annual, quarterly
and other reports
3
filed with the SEC pursuant to Section
13 or Section 15(d) of the Securities
Exchange Act of 1934. Butler's auditors
shall be an accounting firm of national
reputation.
OTHER MATTERS
Certain Legal Expenses: Robertson Ceco will pay all costs,
including legal expenses, incurred by
Butler arising from or related to
asbestos liabilities of Robertson Ceco
or any predecessor of the Contributed
Entities.
Transfer of Rights: Any rights accorded to the Investor may
be transferred to (i) any affiliate or
associate of the Investor and (ii) any
other transferee who acquires at least
25% of the Common Shares; provided in
each instance that Butler is given
written notice thereof.
Publicity: Robertson Ceco will not discuss the
terms or existence of this Term Sheet
with any person other than key officers,
directors of Robertson Ceco or Robertson
Ceco's accountants or attorneys without
the prior consent of the Investor,
except as required by law. In addition,
Robertson Ceco shall not use the
Investor's name in any manner, context
or format without the prior review
and approval of the Investor.
[SIGNATURE PAGES FOLLOW]
4
AGREED AND ACCEPTED:
ROBERTSON-CECO CORPORATION
BY:_____________________________________
NAME:
TITLE:
[SIGNATURE PAGE TO SUMMARY OF TERMS]
AGREED AND ACCEPTED:
LONGLEAF PARTNERS SMALL-CAP FUND
BY: /s/ G. Staley Cates
------------------------------------
NAME: G. STALEY CATES
TITLE: CO-PORTFOLIO MANAGER
[SIGNATURE PAGE TO SUMMARY OF TERMS]
Attachment A
April 13, 2004
CONFIDENTIAL
The Board of Directors
Butler Manufacturing Company
1540 Genessee Street
Kansas City, Missouri 64102
Gentlemen:
This letter sets forth a proposal for the combination of the businesses
of Butler Manufacturing Company, a Delaware corporation ("Butler"), and the
three operating divisions of Robertson Ceco Corporation, a Delaware corporation
("RCC"), and an opportunity for liquidity for Butler shareholders who desire it.
The three operating divisions of RCC, each of which is engaged in North America
in the design, fabrication and sale of pre-engineered buildings, are Star
Building Systems ("Star"), Ceco Building Systems ("Ceco") and Robertson Building
Systems Canada ("RBS").
Under our proposal, Butler shareholders will have the right to elect to
receive in cash $23 per share or alternatively to continue their ownership of
shares in the combined company. We believe the shares in the publicly traded,
combined company will have a long term value significantly above $23 per share:
We have arranged to refinance outstanding Butler debt, including
letters of credit. We are prepared to purchase all three series of the 8.02%,
the 6.57% and the 7.87% Senior Notes issued by Butler and further extend the
Noteholder Amendment and Acknowledgement Agreements. In connection therewith, we
are prepared to offer the existing noteholders a value of par plus accrued
interest plus the "make-whole" payment at the completion of the transaction.
We believe that our proposal as set forth below is superior to the
BlueScope buyout proposal. Accordingly, we respectfully suggest that the Butler
Board of Directors should determine in fulfillment of its fiduciary duties to
withdraw its recommendation that the Butler shareholders vote for approval of
the BlueScope proposal.
The combined net sales and EBITDA of Star, Ceco and RBS for the year
ended December 31, 2003, and the average annual combined net sales and EBITDA of
Star, Ceco and RBS for the five years ended December 31, 2003 are as follows:
Board of Directors
Butler Manufacturing Company
April 13, 2004
Page 2
Average Annual for Five Years
Year Ended December 31, 2003 Ended December 31, 2003
---------------------------- -----------------------------
Net sales $287.6 million $291.9 million
EBITDA $ 16.6 million $ 27.3 million
A combined balance sheet for the three divisions at December 31, 2003, excluding
all assets and liabilities to be retained by RCC, is attached hereto as Exhibit
A.
We propose to combine the operating divisions of RCC and Butler in a
transaction that values the shares of Butler common stock at $26.00 per share.
The RCC operating divisions would be valued at 6.7x the average EBITDA of the
divisions for the five years ended December 31, 2003. The multiple of 6.7x
EBITDA when applied to Butler's average annual EBITDA for the same period
results in a value of $22.50 per Butler common share, as proposed to be paid by
BlueScope. Based on these values, we believe the combination of Butler and the
RCC operating divisions is immediately accretive to Butler's shareholders. See
Exhibit B. As part of the transaction proposed by us, Butler shareholders who do
not wish to continue their ownership of shares in the combined enterprise would
be given the opportunity to receive $23.00 per Butler common share in cash.
We propose that the transaction will be effected as follows:
1. RCC will transfer all of the operating assets and
liabilities of each of Star, Ceco and RBS to newly formed
corporations for each respective division. In addition, each
division will assume any currently outstanding indebtedness
relating to its business and assets. RCC will retain certain
intercompany obligations owed to it by affiliates and
certain liabilities (including contingent claims) relating
to discontinued operations.
2. RCC will transfer the stock of the newly formed corporations
to a newly formed corporation ("Newco"), and Newco will form
an acquisition subsidiary ("Newco Acquisition").
3. Butler will commit to issue shares of its common stock at a
price of $23.00 per share immediately prior to the merger
described below, in an amount sufficient to fund the cash
portion of the merger described in item 4 below, but not
less than $60 million of newly issued shares. RCC has
identified investors who are prepared to commit to purchase
the shares to be issued.
4. Newco Acquisition will merge with and into Butler. Butler
shareholders will elect to either receive cash at $23 per
share or receive one registered Newco share for each Butler
share. Newco will own 100% of Butler, will change its name
to Butler ("New Butler"), and will become the public
Board of Directors
Butler Manufacturing Company
April 13, 2004
Page 3
reporting company. It is anticipated that following the
merger, a minimum of approximately 43.1% of the New Butler
shares will be held by RCC and 16.6% by the new investors.
5. Following the merger, RCC nominees will constitute a
majority of the board of directors of New Butler. At least
three (3) current Butler directors will be asked to continue
as members of the board of New Butler.
6. The Butler management contracts will be honored.
7. Outstanding indebtedness of Butler will be refinanced.
8. RCC will continue in existence with substantial net worth
and will discharge its liabilities as they come due.
As a result of (a) the refinancing of Butler debt, (b) the synergies
derived from the combined operations, (c) value associated with the successful
conclusion of the Louisiana Pacific litigation and (d) input from RCC designated
board members, we believe that the market value of the New Butler shares will
significantly exceed the current BlueScope valuation of $22.50 per share.
Recognizing that the business cycle for the pre-engineered metal buildings
businesses in which Butler and RCC participate was at a five-year low in 2003,
we expect that Butler shareholders would also benefit from being able to
continue their share ownership when the business cycle improves. For these
reasons, we believe our proposal is superior for Butler shareholders than the
current BlueScope buyout proposal.
RCC is ready to immediately negotiate and sign a definitive agreement
for the transaction, without contingencies. We believe that HSR clearance should
be obtained expeditiously. We suggest that any review by Butler of the Star,
Ceco and RBS businesses could be commenced immediately and concluded during the
next week or so while definitive agreements are prepared. Because we have also
conducted significant due diligence during our participation in your sale
process in late 2003, we have substantially completed our review of Butler. We
believe the transaction structure proposed herein allows us to put a value on
Butler above our valuation arrived at during the 2003 sales process.
Board of Directors
Butler Manufacturing Company
April 13, 2004
Page 4
Provided that Butler's Board of Directors withdraws not later than
April 23, 2004 its recommendation that its shareholders approve the BlueScope
buyout proposal, our proposal will remain open until the close of business on
April 30, 2004. Please contact the undersigned at (312) 419-8220 to indicate
your acceptance of our proposal and with any questions you may have.
Very truly yours,
E.A. Roskovensky
President
EAR:idt
ROBERTSON CECO
CORPORATION
CECO BUILDINGS, STAR BUILDINGS, HH ROBERTSON
OPERATING DIVISIONS
PROPOSED COMBINED
BALANCE SHEET
DECEMBER 31, 2003
(IN THOUSANDS)
ASSETS
Current Assets:
Cash and cash equivalents 9,449
Accounts and notes receivable 30,202
Inventories 16,985
Deferred taxes - current 1,079
Other current assets 566
-------
Total current assets 58,281
Property, plant & equipment, net 38,370
Notes receivable from affiliates 0
Goodwill 3,123
Deferred taxes 6,413
Other noncurrent assets 876
TOTAL ASSETS -------
107,063
=======
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Current portion - long-term debt 6,697
Accounts payable 16,194
Accrued payroll and benefits 6,357
Other accrued liabilities 8,455
-------
Total Current assets 37,703
Long - term debt 9,298
Minimum pension liability 18,293
Long - term warranty 3,219
Other long - term liabilities 3,320
Stockholders' Equity:
Capital surplus 77,354
Accumulated deficit (30,183)
Accumulated and comprehensive Income (11,941)
-------
Total stockholders' equity 35,230
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 107,063
=======
Exhibit B
1 Blue Scope Multiple Paid of Butlers last 5 years EBITDA 6.7x
2 RCC 5 years average EBITDA 27.3
EBITDA Multiple 6.7
------
RCC Enterprise Value 183
Less Debt 7
------
Equity Value 176 mm
New Butler shares issued to
RCC @26 6.77 mm
Value of shares issued @ $23 (1) 155.7 mm
Value transfer to Butler shareholders $ 20 mm
(Approximate $3 per share)
(1) implies an EDITDA multiple of 5.97 times
SUMMARY OF INDICATIVE TERMS AND CONDITIONS
Company: Robertson-Ceco Corporation (the "Company").
Loan Parties: The Company and each of its subsidiaries.
Administrative Agent: LaSalle Bank National Association ("LaSalle" and, in
such capacity, the "Administrative Agent").
Arranger: LaSalle.
Lenders: A syndicate of financial institutions (including
LaSalle) and other accredited investors arranged by
the Arranger in consultation with the Company.
Documentation Agent: To be determined.
Syndication Agent: To be determined.
Facilities: Senior secured credit facilities (the "Facilities")
in the aggregate amount of $225.0 million, consisting
of the following:
(a) $160.0 million revolving credit facility
(the "Revolving Credit Facility"), with a
subfacility for letters of credit issued by
LaSalle or one of its affiliates (the
"Issuing Lender") in an amount equal to
$30.0 million; and
(b) $65.0 million term loan facility (the "Term
Loan").
Maturity: Five years from the closing date.
Availability: Availability under the Revolving Credit Facility will
be based on a borrowing base formula, which will
include advance rates of (i) 85% on eligible accounts
receivable and (ii) the lesser of (a) 60% of eligible
inventory or (b) 85% of the net orderly liquidation
value of eligible inventory but, in either case, (a)
or (b) shall not exceed $______ million. Eligibility
definitions and advance rates shall be defined and
confirmed by the Administrative Agent's Collateral
Reports (herein defined) and/or due diligence, in
each case subject to reserves reasonably established
by the Administrative Agent. Outstanding letters of
credit will be reserved against availability.
Borrowings under the Revolving Credit Facility shall
be governed by a weekly borrowing base certificate.
In the event that availability exceeds $35.0 million
(for period of time to be determined), borrowing base
certificates will be required on a monthly basis.
1
Availability under the Term Loan will be based on the
aggregate of (i) 80% of the net orderly liquidation
value of the Company's unencumbered equipment and
(ii) 70% of the fair market value of certain real
estate properties.
Purpose: To (a) finance the acquisition of Butler
Manufacturing Company by the Company (the
"Acquisition"), including related fees and expenses,
(b) refinance existing debt of the Loan Parties and
(c) provide for the working capital requirements and
general corporate purposes of Company and its
subsidiaries.
Fees and Interest Rates: See Annex I.
Voluntary Prepayments The Company may prepay amounts outstanding under the
and Commitment Facilities in whole or in part (in minimum amounts to
Reductions: be agreed upon), with prior notice but without
premium or penalty (but subject to payment of costs
associated with breakfunding on LIBOR loans).
Prepayments under the Term Loan shall be applied
against remaining scheduled installments pro rata.
The Company may reduce commitments under the
Revolving Credit Facility upon advance notice and in
minimum amounts to be agreed upon.
Amortization: The Term Loan will amortize on a straight line basis
over seven years with monthly payments due on the
last day of each month.
Security: The Facilities will be secured by a first priority
security interest in substantially all existing and
after acquired assets (real and personal) of the Loan
Parties and all products and proceeds thereof. The
Loan Parties will authorize the filing of UCC
financing statements prior to the closing of the
Facilities. In addition, the Facilities will be
secured by a first priority pledge of all outstanding
equity securities of the Company and each of its
subsidiaries.
Guarantees: The Facilities will be guaranteed by all subsidiaries
of the Company.
Initial Conditions: The closing of the Facilities will be subject to
customary closing conditions, all in form and
substance satisfactory to the Administrative Agent,
including, without limitation, the following:
(a) The Administrative Agent shall have received
an executed credit agreement and other loan
documents and all conditions to the initial
borrowing thereunder shall have been
satisfied. Such loan documents shall include
conditions precedent, representations,
warranties, affirmative, negative and
financial covenants, Administrative Agent
and Lender indemnity and reimbursement
provisions, events of default, remedies, and
2
other customary provisions.
(b) The Administrative Agent shall have received
all fees required to be paid, and all
expenses for which invoices have been
presented, on or before the closing date.
(c) The Administrative Agent shall have received
satisfactory evidence that (i) the sum of
(x) the aggregate purchase price of the
Acquisition and (y) the amount required to
refinance all existing debt of the Loan
Parties shall not exceed $_______ million
and (ii) the aggregate fees and expenses
with respect to the Acquisition will not
exceed $_______ million.
(d) The Company shall have reported at least
$_________ million in adjusted EBITDA for
the most recent trailing twelve month period
(on a combined basis) with all adjustments
satisfactory to the Administrative Agent.
(e) After giving effect to the funding of the
loans on the closing date and payment of all
costs and expenses, the Administrative Agent
shall receive a borrowing base certificate
in form and substance satisfactory to the
Administrative Agent with minimum excess
availability of at least $35.0 million.
(f) The Administrative Agent shall have received
(i) audited consolidated financial
statements for the Company and its
subsidiaries for the fiscal years ending
2001, 2002 and 2003 and (ii) unaudited
interim consolidated financial statements
for the Company and its subsidiaries for
each fiscal month and quarterly period ended
after the latest fiscal year referred to in
clause (i) above.
(g) The Administrative Agent shall have received
a pro forma consolidated balance sheet of
the Company and its subsidiaries as of the
date of the most recent consolidated balance
sheet delivered pursuant to the preceding
paragraph, adjusted to give effect to the
consummation of the Acquisition and the
financings contemplated hereby as if such
transactions had occurred on such date,
which is consistent in all material respects
with the sources and uses of cash for the
Acquisition previously described to the
Administrative Agent and the forecasts
previously provided to the Administrative
Agent.
(h) The Administrative Agent and the Lenders
shall have received projected income
statements, balance sheets and cash flow
3
statements prepared by the Company and
giving effect to the Acquisition, the
Facilities and the use of proceeds
therefrom. The Company shall provide
projections on a monthly basis for fiscal
2004 and on an annual basis thereafter.
(i) The Administrative Agent shall be satisfied
with the results of its legal and business
due diligence.
(j) The Administrative Agent shall have received
a field audit examination and appraisals
(including appraisals of inventory,
equipment and real estate) (collectively,
the "Collateral Reports") requested by the
Administrative Agent and the results thereof
shall be satisfactory to the Administrative
Agent in its sole and absolute discretion.
The Administrative Agent shall have the
right to distribute the Collateral Reports
and other due diligence reports it obtains
from consultants engaged by the Company to
other Lenders, subject only to reasonable
confidentiality restrictions.
(k) The Administrative Agent shall have received
the results of recent tax, judgment and UCC
lien searches in each relevant jurisdiction
with respect to the Loan Parties, and such
searches shall reveal no liens on any of the
assets of the Loan Parties except for liens
permitted by the credit agreement.
(l) If requested, the Administrative Agent shall
have received an environmental audit with
respect to certain real property owned or
leased by the Loan Parties.
(m) All documents and instruments required to
perfect the Administrative Agent's security
interest in the collateral under the
Facilities shall have been executed and be
in proper form for filing, and, in
connection with real estate collateral, the
Administrative Agent shall have received
title insurance policies, surveys, permits
and other customary documentation requested
by the Administrative Agent.
(n) The Administrative Agent shall be reasonably
satisfied with the insurance program to be
maintained by the Loan Parties.
(o) If requested, the Administrative Agent shall
have received a solvency certificate from
the chief financial officer of the Company
which shall document the solvency of the
Company and its subsidiaries after giving
effect to the Acquisition and the other
transactions contemplated hereby.
4
(p) The Administrative Agent shall have received
such legal opinions as Administrative Agent
may reasonably request.
(q) The Administrative Agent shall have received
such other documents, agreements,
certificates and opinions to be executed or
delivered, or relating to the transactions
contemplated, on or prior to the closing
date as the Administrative Agent or the
Lenders may request.
(r) The Loan Parties shall have obtained all
governmental and third party approvals
necessary in connection with the
Acquisition, the financing contemplated
hereby and the continuing operations of the
Loan Parties shall have been obtained on
terms reasonably satisfactory to the
Administrative Agent and shall be in full
force and effect, and all applicable waiting
periods shall have expired without any
action being taken or threatened by any
competent authority which would restrain,
prevent or otherwise impose adverse
conditions on the Acquisition or the
financing thereof contemplated by the
Facilities, except for such governmental and
third party approvals the failure to obtain
which could not individually or in the
aggregate, reasonably be expected to have a
material adverse effect on the condition
(financial or otherwise), business, assets,
liabilities, properties, results of
operations or prospects of the Loan Parties
taken as a whole.
(s) The Acquisition shall have been or shall
concurrently be consummated in accordance
with applicable law and on satisfactory
terms. The documentation relating to the
Acquisition (collectively, the "Acquisition
Documents") shall have satisfactory terms
and conditions, and no provision of such
documentation shall have been waived,
amended, supplemented or otherwise modified
in any material respect. The Loan Parties
shall have no debt other than the
Facilities, and debt approved by the
Administrative Agent. The capitalization and
structure of the Loan Parties after the
Acquisition shall be reasonably satisfactory
in all respects.
(t) The Administrative Agent shall be satisfied
that, since December 31, 2003, there has
been no material adverse change in the
business, assets, liabilities, properties,
condition (financial or otherwise), results
of operations or prospects of the Loan
Parties.
Ongoing Conditions: The making of each extension of credit shall be
conditioned upon (a) the accuracy of all
representations and warranties in the credit
5
agreement and the other loan documents and (b) there
being no default or event of default in existence at
the time of, or after giving effect to the making of,
such extension of credit.
Representations and Those representations and warranties customarily
Warranties: found in credit agreements for transactions of this
nature.
Affirmative Covenants: Those affirmative covenants customarily found in
credit agreements for transactions of this nature.
Negative Covenants: Those negative covenants customarily found in credit
agreements for transactions of this nature.
Financial Covenants: To include, without limitation, the following
financial covenants (with covenant levels to be
determined):
(i) Minimum Fixed Charge Coverage Ratio (the
ratio of (i) EBITDA less cash taxes less
capital expenditures to (ii) the sum of
scheduled principal and interest expense)
(tested quarterly);
(ii) Maximum Senior Leverage Ratio (the ratio of
Senior Debt to trailing twelve month EBITDA)
(tested quarterly); and
(iii) Minimum Availability (all times test).
In the event that availability exceeds $35.0 million
(for period of time to be determined) financial
covenants will not be tested.
Events of Default: Those events of default customarily found in credit
agreements for transactions of this nature.
Lockbox Collections/ Payments from all of the Company's customers shall be
Disbursement: mailed directly to a lockbox at LaSalle. The company
will also maintain its primary operating accounts at
LaSalle.
Expenses; Upon acceptance of the Term Sheet, the Company agrees
Indemnification: to pay all reasonable costs and expenses associated
with the preparation, due diligence, administration,
syndication and enforcement of all documentation
executed in connection with the Facilities,
including, without limitation, legal fees of counsel
to the Administrative Agent regardless of whether or
not the Facilities close.
Upon acceptance of this Term Sheet, the Company
agrees to pay on demand all reasonable out-of-pocket
costs and expenses of the Administrative Agent
(including all field examination and appraisal costs,
all reasonable fees and charges of any counsel to the
Administrative Agent, the reasonable allocable cost
of internal legal services of the Administrative
Agent, all reasonable disbursements
6
of such internal counsel and all court costs and
similar legal expenses and any taxes) in connection
with the preparation, execution and delivery
(including the costs of Intralinks (or other similar
transmission systems), if applicable) of this Term
Sheet whether or not the Facilities close.
The Company shall indemnify the Administrative Agent,
the Lenders and their respective directors, officers,
affiliates, employees and agents from and against all
losses, liabilities, claims damages or expenses
relating to the Facilities and the Company's use of
the Facilities, including, without limitation,
reasonable attorneys' fees and settlement costs,
except to the extent that such losses, liabilities,
claims, damages or expenses are incurred by reason of
the gross negligence of willful misconduct of the
applicable indemnified person, as determined by a
final, nonappealable judgment by a court of competent
jurisdiction.
Taxes and Yield The Company will indemnify the Lenders for
Protection: withholding taxes. The definitive loan documents will
also contain customary tax gross-up, yield protection
and breakage provisions.
Voting: Required Lenders shall be equal to 66-2/3% or more of
commitments under the Facilities, except that (a) the
consent of each Lender directly affected thereby
shall be required with respect to (i) reductions in
the amount of, or extensions of the scheduled date of
amortization or final maturity of, any loan, (ii)
reductions in the rate of interest or any fee or
extensions of any due date therefore, and (iii)
increases in the amount or extension of the expiry
date of any Lender's commitments and (b) the consent
of 100% of the Lenders shall be required with respect
to (i) modifications of the voting percentages and
rights and (ii) releases of all or substantially all
of the guarantees or all or substantially all of the
collateral.
Syndication: Upon acceptance of this term sheet, LaSalle may
initiate discussions with potential lenders relating
to the syndication of the Facilities. LaSalle will
syndicate the transaction with the assistance of the
Company. Such assistance shall include, but not be
limited to: (i) prompt assistance in the preparation
of an information memorandum and verification of the
accuracy and completeness of the information
contained therein; (ii) preparation of other
materials and projections by the Company and its
advisors taking into account the proposed Facilities;
(iii) providing LaSalle with all information
reasonably deemed necessary by LaSalle to
successfully complete the syndication; (iv)
confirmation as to the accuracy and completeness of
such offering materials, projections and information
and (v) participation of the Company's senior
management in meetings and
7
conference calls with potential lenders and rating
agencies, if applicable, at such times and places as
LaSalle may reasonably request.
Neither LaSalle nor any of its affiliates (i) can
provide any assurances that a syndicate of Lenders
can be arranged, and (ii) shall not have any
liability should a syndicate not materialize. LaSalle
intends to fully underwrite the loans on the closing
date subject to receiving commitments from other
Lenders acceptable to the Company and LaSalle. These
Lenders shall have committed, on terms acceptable to
the Company and LaSalle, in an amount no less than
$150.0 million. Subsequent to the closing date, if
less than all required commitments are obtained, the
Agent may make adjustments to the pricing, structure,
terms or amount of the Facilities required to effect
a successful syndication. The agreement in the
foregoing sentence shall survive closing of the loans
and continue in effect until a successful syndication
has been completed. For purposes of the foregoing,
"successful syndication" means that LaSalle has
achieved its target hold level of $50.0 million.
LaSalle may provide to industry trade organizations
information with respect to the Facilities that is
necessary and customary for inclusion in league table
measurements.
Assignments and Each Lender may at any time sell assignments in the
Participations: Facilities to eligible financial institutions or
commercial banks in minimum amounts of $5.0 million
(or all of such Lender's remaining loans and
commitments) subject to the consent of the
Administrative Agent, the Issuing Lender (for
assignments of the Revolving Credit Facility only)
and (so long as no event of default has occurred and
is continuing) the Company (which shall not be
unreasonably withheld or delayed). Each Lender may
sell participations in all or any part of the
Facilities, provided such participants shall only
have voting rights with respect to certain customary
or affected Lender consent items.
Governing Law and The loan documents will be governed by Illinois law.
Forum: The Loan Parties will submit to the jurisdiction and
venue of the federal and state courts located in Cook
County in the State of Illinois and will waive any
right to trial by jury.
Counsel to the To be determined.
Administrative Agent:
8
The Term Sheet does not attempt to describe all of the terms, conditions and
requirements that would pertain to the Facilities, but rather is intended to
outline certain basic items around which the Facilities will be structured. This
Term Sheet is not intended to limit the scope of discussion or negotiation of
any and all matters not inconsistent with the specific matters set forth herein.
This Term Sheet does not constitute a commitment, a contract to provide a
commitment or an offer to enter into a contract to provide the Facilities
described herein. Such a commitment, contract or offer is subject to, among
other things, completion of due diligence, obtaining the approval of all
applicable credit committees and execution and delivery of definitive loan
documentation.
9
ANNEX I
INTERESTS AND CERTAIN FEES
Interest: Loans will bear interest at a rate per annum over the
Base Rate or the LIBOR Rate according to the Pricing
Grid set forth below based on the most recent quarter
end Senior Leverage Ratio. Minimum pricing on the
closing date and for a minimum period of nine months
thereafter shall be set at Level II.
PRICING GRID
REVOLVING CREDIT FACILITY TERM LOAN
--------------------------------- ---------------------
LIBOR BASE RATE NON-USE LETTER OF LIBOR BASE RATE
LEVEL SENIOR DEBT/EBITDA MARGIN MARGIN FEE CREDIT FEE MARGIN MARGIN
----- ------------------- ------- --------- -------- ---------- ------- ---------
I > or = 3.50x 275 bps 50 bps 50 bps 275 bps 325 bps 100 bps
II > or = 2.75x and < 3.50x 250 bps 25 bps 50 bps 250 bps 300 bps 75 bps
III > or = 2.00x and < 2.75x 225 bps 0 bps 50 bps 225 bps 275 bps 50 bps
IV < 2.00x 200 bps 0 bps 37.5 bps 200 bps 250 bps 25 bps
LIBOR Rate: The London Interbank Offered Rate
("LIBOR") as displayed in the Bloomberg Financial
Markets system (or other authoritative source
selected by the Administrative Agent in its sole
discretion) for deposits in dollars for one, two or
three month periods ("Interest Periods") as offered
at 11:00 a.m. London time two (2) business days prior
to the borrowing date (or three (3) business days
prior to the commencement of such Interest Period if
banks in London, were not open and dealing in
offshore United States dollars on such second
preceding business day), adjusted for statutory
reserve requirements.
Base Rate: The higher of (a) the rate publicly
announced from time to time by the Administrative
Agent as its "prime rate" and (b) the Federal Funds
Rate plus 0.5% per annum.
Calculations: All calculations of interest and fees will be made on
the basis of a 360-day year and actual days elapsed.
Interest Payments: Interest will be payable monthly in arrears on the
last day of each calendar month on Base Rate loans
and on the last day of each Interest Period in the
case of LIBOR loans.
10
Non-Use Fee: A Non-Use Fee at a rate per annum determined by
reference to the Pricing Grid will be payable on the
daily unutilized portion of the Revolving Credit
Facility. Such fee will be payable monthly in arrears
on the last day of each calendar month. The undrawn
amount of letters of credit will count as utilization
of the Revolving Credit Facility for purposes of
calculating this fee.
Letter of Credit Fees: A letter of credit fee at a rate per annum determined
by reference to the Pricing Grid will be payable on
the daily stated amount of all outstanding letters of
credit. Such fee will be payable monthly in arrears
on the last day of each calendar month. In addition,
the Company will pay the Issuing Lender for its own
account for each Letter of Credit (a) a fronting fee
in the amount separately agreed to between the
Company and the Issuing Lender and (b) such other
standard issuance, negotiation, processing and/or
administration fees as may be charged by the Issuing
Lender.
Default Rate: Upon the occurrence and during the continuance of a
default, unless the Required Lenders otherwise
consent, the obligations under the Facilities will
bear interest at a rate equal to an additional two
percent (2%) per annum over the rate otherwise
applicable, with such interest payable on demand.
Imposition of the default rate will be automatic for
payment and insolvency defaults.
Upfront Fees: 2.00% on the Facilities payable at close. It is
understood and agreed that no other Lender shall
receive compensation from the Company in order to
obtain its commitment therein.
Agency Fee: $50,000 payable to the Administrative Agent at
closing and on each anniversary of the closing date.
Prepayment Fee: 1.00% in the first year after the closing date and
0.50% in second year.
11
EXHIBIT B
BUTLER MANUFACTURING COMPANY DIRECTORS CONCLUDE:
ROBERTSON-CECO PROPOSAL MORE UNCERTAIN, CONTINGENT
THAN HAD BEEN ORIGINALLY SUSPECTED
KANSAS CITY, MO, April 19, 2004 -- After review and consultation with
its financial advisors and outside legal counsel, the Board of Directors of
Butler Manufacturing Company (BBR:NYSE) has determined that the additional
information provided by Robertson-Ceco Corporation ("RCC") on April 16, 2004
only served to highlight the vagueness and uncertainty of RCC's proposal to
acquire Butler.
"The Board believes the RCC proposal is riddled with contingencies,"
said John Holland, Chairman and Chief Executive Officer of Butler. "Because the
RCC proposal is too vague and uncertain for the Board to conclude that it
represents a Superior Proposal, Butler is precluded under the merger agreement
with BlueScope Steel Limited ("BlueScope") from entering into or participating
in discussions with RCC at this time. The Board continues to recommend that
Butler stockholders vote for approval and adoption of the BlueScope merger
agreement."
On April 16, Butler received additional information from RCC regarding
its unsolicited proposal to acquire Butler. RCC also issued a related press
release on April 16 purporting to describe this additional information. While
RCC chose to publish and file with the SEC its original April 13, 2004 letter to
Butler's Board of Directors, RCC chose not to publish in full the April 16
information. In the interest of full disclosure, Butler is today filing with the
SEC a complete copy of the April 16 information delivered by RCC to Butler.
As previously announced and described in the proxy statement mailed to
Butler stockholders on March 26, 2004, Butler has entered into an Agreement and
Plan of Merger with BlueScope whereby Butler stockholders would be entitled to
receive $22.50 per share in cash. A special meeting of Butler stockholders is
scheduled on April 27, 2004 to vote on the proposed merger with BlueScope. As
previously announced on April 16, Butler expects to meet the financial
milestones established in the BlueScope merger agreement for the quarter ended
March 31, 2004 that are a condition to BlueScope's obligation to consummate the
merger.
Under the terms of the merger agreement with BlueScope, a Superior
Proposal is defined as an acquisition transaction that is reasonably likely to
be consummated on the terms proposed, taking into account all legal, financial,
regulatory and other aspects, and would result in a more favorable outcome than
the BlueScope merger from a financial point of view to Butler stockholders if
consummated, taking into account the proposed timing.
The April 16 information purported to provide evidence of equity
financing that was available to RCC from Longleaf Partners Small-Cap Fund
("Longleaf") and debt financing from LaSalle Bank N.A. ("LaSalle"). In reviewing
these materials, the Board had the following observations and concerns:
o The Longleaf and LaSalle proposals are non-binding term sheets--in
the case of Longleaf "for discussion purposes only", and in the case
of LaSalle "does not constitute a commitment"--and do not represent
any promise to provide funding;
o The Longleaf and LaSalle proposals clearly indicate any funding
would be subject to detailed documentation and legal, financial and
business due diligence on both Butler and the RCC companies,
including environmental and other field audits and the like, as well
as special comfort on other matters such as available insurance
coverage and trends regarding RCC's asbestos claims and the solvency
of RCC before and after the transaction, all of which would
reasonably be expected to be a lengthy process, even if successfully
concluded;
o Nothing in the Longleaf and LaSalle proposals alters the fact that
the RCC proposal is complex, multi-party, highly contingent and
conditional, and lacks any formal agreements, timetable or
assurances that it would ever be consummated;
o The $26.00 per share value referenced by RCC is not a cash payment
to Butler stockholders but merely a hypothetical value used as a
means for establishing an exchange ratio for Butler's stock relative
to RCC's stock in a merger transaction. Despite RCC's implications
to the contrary in the April 16 press release, RCC has given no
assurance that the actual trading value for Butler's stock in the
market would be $26.00 per share following the completion of a
transaction;
o The proposed combined balance sheet provided for the three RCC
operating entities reflects $42 million of cumulative losses;
o The Board continues to be mindful of the existing Noteholder
Amendment Agreement, dated December 30, 2003, that requires Butler
to conclude a transaction that provides for payment in full of all
Butler's obligations to its senior noteholders by April 30, 2004,
and believes that the merger with BlueScope will be closed, subject
to stockholder approval, immediately following the special meeting
of Butler stockholders on April 27.
The Board weighed the relative certainty of the BlueScope merger
against the apparent risk and uncertainty associated with consummating the
transactions outlined in the RCC proposal. In light of Butler's current
financial condition, the Board also considered the risks of continuing to
operate Butler's business for the extended period of time necessary to seek to
conclude the transactions proposed by RCC. These factors also contributed to the
Board's evaluation of the RCC proposal.
"We are convinced that the merger with BlueScope represents the best
available transaction for Butler shareholders," said Holland.
Butler Manufacturing Company is the world's leading producer of
pre-engineered building systems, a leading supplier of architectural aluminum
systems and components, and provides construction and real estate services for
the nonresidential construction market.
-----------------------------------
Statements in this press release concerning the company's business outlook or
future economic performance; anticipated profitability, revenues, expenses or
other financial items, together with other statements that are not historical
facts, are "forward-looking statements" as that term is defined under the
Federal Securities Laws. Forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
stated in such statements. Such risks and uncertainties include, but are not
limited to, industry cyclicality, fluctuations in customer demand and order
pattern, the seasonal nature of the business, changes in pricing or other
actions by competitors, and general economic conditions, as well as other risks
detailed in the company's 2003 Annual Report to the Securities and Exchange
Commission on page 4.