AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1996
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
WESTERN RESOURCES, INC.
(Exact name of Registrant as specified in its charter)
--------------
KANSAS 4911 48-0290150
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
818 S. KANSAS AVENUE
TOPEKA, KANSAS 66612
(913) 575-6300
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
--------------
JOHN K. ROSENBERG
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
WESTERN RESOURCES, INC.
818 S. KANSAS AVENUE
TOPEKA, KANSAS 66612
(913) 575-6300
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
--------------
COPY TO:
NEIL T. ANDERSON
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
--------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE PRICE(2) FEE(2)
- ---------------------------------------------------------------------------------
Common Stock, par value
$5.00 per share........ 72,260,989 Not applicable $1,845,220,589 $559,158
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Represents the maximum amount of common stock, par value $5.00 per share,
of Western Resources, Inc. ("Western Resources"), issuable upon
consummation of the exchange offer for common shares, par value $0.10 per
share (the "Shares"), of ADT Limited ("ADT") based on the maximum Exchange
Ratio (as defined in the Preliminary Prospectus) and excluding the Shares
owned by Westar Capital, Inc., a wholly-owned subsidiary of Western
Resources. According to ADT's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996, as of November 4, 1996, there were
issued and outstanding: (i) 141,119,159 Shares, and (ii) a warrant to
purchase 15,000,000 Shares, exercisable for six months from September 27,
1996 (the "Republic Warrant"). According to ADT's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, as of December 31, 1995,
there were 776,250 Liquid Yield Option Notes ("LYONS") issued and
outstanding, each of which is exchangeable at the option of the holder for
28.23 Shares. According to ADT's 1996 Proxy Statement (the "Proxy
Statement") there were to be 18,572,518 options to purchase Shares
outstanding subsequent to the ADT 1996 Annual Meeting . Based on the
foregoing and assuming that (i) no Shares have been issued since November
4, 1996, (ii) no options for Shares have been issued other than those
reported in the Proxy Statement, (iii) no LYONS have been issued since
December 31, 1995, and (iv) the Republic Warrant is invalid, the maximum
number of Shares to be cancelled in the exchange would be 143,318,104.
However, the actual maximum number of Shares will depend on the facts as
they exist on the date of exchange.
(2) Pursuant to Rules 457(f)(1), 457(f)(3) and 457(c) under the Securities Act
of 1933, as amended, and solely for the purpose of calculating the
registration fee, the registration fee was computed on the basis of the
high and low prices of Shares as reported on the New York Stock Exchange
Composite Tape on December 16, 1996. The fee is $559,158, calculated as
1/33 of one percent of the Proposed Maximum Aggregate Offering Price.
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION--DATED DECEMBER 18, 1996
PROSPECTUS
OFFER TO EXCHANGE EACH OUTSTANDING COMMON SHARE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
OF
ADT LIMITED
FOR
$7.50 NET PER SHARE IN CASH
AND
$15.00 OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
OF
WESTERN RESOURCES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00
PM, EASTERN TIME, ON , 1997 UNLESS THE OFFER IS
EXTENDED (THE "EXPIRATION DATE"). SHARES WHICH ARE
TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT
ANY TIME PRIOR TO THE EXPIRATION DATE.
Western Resources, Inc., a Kansas corporation ("Western Resources"), and
Westar Capital, Inc., a Kansas corporation and a wholly owned subsidiary of
Western Resources ("Westar Capital"), hereby offer, upon the terms and subject
to the conditions set forth herein and in the related Letter of Transmittal
(collectively, the "Offer"), to exchange $7.50 net in cash and $15.00 in shares
of common stock, par value $5.00 per share, of Western Resources ("Western
Resources Common Stock"), subject to adjustment as described below, for each
outstanding common share, par value $ 0.10 per share (each a "Share" and
collectively, the "Shares"), of ADT Limited, a company incorporated under the
laws of Bermuda ("ADT"), including (unless and until Western Resources and
Westar Capital declare that the Rights Condition (as defined below) is
satisfied) the associated preference share purchase rights (each, a "Right" and
collectively, the "Rights") issued pursuant to the Rights Agreement, dated as
of November 6, 1996, between ADT and Citibank, N.A., as Rights Agent (the
"Rights Agreement"), validly tendered on or prior to the Expiration Date and
not properly withdrawn. Unless the context otherwise requires and unless and
until the Rights are redeemed, all references to Shares shall include the
associated Rights. All references herein to Rights shall include all benefits
that may inure to holders of the Rights pursuant to the Rights Agreement. Each
Share validly tendered on or prior to the Expiration Date and not properly
withdrawn will be entitled to receive $7.50 net in cash (the "Cash
Consideration") and that number of shares of Western Resources Common Stock
equal to the Exchange Ratio (as defined below) (the "Stock Consideration," and,
together with the Cash Consideration, the "Offer Consideration").
(Continued on following page)
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PRELIMINARY PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Dealer Managers for the Offer are:
BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC.
SALOMON BROTHERS INC
The date of this Preliminary Prospectus is December 18, 1996.
(continued from previous page)
The term "Exchange Ratio" means the quotient (rounded to the nearest
1/100,000) determined by dividing $15.00 by the average of the high and low
sales prices of Western Resources Common Stock (as reported on the New York
Stock Exchange, Inc. (the "NYSE") Composite Transactions reporting system as
published in The Wall Street Journal or, if not published therein, in another
authoritative source) (the "Western Resources Average Price") on each of the
twenty consecutive trading days ending with the third trading day immediately
preceding the Expiration Date; provided that the Exchange Ratio shall not be
greater than 0.50420. Pursuant to the Exchange Ratio, each Share will be
exchanged for $7.50 net in cash and $15.00 of Western Resources Common Stock
as long as the Western Resources Average Price is $29.75 or higher. If the
Western Resources Average Price is less than $29.75, each Share will be
exchanged for $7.50 net in cash and less than $15.00 of Western Resources
Common Stock. See "Reasons for the Offer--The Exchange Ratio." Western
Resources Common Stock is listed for trading under the symbol "WR" on the
NYSE. On December 17, 1996, the closing price of Western Resources Common
Stock on the NYSE was $31.25. Based on such closing price, the Exchange Ratio
would be and each Share would be converted into $7.50 net in cash and $15.00
of Western Resources Common Stock. The Exchange Ratio will change as the
market price of the Western Resources Common Stock changes. Holders of
outstanding Shares ("ADT Shareholders") may call (800) any time on or
after the date hereof through the Expiration Date for the current Exchange
Ratio calculated based on the then-current Western Resources Average Price for
the twenty consecutive trading days ending with the third trading day
immediately preceding the date the call is placed. The actual Western
Resources Average Price and Exchange Ratio will be calculated as of the third
trading day immediately prior to the Expiration Date, as described above, and
a press release will be issued announcing the actual Exchange Ratio prior to
the opening of the second trading day prior to the Expiration Date (as it may
be extended from time to time).
WESTERN RESOURCES' OBLIGATION TO EXCHANGE THE OFFER CONSIDERATION FOR SHARES
PURSUANT TO THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE
SATISFACTION OR, WHERE APPLICABLE, WAIVER OF THE FOLLOWING CONDITIONS: (I)
THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A
NUMBER OF SHARES WHICH, TOGETHER WITH SHARES OWNED BY WESTERN RESOURCES AND
ITS AFFILIATES, WILL CONSTITUTE AT LEAST A MAJORITY OF THE TOTAL NUMBER OF
OUTSTANDING SHARES ON A FULLY DILUTED BASIS (AS THOUGH ALL OPTIONS OR OTHER
SECURITIES CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE FOR SHARES HAD BEEN
SO CONVERTED, EXERCISED OR EXCHANGED) AS OF THE DATE THE SHARES ARE ACCEPTED
FOR EXCHANGE BY WESTERN RESOURCES PURSUANT TO THE OFFER (THE "MINIMUM TENDER
CONDITION"), (II) APPROVAL OF THE ISSUANCE OF SHARES OF WESTERN RESOURCES
COMMON STOCK IN CONNECTION WITH THE OFFER AND THE AMALGAMATION AND APPROVAL OF
AN AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF WESTERN
RESOURCES (THE "WESTERN RESOURCES ARTICLES") TO INCREASE THE NUMBER OF SHARES
OF WESTERN RESOURCES COMMON STOCK AUTHORIZED FOR ISSUANCE, BY THE HOLDERS
(VOTING AS A SINGLE CLASS) OF A MAJORITY OF THE SHARES OF WESTERN RESOURCES
COMMON STOCK AND WESTERN RESOURCES PREFERRED STOCK OUTSTANDING ON THE
APPLICABLE RECORD DATE (THE "WESTERN RESOURCES SHAREHOLDER APPROVAL
CONDITION"), (III) THE APPROVAL BY A MAJORITY OF THOSE SHARES VOTED AT A
SPECIAL GENERAL MEETING OF ADT SHAREHOLDERS, WHICH HAS BEEN REQUISITIONED BY
WESTAR CAPITAL (THE "ADT SPECIAL MEETING") PURSUANT TO SECTION 74 OF THE
COMPANIES ACT 1981 OF BERMUDA, AS AMENDED (THE "COMPANIES ACT"), AND BYE-LAW
42 OF ADT'S BYE-LAWS (THE "ADT BYE-LAWS"), OF THE FOLLOWING ACTIONS: (A) THE
REMOVAL, PURSUANT TO SECTION 93 OF THE COMPANIES ACT AND BYE-LAW 71 OF THE ADT
BYE-LAWS, OF ALL OF THE PRESENT MEMBERS OF THE BOARD OF DIRECTORS OF ADT (THE
"ADT BOARD") AND ANY PERSON OR PERSONS ELECTED OR DESIGNATED BY ANY OF SUCH
DIRECTORS TO FILL ANY VACANCY OR NEWLY CREATED DIRECTORSHIP, (B) THE REDUCTION
OF THE NUMBER OF SEATS ON THE ADT BOARD TO TWO, AND (C) THE ELECTION OF STEVEN
L. KITCHEN AND STEVEN A. MILLSTEIN (THE "WESTERN RESOURCES NOMINEES") AS THE
DIRECTORS OF ADT (OR, IF EITHER WESTERN RESOURCES NOMINEE IS UNABLE TO SERVE
AS A DIRECTOR OF ADT DUE TO DEATH, DISABILITY OR OTHERWISE, ANY OTHER PERSON
DESIGNATED AS A WESTERN RESOURCES NOMINEE BY WESTERN RESOURCES) (COLLECTIVELY,
THE "ADT SHAREHOLDER APPROVAL CONDITION"), (IV) THE ADT BOARD HAVING REDEEMED
THE RIGHTS OR AMENDED THE RIGHTS AGREEMENT SO THAT THE RIGHTS ARE INAPPLICABLE
TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER, OR WESTERN RESOURCES BEING
OTHERWISE SATISFIED IN ITS SOLE DISCRETION THAT THE RIGHTS ARE INVALID OR ARE
NOT APPLICABLE TO THE ACQUISITION OF SHARES PURSUANT TO THE OFFER (THE "RIGHTS
PLAN
ii
CONDITION"), (V) WESTERN RESOURCES AND WESTAR CAPITAL BEING SATISFIED, IN THEIR
SOLE DISCRETION, THAT THE PROVISIONS OF BYE-LAW 104 AND BYE-LAW 46 OF THE ADT
BYE-LAWS (AS DESCRIBED HEREIN) DO NOT AND WILL NOT APPLY TO WESTERN RESOURCES,
WESTAR CAPITAL OR THE ACQUISITION OF SHARES PURSUANT TO THE OFFER SO AS (A) TO
REQUIRE WESTERN RESOURCES OR WESTAR CAPITAL TO COMPLY WITH THE PROVISIONS OF
BYE-LAW 104 OF THE ADT BYE-LAWS OR (B) TO PREVENT WESTERN RESOURCES, WESTAR
CAPITAL OR ANY OF THEIR AFFILIATES FROM VOTING SHARES OWNED BY ANY OF THEM AT
ANY TIME (THE "ADT BYE-LAW CONDITION"), (VI) THE RECEIPT BY WESTAR CAPITAL OF A
FINAL JUDGMENT FROM A COURT OF COMPETENT JURISDICTION DECLARING THE REPUBLIC
WARRANT (AS DEFINED HEREIN) INVALID OR THE EXPIRATION OF THE REPUBLIC WARRANT
PRIOR TO THE EXPIRATION DATE WITHOUT HAVING BEEN EXERCISED (THE "REPUBLIC
WARRANT CONDITION") AND (VII) ALL REGULATORY APPROVALS REQUIRED TO CONSUMMATE
THE OFFER HAVING BEEN OBTAINED AND REMAINING IN FULL FORCE AND EFFECT, ALL
STATUTORY WAITING PERIODS IN RESPECT THEREOF HAVING EXPIRED AND NO SUCH
APPROVAL CONTAINING ANY CONDITIONS OR RESTRICTIONS WHICH THE WESTERN RESOURCES
BOARD OF DIRECTORS (THE "WESTERN RESOURCES BOARD") DETERMINES WILL OR COULD BE
EXPECTED TO MATERIALLY IMPAIR THE STRATEGIC AND FINANCIAL BENEFITS EXPECTED TO
RESULT FROM THE OFFER (THE "REGULATORY APPROVAL CONDITION"). THE MINIMUM TENDER
CONDITION, THE WESTERN RESOURCES SHAREHOLDER APPROVAL CONDITION, THE ADT
SHAREHOLDER APPROVAL CONDITION, THE RIGHTS PLAN CONDITION, THE ADT BYE-LAW
CONDITION, THE REPUBLIC WARRANT CONDITION, THE REGULATORY APPROVAL CONDITION
AND THE OTHER CONDITIONS SET FORTH UNDER THE CAPTION "THE OFFER--CONDITIONS OF
THE OFFER--CERTAIN OTHER CONDITIONS OF THE OFFER" SHALL BE REFERRED TO
COLLECTIVELY AS THE "OFFER CONDITIONS." CAPITALIZED TERMS USED BUT NOT DEFINED
ABOVE ARE DEFINED HEREINAFTER.
THIS PRELIMINARY PROSPECTUS AND THE OFFER MADE HEREBY DO NOT CONSTITUTE A
SOLICITATION OF ANY PROXIES OR CONSENTS. ANY SUCH SOLICITATIONS WILL BE MADE
ONLY PURSUANT TO SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING
WITH THE REQUIREMENTS OF SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934.
THIS PRELIMINARY PROSPECTUS CONTAINS CERTAIN STATEMENTS WITH RESPECT TO THE
FINANCIAL CONDITION AND BUSINESS OF WESTERN RESOURCES FOLLOWING THE
CONSUMMATION OF THE OFFER (SEE "PROSPECTUS SUMMARY--REASONS FOR THE OFFER,"
"REASONS FOR THE OFFER" AND "THE OFFER"). SUCH STATEMENTS INCLUDE FORWARD
LOOKING STATEMENTS WITH RESPECT TO, AMONG OTHER THINGS: (1) EXPECTED REVENUE
ENHANCEMENTS AND COST SAVINGS FROM THE COMBINATION OF THE BUSINESSES OF ADT AND
WESTERN RESOURCES; (2) NORMAL WEATHER CONDITIONS; (3) FUTURE INTERNATIONAL,
NATIONAL AND REGIONAL ECONOMIC AND COMPETITIVE CONDITIONS; (4) INFLATION RATES;
(5) FUTURE REGULATORY DEVELOPMENTS; (6) WESTERN RESOURCES' FUTURE RATES AND
COSTS IN ITS UTILITY AND OTHER BUSINESSES; (7) FUTURE FINANCIAL MARKET
CONDITIONS; (8) INTEREST RATES; (9) FUTURE BUSINESS DECISIONS; AND (10) OTHER
UNCERTAINTIES, WHICH, THOUGH CONSIDERED REASONABLE BY WESTERN RESOURCES, ARE
BEYOND WESTERN RESOURCES' SOLE CONTROL AND DIFFICULT TO PREDICT. FURTHER
INFORMATION ON OTHER FACTORS WHICH COULD AFFECT THE FINANCIAL RESULTS OF
WESTERN RESOURCES FOLLOWING THE COMBINATION OF THE BUSINESSES OF ADT AND
WESTERN RESOURCES IS INCLUDED IN THE SECURITIES AND EXCHANGE COMMISSION FILINGS
INCORPORATED BY REFERENCE HEREIN.
----------------
Western Resources is unable to predict the amount of time necessary, among
other things, to obtain the shareholder, governmental and regulatory approvals
and consents required to complete the Offer and the transactions contemplated
herein. However, the time necessary to obtain such approvals and consents may
extend beyond the Expiration Date, and Western Resources reserves the right to
extend the Offer from time to time in its sole discretion.
----------------
iii
On July 8, 1996, Western Resources made an offer (the "KCPL Offer") to the
shareholders of Kansas City Power & Light Company, a Missouri corporation
("KCPL"), to exchange each outstanding share of common stock, no par value per
share, of KCPL ("KCPL Common Stock"), for $31.00 of Western Resources Common
Stock, subject to adjustment. For further details concerning, and recent
developments with respect to, the KCPL Offer, see "Prospectus Summary--Western
Resources' Offer for KCPL" and "Western Resources' Offer for KCPL." Western
Resources currently intends to proceed with the Offer to ADT Shareholders
without regard to future developments with respect to the KCPL Offer.
Accordingly, this Preliminary Prospectus presents financial information with
respect to both the combination of ADT and Western Resources and the
combination of ADT, Western Resources and KCPL. See "Prospectus Summary--
Selected Unaudited Pro Forma Combined Financial Information," "Unaudited Pro
Forma Combined Balance Sheet" and "Unaudited Pro Forma Combined Statement of
Income."
----------------
IMPORTANT
Any ADT Shareholder desiring to tender all or any portion of his or her
Shares and the associated Rights should either (a) complete and sign the
Letter of Transmittal or a facsimile copy thereof in accordance with the
instructions in the Letter of Transmittal, and mail or deliver the Letter of
Transmittal or such facsimile and any other required documents to [ ] (the
"Exchange Agent") and either deliver the certificates for such Shares and, if
separate, certificates for the Rights to the Exchange Agent along with the
Letter of Transmittal, deliver such Shares (and Rights, if applicable)
pursuant to the procedures for book-entry transfer set forth herein (in the
case of Rights, only if such procedures are available) or comply with the
guaranteed delivery procedures set forth below or (b) request his or her
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such ADT Shareholder. An ADT Shareholder having Shares and, if
applicable, Rights registered in the name of a broker, dealer, commercial
bank, trust company or other nominee is urged to contact such broker, dealer,
commercial bank, trust company or other nominee if he or she desires to tender
such Shares and, if applicable, Rights.
ADT Shareholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares, unless and until Western
Resources declares that the Rights Plan Condition is satisfied. Unless and
until the ADT Distribution Date (as defined herein) occurs, a tender of Shares
will constitute a tender of the associated Rights.
An ADT Shareholder that desires to tender Shares and, if applicable, Rights
and whose certificates for such Shares and, if applicable, Rights are not
immediately available or who cannot comply with the procedures for book-entry
transfer on a timely basis or who cannot deliver all required documents to the
Exchange Agent prior to the Expiration Date, may tender such Shares and, if
applicable, Rights, by following the procedure for guaranteed delivery.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Managers at their respective addresses and telephone
numbers set forth on the back cover of this Preliminary Prospectus. Requests
for additional copies of this Preliminary Prospectus and the Letter of
Transmittal may be directed to the Information Agent or to brokers, dealers,
commercial banks or trust companies.
iv
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION..................................................... vi
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... vii
ADT AND KCPL INFORMATION.................................................. vii
PROSPECTUS SUMMARY........................................................ 1
Western Resources....................................................... 1
ADT..................................................................... 1
Reasons for the Offer................................................... 2
Background of the Offer................................................. 3
Litigation.............................................................. 4
The ADT Special Meeting................................................. 5
The Offer............................................................... 5
The Amalgamation........................................................ 8
Certain Federal Income Tax Consequences................................. 9
Effect of Offer on Market for Shares; Registration Under the Exchange
Act.................................................................... 9
Appraisal Rights........................................................ 9
Comparison of the Rights of Holders of Shares and Western Resources
Common Stock........................................................... 9
Western Resources' Offer for KCPL....................................... 10
Recent Developments..................................................... 10
Description of Western Resources Capital Stock.......................... 11
Market Prices........................................................... 12
The Exchange Agent...................................................... 12
Request for Assistance and Additional Copies............................ 12
Western Resources, ADT and KCPL Comparative Per Share Data.............. 13
Selected Financial Data................................................. 14
Selected Historical Financial Data of Western Resources................. 14
Selected Historical Financial Data of ADT............................... 15
Western Resources and ADT Selected Unaudited Pro Forma Combined
Financial Information.................................................. 16
Selected Historical Financial Data of KCPL.............................. 17
Western Resources, ADT and KCPL Selected Unaudited Pro Forma Combined
Financial Information.................................................. 18
REASONS FOR THE OFFER..................................................... 19
Offer Premium and Dividend Impact....................................... 19
The Exchange Ratio...................................................... 19
Enhanced Business Opportunities......................................... 20
Growth Opportunities in the Security Industry........................... 20
Expansion of Branded Energy Marketing................................... 21
Cost Savings from Operational Synergies................................. 22
BACKGROUND OF THE OFFER................................................... 23
LITIGATION................................................................ 25
THE ADT SPECIAL MEETING................................................... 26
The Requisition......................................................... 26
Matters to be Brought Before the ADT Special Meeting.................... 26
PAGE
----
THE OFFER................................................................. 27
General................................................................. 27
ADT Rights.............................................................. 28
Timing of the Offer..................................................... 28
Extension, Termination and Amendment.................................... 29
Exchange of Shares; Delivery of Western Resources Common Stock and Cash
Consideration.......................................................... 29
Cash in Lieu of Fractional Shares of Western Resources Common Stock..... 30
Withdrawal Rights....................................................... 30
Procedure for Tendering................................................. 31
Certain Federal Income Tax Consequences................................. 34
Effect of Offer on Market for Shares; Registration Under the Exchange
Act.................................................................... 35
Purpose of the Offer; The Amalgamation.................................. 36
ADT Bye-Laws and the Provisions of the United Kingdom City Code......... 36
Conditions of the Offer................................................. 37
Source and Amount of Funds.............................................. 43
Relationships with ADT.................................................. 43
Fees and Expenses....................................................... 43
Accounting Treatment.................................................... 45
Stock Exchange Listing.................................................. 45
THE AMALGAMATION.......................................................... 46
General................................................................. 46
Appraisal Rights........................................................ 47
WESTERN RESOURCES' OFFER FOR KCPL......................................... 48
RECENT DEVELOPMENTS....................................................... 48
BUSINESS OF WESTERN RESOURCES............................................. 49
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION........................ 50
The Amalgamation........................................................ 50
The KCPL Merger......................................................... 51
UNAUDITED PRO FORMA COMBINED BALANCE SHEET................................ 52
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME.......................... 53
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION............... 60
DESCRIPTION OF WESTERN RESOURCES CAPITAL STOCK............................ 63
Western Resources Common Stock.......................................... 63
Western Resources Preferred Stock....................................... 64
Western Resources Preference Stock...................................... 65
COMPARISON OF THE RIGHTS OF HOLDERS OF SHARES AND WESTERN RESOURCES COMMON
STOCK.................................................................... 66
Voting Rights in Connection with Business Combinations.................. 72
MARKET PRICES AND DIVIDENDS............................................... 78
VALIDITY OF WESTERN RESOURCES COMMON STOCK................................ 79
EXPERTS................................................................... 79
v
AVAILABLE INFORMATION
Western Resources, ADT and KCPL are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith file reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by Western Resources,
ADT and KCPL with the Commission may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the public
reference facilities in the Commission's Regional Offices at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of information may
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Because Western
Resources, ADT and KCPL each file certain documents electronically with the
Commission, reports, proxy and information statements and other information
regarding Western Resources and ADT may also be obtained at prescribed rates
from the Commission at the Commission's Web site, http//:www.sec.gov. The
Western Resources Common Stock, the Shares and the KCPL Common Stock are
listed and traded on the NYSE. The Shares are also listed and traded on the
London Stock Exchange (the "LSE"), the Frankfurt Stock Exchange (the "FSE")
and the Bermuda Stock Exchange (the "BSX") and the KCPL Common Stock is also
listed on the Chicago Stock Exchange (the "CSE"). Reports, proxy statements
and other information filed by Western Resources, ADT and KCPL with the
Commission may be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005 and, concerning KCPL only, at the offices of the CSE, 440
South LaSalle Street, Chicago, Illinois 60605.
This Preliminary Prospectus does not contain all of the information set
forth in the Registration Statement on Form S-4, as amended (the "Registration
Statement"), covering the Western Resources Common Stock offered hereby which
has been filed with the Commission, certain portions of which have been
omitted pursuant to the rules and regulations of the Commission, and to which
portions reference is hereby made for further information with respect to
Western Resources, ADT and KCPL and the securities offered hereby. Statements
contained herein concerning any documents are not necessarily complete and, in
each instance, reference is made to the copies of such documents filed as
exhibits to the Registration Statement. Each such statement is qualified in
its entirety by such reference.
Not later than the date of commencement of the Offer, Western Resources will
file with the Commission a statement on Schedule 14D-1 pursuant to Rule 14d-3
under the Exchange Act furnishing certain information with respect to the
Offer. Such Schedule and any amendments thereto should be available for
inspection and copying as set forth above (except that such Schedules and any
amendments thereto will not be available at the regional offices of the
Commission).
Pursuant to Rule 409 promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), and Rule 12b-21 promulgated under the Exchange
Act, Western Resources plans to request that ADT and its independent public
accountants, Coopers & Lybrand, L.L.P., provide to Western Resources the
information required for complete disclosure concerning the business,
operations, financial condition and management of ADT. Western Resources will
provide any and all information which it receives from ADT or Coopers &
Lybrand, L.L.P. prior to the expiration of the Offer and which Western
Resources deems material, reliable and appropriate in a subsequently prepared
amendment or supplement hereto.
Pursuant to Rule 409 promulgated under the Securities Act and Rule 12b-21
promulgated under the Exchange Act, Western Resources has similarly requested
that KCPL and its independent public accountants, Coopers & Lybrand, L.L.P.,
provide to Western Resources the information required for complete disclosure
concerning the business, operations, financial condition and management of
KCPL for purposes of the KCPL Offer (as defined herein). Neither KCPL nor
Coopers & Lybrand, L.L.P. has yet provided any information in response to such
request. Western Resources will provide any and all information which it
receives from KCPL or Coopers & Lybrand, L.L.P. prior to the expiration of the
Offer and which Western Resources deems material, reliable and appropriate in
a subsequently prepared amendment or supplement hereto.
vi
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PRELIMINARY PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (NOT INCLUDING
EXHIBITS TO SUCH DOCUMENTS THAT ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE
INTO SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE UPON REQUEST TO CORPORATE
SECRETARY, WESTERN RESOURCES, INC., 818 S. KANSAS AVENUE, TOPEKA, KANSAS
66612. TELEPHONE REQUESTS MAY BE DIRECTED TO THE CORPORATE SECRETARY'S
DEPARTMENT AT (913) 575-1950. IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH
DOCUMENTS, ANY REQUEST FOR DOCUMENTS SHOULD BE SUBMITTED NOT LATER THAN FIVE
BUSINESS DAYS PRIOR TO THE EXPIRATION DATE.
The following documents filed with the Commission by Western Resources (File
No. 1-3523) are incorporated herein by reference: (a) Western Resources'
Annual Report on Form 10-K for the year ended December 31, 1995 (the "Western
Resources 1995 Form 10-K"); (b) Western Resources' Proxy Statement for the
1996 Annual Meeting of Shareholders, dated March 27, 1996 (the "1996 Western
Resources Annual Meeting Proxy Statement"); (c) Western Resources' Quarterly
Reports on Form 10-Q for the periods ended March 31, 1996, June 30, 1996 and
September 30, 1996; (d) Western Resources' Registration Statement on Form S-4,
dated July 3, 1996 (Registration No. 333-02711), and Western Resources'
Prospectus, dated July 3, 1996, included therein (the "KCPL Prospectus"); (e)
Western Resources' Preliminary Proxy Statement on Schedule 14A, dated December
18, 1996, to ADT Shareholders (the "Western Resources Proxy Statement"); (f)
Western Resources' Preliminary Proxy Statement on Schedule 14A, dated December
18, 1996, to shareholders of Western Resources; (g) Western Resources' Current
Reports on Form 8-K, dated October 24, 1996 and December 18, 1996; and (h)
soliciting materials of Western Resources filed pursuant to Rule 14a-12 and
Rule 14a-6 of the Exchange Act from December 18, 1996 through the date hereof.
The following documents filed with the Commission by ADT (File No. 0-16979)
are incorporated herein by reference: (a) ADT's Annual Report on Form 10-K for
the year ended December 31, 1995 (the "ADT 1995 Form 10-K"); (b) ADT's
Quarterly Reports on Form 10-Q for the periods ended March 31, 1996, June 30,
1996 and September 30, 1996; (c) ADT's Current Reports on Form 8-K, dated
October 1, 1996, October 23, 1996 and November 12, 1996; (d) ADT's
Registration Statement on Form 8-A, dated November 12, 1996 (the "ADT Form 8-
A") and (e) soliciting materials of ADT filed pursuant to Rule 14a-12 and Rule
14a-6 of the Exchange Act from December 18, 1996 through the date hereof.
The following documents filed with the Commission by KCPL (File No. 1-707)
are incorporated herein by reference: (a) KCPL's Annual Report on Form 10-K
for the year ended December 31, 1995 (the "KCPL 1995 Form 10-K"); and (b)
KCPL's Quarterly Reports on Form 10-Q for the periods ended March 31, 1996,
June 30, 1996 and September 30, 1996.
All documents filed by either Western Resources, ADT or KCPL pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the date the Offer is terminated or the Shares are
accepted for exchange shall be deemed to be incorporated herein by reference
and to be a part hereof from the date of such filing. Any statement contained
herein or in a document incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes hereof to
the extent that a statement contained herein or in any other subsequently
filed document which also is, or is deemed to be, incorporated herein by
reference modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part hereof, except
as so modified or superseded.
ADT AND KCPL INFORMATION
While Western Resources has included information concerning ADT and KCPL
insofar as it is known or reasonably available to Western Resources, neither
ADT nor KCPL is affiliated with Western Resources and neither ADT nor KCPL has
to date permitted access by Western Resources to ADT's or KCPL's books and
records. Therefore, information concerning ADT and KCPL which has not been
made public is not available to Western Resources. Although Western Resources
has no knowledge that would indicate that statements relating to ADT or KCPL
contained or incorporated by reference in this Preliminary Prospectus in
reliance upon publicly available information are inaccurate or incomplete,
Western Resources was not involved in the preparation of such information and
statements and, for the foregoing reasons, is not in a position to verify any
such information or statements.
vii
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PRELIMINARY PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY WESTERN RESOURCES, SALOMON BROTHERS INC ("SALOMON"), BEAR,
STEARNS & CO. INC. ("BEAR STEARNS") OR CHASE SECURITIES INC. ("CHASE," AND
TOGETHER WITH SALOMON AND BEAR STEARNS, THE "DEALER MANAGERS"). THIS
PRELIMINARY PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
THE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF
OF, ADT SHAREHOLDERS IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION.
HOWEVER, WESTERN RESOURCES MAY, IN ITS SOLE DISCRETION, TAKE SUCH ACTION AS IT
MAY DEEM NECESSARY TO MAKE THE OFFER IN ANY SUCH JURISDICTION AND EXTEND THE
OFFER TO ADT SHAREHOLDERS IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PRELIMINARY PROSPECTUS NOR ANY EXCHANGE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF WESTERN RESOURCES OR ADT SINCE THE DATE AS OF WHICH INFORMATION IS
FURNISHED OR THE DATE HEREOF.
IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE
OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO
BE MADE ON BEHALF OF WESTERN RESOURCES BY SALOMON, BEAR STEARNS AND CHASE, AS
DEALER MANAGERS, OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER
THE LAWS OF SUCH JURISDICTION.
viii
PROSPECTUS SUMMARY
The information below is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Preliminary
Prospectus, including the documents incorporated in this Preliminary Prospectus
by reference. ADT Shareholders are urged to read this Preliminary Prospectus
and the Annexes hereto, and the documents incorporated herein by reference, in
their entirety. As used in this Preliminary Prospectus, the terms "Western
Resources," "ADT" and "KCPL" refer to such entity and, unless the context
otherwise requires, its subsidiaries.
WESTERN RESOURCES
Western Resources and its divisions and wholly owned subsidiaries include
KPL, a rate-regulated electric and gas division of Western Resources ("KPL"),
Kansas Gas and Electric Company ("KGE"), a rate-regulated utility and wholly
owned subsidiary of Western Resources, Westar Capital, Inc., Westar Security,
Inc., Westar Energy, Inc., The Wing Group, Inc., non-utility subsidiaries, and
Mid-Continent Market Center, Inc., a regulated gas transmission service
provider ("MCMC"). KGE owns 47% of Wolf Creek Nuclear Operating Corporation
("WCNOC"), the operating company for the Wolf Creek Generating Station ("Wolf
Creek"). Western Resources' non-utility subsidiaries market natural gas
primarily to large commercial and industrial customers, provide electronic
security services, engage in international large power project development and
provide other energy-related products and services.
Western Resources is engaged principally in the production, purchase,
transmission, distribution and sale of electricity and the delivery and sale of
natural gas. Western Resources serves approximately 601,000 electric customers
in eastern and central Kansas and approximately 648,000 natural gas customers
in Kansas and northeastern Oklahoma. On December 12, 1996, Western Resources
and ONEOK, Inc. ("ONEOK") announced a strategic alliance pursuant to which
Western Resources will contribute its regulated local natural gas distribution
operations, and MCMC and Westar Gas Marketing, Inc. ("Westar Gas Marketing"),
and will become the largest shareholder of ONEOK. See "Prospectus Summary--
Recent Developments" and "Recent Developments."
Westar Capital is a private investment company, wholly owned by Western
Resources, with investments in energy-related and technology-oriented
businesses. Westar Capital owns 38,287,111 Shares, or approximately 27% of the
outstanding Shares, including 14,115 Shares issuable upon exchange of 500
Liquid Yield Option Notes ("LYONS") of ADT, which are exchangeable for Shares
at a rate of 28.23 Shares per LYON.
Westar Security is a rapidly growing electronic security services business
with 110,000 customer accounts. Westar Security is currently the tenth largest
security company in the United States, by customer count, with operations in
eleven states. On December 16, 1996, Western Resources announced an agreement
pursuant to which Western Resources will acquire all of the assets of
Westinghouse Security Systems, Inc. ("Westinghouse Security"), a subsidiary of
Westinghouse Electric Corporation ("Westinghouse"). Westinghouse Security is a
national security system monitoring company. See "Prospectus Summary--Recent
Developments" and "Recent Developments."
Western Resources was incorporated under the laws of the State of Kansas in
1924. Western Resources' corporate headquarters is located at 818 S. Kansas
Avenue, Topeka, Kansas 66612 and its telephone number is (913) 575-6300. Westar
Capital's corporate headquarters is located at 818 S. Kansas Avenue, Topeka,
Kansas 66612 and its telephone number is (913) 575-6300. See "Business of
Western Resources."
ADT
The following information concerning ADT is derived from the ADT 1995 Form
10-K:
ADT was incorporated in Bermuda on September 28, 1984, under the name Hawley
Group Limited and is an exempted company limited by shares with its registered
office at Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda. The executive
office of the subsidiary which supervises ADT's North American activities is
located in the United States at One Boca Place, 2255 Glades Road, Suite 421A,
Boca Raton, Florida 33431, and its telephone number is (407) 997-8406.
1
ADT is currently engaged in two service businesses: electronic security
services in North America and Europe and vehicle auction and related services
in the United States. ADT is the largest provider of electronic security
services in North America and the largest provider in the United Kingdom,
providing continuous monitoring of commercial and residential security systems
for 1.6 million customers. ADT is also the second largest provider of vehicle
remarketing services in the United States, operating a network of 28 vehicle
auction centers.
ADT's principal activities in the electronic security services businesses are
the electronic monitoring of its installed base of security systems and the
installation of new, monitored security systems to add to its installed base.
Monitored systems may be sold or, as is most often the case, ADT may retain
ownership of installed systems. ADT receives contractual recurring fees for
monitoring security systems through its electronic monitoring centers and for
maintenance of security systems installed at customer premises and other
related services. ADT sells, installs and maintains monitored security systems,
integrated electronic security systems and other electronic security products
for additional fees. In 1995, approximately 60% of ADT's total electronic
security services revenues in North America and Europe were derived from
contractually recurring fees for electronic monitoring and maintenance of
security systems installed at customer premises and other related services. The
remainder of ADT's security revenues were derived from the sale and
installation of security systems, the installation of security systems in
accordance with a monitoring service agreement and the maintenance of security
systems on a non-contractual basis.
In September 1996, ADT acquired the entire equity interest in Automated
Security (Holding) PLC, a United Kingdom company ("ASH"). ASH is engaged in the
provision of electronic security services in North America and Europe. Under
the terms of the transaction (the "ASH Transaction"), shareholders of ASH
received three Shares for every ninety-two ordinary shares of ASH and two
Shares for every thirty-one 5% convertible cumulative redeemable preference
shares and 6% convertible cumulative redeemable preference shares of ASH. The
total consideration paid by ADT in the ASH Transaction consisted of 7,034,940
Shares and ADT accounted for the ASH Transaction as a pooling of interests.
In a press release issued by ADT on November 6, 1996, ADT announced its
intention to sell its United States vehicle auction business. ADT's vehicle
auction business operates a network of large modern auction centers which
provide an organized wholesale marketplace for the sale and purchase of used
vehicles. Principal sellers, or consignors, include new and used vehicle
dealers, vehicle manufacturers, fleet operators, leasing companies, financial
institutions and government agencies. Principal purchasers include franchise
and non-franchise vehicle dealers and distributors who acquire vehicles to sell
in the retail market.
REASONS FOR THE OFFER
Offer Premium and Dividend Impact. The purpose of the Offer is for Western
Resources to obtain control of ADT. Western Resources presently intends, as
soon as practicable after consummation of the Offer, to propose and seek to
have ADT effect an amalgamation of a newly created subsidiary of Western
Resources incorporated under the laws of Bermuda ("Bermuda Sub") with and into
ADT pursuant to the provisions of Sections 104 through 109 of the Companies
Act, with the amalgamated company operating under the name of ADT (the
"Amalgamation").
Western Resources believes that the Offer is in the best interests of the ADT
Shareholders because, among other things, the Offer Consideration represents a
substantial premium to the per Share price prior to (i) the public announcement
of Westar Capital's initial investment in ADT, and (ii) the public announcement
of the Offer and the date of this Preliminary Prospectus. The following table
shows the premium of the Offer Consideration over the closing per Share price
on the NYSE on the last trading day immediately prior to such events.
2
ADT
OFFER SHARE PERCENT
PRICE* PRICE DIFFERENTIAL**
------ ------ --------------
December 21, 1995, the last trading day before the
public
announcement of Westar's initial investment in
ADT.............................................. $22.50 $13.50 66.7%
December 17, 1996, the last trading day before the
public
announcement of the Offer and the date of this
Preliminary Prospectus........................... $22.50 $20.13 11.8%
- --------
* Assumes the Offer Consideration is $7.50 net in cash and $15.00 of Western
Resources Common Stock per Share.
** Based on the closing prices of Western Resources Common Stock and Shares on
the indicated dates.
In addition to these substantial per Share price premiums, the Offer also
provides ADT Shareholders with the opportunity to receive an ongoing current
cash return on their ADT investment in the form of dividends on Western
Resources Common Stock. Western Resources has paid dividends every year since
its formation in 1924 and dividends have been increased every year since 1958
(except for 1975, in which the dividend remained unchanged). It has been
Western Resources' past practice to return a substantial portion of its
earnings to shareholders in the form of dividends. Western Resources does not
anticipate any significant change with respect to such dividend practice as a
result of the Offer or the Amalgamation. However, the declaration of future
dividends will depend upon future earnings, the financial condition of Western
Resources and other factors.
Enhanced Business Opportunities. Western Resources believes that ADT
Shareholders will benefit in several ways in addition to the 12% premium above
the per Share closing price on December 17, 1996. Upon consummation of the
Offer, Western Resources intends to build upon ADT's leading international
presence and quality brand equity in the security business, combining them with
Western Resources' fast growing security business, strong core utility business
and customer service expertise to become a leading provider of energy related
products and services, including security, to homes and businesses. As the
energy market deregulates, there will be opportunities for companies to capture
market share based on sound utility fundamentals and access to customers. This
proposed combination provides ADT Shareholders with an opportunity to leverage
the ADT brand name to enter the rapidly expanding deregulated energy market.
Combining the ADT brand name with Western Resources' solid financial base and
sound utility expertise will give the combined entity a competitive advantage
in the newly deregulated energy and energy-related services market. Western
Resources believes that the combination of Western Resources and ADT will
provide a stable earnings base and a sound foundation resulting in sustainable
long-term growth in the deregulated energy and energy related services markets.
The combined companies are also expected to achieve meaningful cost savings as
a result of operational synergies following consummation of the Offer. For
further information regarding Western Resources' analysis of the benefits of
the Offer to ADT Shareholders and Western Resources' proposal for the
combination of ADT's and Western Resources' businesses, see "Reasons for the
Offer--Enhanced Business Opportunities."
BACKGROUND OF THE OFFER
In the past, ADT has advised Western Resources that it is not interested in
discussing a business arrangement between ADT and Western Resources that could
maximize ADT's potential both in its existing security business and in the
emerging market of deregulated retail energy distribution. After careful study
and consideration, Western Resources has determined that the potential benefits
to ADT, Western Resources and the companies' respective shareholders can be
best realized through a combination of Western Resources and ADT, and has,
therefore, decided to proceed with the Offer.
In December 1995, Western Resources entered into a stock purchase agreement
with Laidlaw Transportation, Inc. ("Laidlaw") and Laidlaw, Inc., pursuant to
which Westar Capital subsequently purchased a total of 30,800,000 Shares on or
prior to March 18, 1996, at an average price of $14.40 per Share. Since March
18, 1996, from time to time Westar Capital has purchased Shares in the open
market at prevailing market prices.
3
Westar Capital owns 38,287,111 Shares, or approximately 27% of the outstanding
Shares, including 14,115 Shares issuable upon exchange of 500 LYONS, which are
exchangeable for Shares at a rate of 28.23 Shares per LYON.
On July 1, 1996, ADT entered into an Agreement and Plan of Amalgamation (the
"Republic Agreement"), by and among ADT, Republic Industries, Inc. ("Republic")
and Republic Sub. Ltd., a newly created wholly owned subsidiary of Republic
("Republic Sub"), pursuant to which Republic Sub was to be amalgamated with and
into ADT, with the amalgamated company operating under the name of ADT.
Pursuant to the terms of the Republic Agreement, ADT granted to Republic a
warrant to subscribe for 15 million Shares at a purchase price of $20 per
share, subject to adjustment (the "Republic Warrant"). The Republic Warrant was
to become exercisable for a period of six months following the termination of
the Republic Agreement. On September 30, 1996, ADT and Republic jointly
announced the termination of the Republic Agreement, citing uncertainty
attributable to market conditions, and amended the Republic Warrant to include
certain restrictions on the issuance of Shares pursuant thereto and the
transfer of such Shares by Republic to persons with interests in 10% or more of
ADT. As described below, Western Resources has commenced litigation challenging
the validity of the Republic Warrant. See "--Litigation."
On November 4, 1996, ADT declared a distribution of one Right for each
outstanding Share, payable to holders of record as of the close of business on
November 15, 1996, pursuant to the Rights Agreement. Pursuant to the terms of
the Rights Agreement, which provides, among other things, that after certain
persons acquire 15% or more (or in certain limited situations, a greater
percentage) of the issued and outstanding Shares, holders of Shares (other than
such persons), will be entitled to purchase Shares at half of the current
market value and that if, after such an acquisition, ADT is involved in an
amalgamation, other business combination or certain sale transactions, holders
of Shares (other than such persons) will be entitled to purchase either Shares,
or common stock of the other party to such transaction, at half of the current
market value of such securities. See "The Offer--Conditions of the Offer--
Rights Agreement" and "The Offer--The ADT Rights."
On November 6, 1996, ADT announced its intention to sell its United States
vehicle auction business.
On December 17, 1996, the Western Resources Board met and determined to
proceed with the Offer. On December 18, 1996, in a letter to Mr. Michael A.
Ashcroft, Chairman of the Board, President and Chief Executive Officer of ADT,
Mr. John E. Hayes, Jr., Chairman of the Board and Chief Executive Officer of
Western Resources, informed Mr. Ashcroft and the ADT Board of Western
Resources' intention to pursue the Offer and the Amalgamation and encouraged
Mr. Ashcroft and the ADT Board to meet with Western Resources to discuss the
possibility of a mutually beneficial negotiated transaction.
On December 18, 1996, Western Resources also publicly announced its intention
to commence the Offer and Western Resources filed a proxy statement (the "ADT
Proxy Statement") with the Commission for use in soliciting proxies from ADT
Shareholders for the ADT Special Meeting to remove the present members of the
ADT Board, elect the Western Resources Nominees to the ADT Board and take
certain other actions to facilitate the consummation of the Offer. On December
18, 1996, Westar Capital deposited a requisition (the "Requisition") with ADT
requiring the ADT Board to convene the ADT Special Meeting. See "The ADT
Special Meeting."
LITIGATION
On December 18, 1996, Western Resources announced that Westar Capital had
commenced litigation in the United States District Court for the Southern
District of Florida charging ADT and the ADT Board with breaches of their
fiduciary duties to ADT and the ADT Shareholders. Specifically, the complaint
alleges, among other things, that the ADT Board breached its fiduciary duty to
ADT and the ADT Shareholders in connection with the grant of the Republic
Warrant and use of the ADT Rights Agreement. Republic is also joined in the
lawsuit.
4
The lawsuit seeks injunctive relief and unspecified damages.
THE ADT SPECIAL MEETING
As more fully set forth in the Western Resources Proxy Statement, on December
18, 1996, Westar Capital deposited the Requisition with ADT, pursuant to
Section 74 of the Companies Act and Bye-Law 42 of the ADT Bye-Laws, requiring
the ADT Board to convene the ADT Special Meeting so that ADT Shareholders will
have the opportunity to satisfy the ADT Shareholder Approval Condition. Under
the Companies Act and the ADT Bye-Laws, the ADT Board is required to convene
the ADT Special Meeting. In the event that the ADT Board does not within
twenty-one days from the date of the deposit of the Requisition convene the ADT
Special Meeting, Westar Capital may itself convene the ADT Special Meeting.
Westar Capital has requested that the date of the ADT Special Meeting be
February 18, 1997; however, as of the date of this Preliminary Prospectus, the
date, time and place for the ADT Special Meeting have not been determined and
there can be no assurance that the ADT Special Meeting will be convened on such
date. See "The ADT Special Meeting."
In connection with the ADT Special Meeting, Western Resources is soliciting
ADT Shareholders' proxies in favor of (i) the removal of all of the present
members of the ADT Board and any person or persons elected or designated by any
such director to fill any vacancy or newly created directorship, pursuant to
Section 93 of the Companies Act and Bye-Law 71 of the ADT Bye-Laws, (ii) the
reduction of the number of seats on the ADT Board to two, and (iii) the
election of the Western Resources Nominees, Steven L. Kitchen and Steven A.
Millstein, as the directors of ADT (or, if either Western Resources Nominee is
unable to serve as a director of ADT due to death, disability or otherwise, any
other person designated as a Western Resources Nominee by Western Resources).
In order to comply with the requirement of Bye-Law 53 of the ADT Bye-Laws that
a director of ADT own one Share, each of the Western Resources Nominees will
own at least one Share at the time of the ADT Special Meeting. Each of the
foregoing actions (collectively, the "Western Resources Proposals") is designed
to facilitate the prompt consummation of the Offer and the Amalgamation.
Only persons entered in the register of members of ADT as holders of Shares
at the time of the ADT Special Meeting will be entitled to vote at such meeting
unless the ADT Board sets a record date for the ADT Special Meeting. In the
event the ADT Board sets a record date for the ADT Special Meeting, only
holders of Shares at the close of business on such record date will be entitled
to vote at the ADT Special Meeting. Each Share is entitled to one vote upon
each matter presented at the ADT Special Meeting. Holders of ADT preferred
stock, if any ("ADT Preferred Stock"), are not entitled to vote on any of the
Western Resources Proposals. Pursuant to Bye-Law 43 of the ADT Bye-Laws, at any
general meeting of ADT not less than two holders of Shares present either in
person or by proxy constitutes a quorum for the transaction of business. Each
of the Western Resources Proposals may be approved by the affirmative vote of a
majority of those Shares voted at the ADT Special Meeting.
THE OFFER
General. Western Resources hereby offers, upon the terms and subject to the
conditions set forth herein and in the related Letter of Transmittal, to
exchange the Offer Consideration for each outstanding Share validly tendered on
or prior to the Expiration Date and not properly withdrawn. The Offer
Consideration consists of $7.50 net in cash and that number of shares of
Western Resources Common Stock equal to the Exchange Ratio. The term "Exchange
Ratio" means the quotient (rounded to the nearest 1/100,000) determined by
dividing $15.00 by the average of the high and low sales prices of Western
Resources Common Stock (as reported on the NYSE Composite Transactions
reporting system as published in The Wall Street Journal or, if not published
therein, in another authoritative source) on each of the twenty consecutive
trading days ending with the third trading day immediately preceding the
Expiration Date; provided, that the Exchange Ratio shall not be greater
5
than 0.50420. The term "Expiration Date" shall mean 5:00 p.m., Eastern time on
, 1997, unless and until Western Resources extends the period of time for
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by Western
Resources, shall expire. Pursuant to the Exchange Ratio, each Share will be
exchanged for $7.50 net in cash and $15.00 of Western Resources Common Stock as
long as the Western Resources Average Price is $29.75 or higher. If the Western
Resources Average Price is less than $29.75, each Share will be exchanged for
$7.50 net in cash and less than $15.00 of Western Resources Common Stock. See
"Reasons for the Offer--The Exchange Ratio." On December 17, 1996, the closing
price of the Western Resources Common Stock on the NYSE was $31.25. Based on
such closing price, each Share would be converted into $7.50 net in cash and
$15.00 of Western Resources Common Stock. The Exchange Ratio will change as the
market price of the Western Resources Common Stock changes. ADT Shareholders
may call (800) any time on or after the date hereof through the
Expiration Date for the current Exchange Ratio calculated based on the then-
current Western Resources Average Price for the twenty consecutive trading days
ending with the third trading day immediately preceding the date the call is
placed. The actual Western Resources Average Price and Exchange Ratio will be
calculated as of the third trading day immediately prior to the Expiration
Date, as described above, and a press release will be issued announcing the
actual Exchange Ratio prior to the opening of the second trading day prior to
the Expiration Date (as it may be extended from time to time). See "The Offer--
General."
Conditions of the Offer. Western Resources' obligation to exchange the Offer
Consideration for Shares pursuant to the Offer is conditioned upon, among other
things, the satisfaction or, where applicable, waiver of each of the Offer
Conditions. Subject to the applicable rules and regulations of the Commission,
Western Resources expressly reserves the right, in its sole discretion, at any
time or from time to time, to delay acceptance for exchange or, regardless of
whether such Shares were theretofore accepted for exchange, exchange of any
Shares pursuant to the Offer or to amend or terminate the Offer and not accept
for exchange or exchange any Shares not theretofore accepted for exchange or
exchanged, upon the failure of any of the conditions to the Offer to be
satisfied. Western Resources reserves the absolute right to waive any defect or
irregularity in the tender of any securities and to waive any of the Offer
Conditions (other than the Western Resources Shareholder Approval Condition,
the Regulatory Approval Condition and the condition related to the
effectiveness of the Registration Statement). Although Western Resources
reserves the right to do so, Western Resources does not currently intend to
waive the Minimum Tender Condition, the ADT Shareholder Approval Condition, the
ADT Bye-Law Condition or the Rights Plan Condition. See "The Offer--Conditions
of the Offer--Minimum Tender Condition," "--Western Resources Shareholder
Approval Condition," "--ADT Shareholder Approval Condition," "--Rights Plan
Condition," "--ADT Bye-Law Condition," "--Republic Warrant Condition,"
"--Regulatory Approval Condition," and "--Certain Other Conditions of the
Offer." Waiver or amendment of any of these conditions may require an extension
of the Offer.
Regulatory Approvals. The acquisition of Shares by Western Resources pursuant
to the Offer is subject to the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR" Act), and the rules (the "Rules") that have been
promulgated thereunder. Western Resources currently has approval under the HSR
Act to acquire up to 50% of the outstanding Shares. Western Resources intends
to file with the Antitrust Division of the United States Department of Justice
(the "Antitrust Division") and the Federal Trade Commission (the "FTC") a Hart-
Scott-Rodino Notification Form with respect to the Offer to acquire over 50% of
the Shares. Western Resources is also subject to the jurisdiction of the State
Corporation Commission of the State of Kansas (the "KCC") with respect to the
issuance of certain securities and indebtedness. An application for approval,
or waiver of approval, of the issuance of Western Resources Common Stock and
debt in connection with the Offer, has been or will be filed with the KCC.
Timing of the Offer. The Offer is currently scheduled to expire on ,
1997; however, it is Western Resources' current intention to extend the Offer
from time to time as necessary until all conditions to the Offer have been
satisfied or waived. See "The Offer--Extension, Termination and Amendment."
Western Resources expects that the Western Resources Shareholder Approval
Condition will be satisfied by February 11, 1997,
6
the date on which it has called a special meeting of its shareholders (the
"Western Resources Special Meeting"), to approve the issuance of shares of
Western Resources Common Stock in connection with the Offer and an amendment to
the Western Resources Articles to increase the number of shares of Western
Resources Common Stock authorized for issuance. Western Resources currently
anticipates that all of the other conditions to the Offer will be satisfied by
the time that each of the ADT Shareholder Approval Condition and the Rights
Plan Condition is satisfied. See "The Offer--Conditions of the Offer."
Extension, Termination and Amendment. Western Resources expressly reserves
the right (but will not be obligated), in its sole discretion, at any time or
from time to time, and regardless of whether any of the events set forth in
"The Offer--Conditions of the Offer" shall have occurred or shall have been
determined by Western Resources to have occurred, (a) to extend the period of
time during which the Offer is open by giving oral or written notice of such
extension to the Exchange Agent, which extension will be announced no later
than 9:00 a.m., Eastern time, on the next business day after the previously
scheduled Expiration Date, and (b) to amend the Offer in any respect
(including, without limitation, by decreasing or increasing the consideration
offered in the Offer to holders of Shares and/or by increasing or decreasing
the number of Shares being sought in the Offer) by giving oral or written
notice of such amendment to the Exchange Agent. The rights reserved by Western
Resources in this paragraph are in addition to Western Resources' right to
terminate the Offer as described in "The Offer--Extension, Termination and
Amendment." There can be no assurance that Western Resources will exercise its
right to extend the Offer. However, it is Western Resources' current intention
to extend the Offer until all Offer Conditions have been satisfied or waived.
See "The Offer--Extension, Termination and Amendment." During any such
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer, subject to the right of a tendering ADT Shareholder to withdraw
his or her Shares. See "The Offer--Withdrawal Rights."
Exchange of Shares; Delivery of Western Resources Common Stock and Cash
Consideration. Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
any such extension or amendment), Western Resources will accept for exchange,
and will exchange, Shares validly tendered and not properly withdrawn as
promptly as practicable after the Expiration Date. See "The Offer--Exchange of
Shares; Delivery of Western Resources Common Stock and Cash Consideration."
Withdrawal Rights. Tenders of Shares made pursuant to the Offer are
irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date, and, unless theretofore accepted for
exchange and exchanged by Western Resources for the Offer Consideration
pursuant to the Offer, may also be withdrawn at any time after , 1997. See
"The Offer--Withdrawal Rights."
Procedure for Tendering Shares. For a holder of Shares validly to tender
Shares pursuant to the Offer, (i) a properly completed and duly executed Letter
of Transmittal (or manually executed facsimile thereof), together with any
required signature guarantees, or an Agent's Message (as defined herein) in
connection with a book-entry transfer, and any other required documents, must
be transmitted to and received by the Exchange Agent at one of its addresses
set forth on the back cover of this Preliminary Prospectus and either
certificates for tendered Shares (and Rights, if applicable) must be received
by the Exchange Agent at such address or such Shares (and Rights, if
applicable) must be tendered pursuant to the procedures for book-entry transfer
(in the case of Rights, if available) set forth under "The Offer--Procedure for
Tendering" (and a confirmation of receipt of such tender received), in each
case, prior to the Expiration Date, or (ii) such ADT Shareholder must comply
with the guaranteed delivery procedure set forth under "The Offer--Procedure
for Tendering."
Unless the ADT Distribution Date occurs, a tender of Shares will constitute a
tender of the associated Rights. ADT Shareholders will be required to tender
one Right for each Share tendered in order to effect a valid tender of Shares,
unless the Rights Plan Condition has been satisfied or waived.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
7
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
THE AMALGAMATION
The purpose of the Offer is to enable Western Resources to acquire control of
ADT. Western Resources presently intends, following consummation of the Offer,
to propose and seek to have ADT effect the Amalgamation, pursuant to which a
newly created subsidiary of Western Resources incorporated under the laws of
Bermuda will amalgamate with and into ADT, with the amalgamated company
operating under the name of ADT. In the Amalgamation, each then outstanding
Share (other than Shares owned by Western Resources or any of its affiliates,
Shares held in the treasury of ADT (if ADT is so authorized) or by any
subsidiary of ADT and Shares owned by ADT Shareholders who perfect appraisal
rights under Bermuda law) would be cancelled in exchange for the right to
receive the Offer Consideration.
If the ADT Shareholder Approval Condition is satisfied at the ADT Special
Meeting, the Western Resources Nominees have stated their intention to take,
subject to the fulfillment of the fiduciary duties they would have as directors
of ADT, all actions necessary and desirable to facilitate consummation of the
Offer and the Amalgamation including, among other things, (i) either redeeming
the Rights or amending the Rights Agreement to make the Rights inapplicable to
the Offer, if necessary, in order to satisfy the Rights Plan Condition, (ii)
not invoking the provisions of Bye-Law 104 or 46 of the ADT Bye-Laws (as
described herein) in connection with the acquisition of Shares by Western
Resources pursuant to the Offer or otherwise, (iii) adopting and approving an
agreement and plan of amalgamation among ADT, Bermuda Sub and Western Resources
pursuant to which Bermuda Sub will amalgamate with and into ADT, with the
amalgamated company operating under the name of ADT, and ADT Shareholders
(other than Western Resources and ADT and their respective affiliates, and ADT
Shareholders who perfect appraisal rights under Bermuda law) will receive the
Offer Consideration in exchange for the cancellation of each Share (the
"Amalgamation Agreement") and (iv) proposing an amendment to the ADT Bye-Laws
providing that an amalgamation may be approved by the affirmative vote of a
majority of the votes cast at a general meeting of ADT (the "Bye-Law
Amendment").
Pursuant to the Companies Act, each of the Bye-Law Amendment and the
Amalgamation Agreement require the approval of ADT Shareholders in order to
take effect. Under the ADT Bye-Laws and Section 77(2) of the Companies Act,
approval of the Bye-Law Amendment requires the affirmative vote of a majority
of votes cast at a general meeting of ADT. Section 106(4A) of the Companies Act
provides in part that, unless a company's bye-laws specifically provide
otherwise, an amalgamation of a Bermuda company must be approved by a majority
vote of three-fourths of those ADT Shareholders voting at a duly called
meeting. The ADT Bye-Laws do not currently specify the vote required to approve
an amalgamation. Therefore, upon the adoption of the Bye-Law Amendment,
approval of the Amalgamation Agreement will also require the affirmative vote
of a majority of votes cast at a general meeting of ADT (including Shares owned
by Western Resources or its affiliates).
If the Offer is consummated, Western Resources and its affiliates will own a
majority of the outstanding Shares. Accordingly, Western Resources and its
affiliates will at such time have sufficient voting power in ADT to approve the
Bye-Law Amendment and the Amalgamation Agreement independently of the votes of
any other ADT Shareholders. Western Resources presently intends to vote any and
all Shares then owned by Western Resources and its affiliates to approve such
proposals.
The Amalgamation will be subject to certain conditions, including the consent
of the Minister of Finance of Bermuda (the "Minister of Finance"). As soon as
practicable following the acceptance of Shares by Western Resources pursuant to
the Offer, the newly elected ADT Board presently intends to cause all necessary
actions to be taken to seek the consent of the Minister of Finance to the
Amalgamation. Western Resources has no reason
8
to believe that the Minister of Finance will not grant approval for the
Amalgamation, however, there can be no assurance that the Minister of Finance
would grant his consent to the Amalgamation. An adverse decision by the
Minister of Finance may not be subject to appeal or review in any court.
Western Resources also presently intends to condition the Amalgamation upon
holders of not more than 5% of the outstanding Shares at the effective time of
the Amalgamation perfecting appraisal rights with respect to the Amalgamation
pursuant to Section 106(6) of the Companies Act.
ADT Shareholders will have appraisal rights under Bermuda law in connection
with the Amalgamation. See "--Appraisal Rights" and "The Amalgamation--
Appraisal Rights."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The exchange of Shares for the Offer Consideration pursuant to the Offer and
Amalgamation will be a taxable transaction for U.S. federal income tax purposes
and may also be taxable under applicable state, local and foreign tax laws.
All ADT Shareholders should carefully read the summary of the federal income
tax consequences of the Offer and the Amalgamation under "The Offer--Certain
Federal Income Tax Consequences" and are urged to consult with their own tax
advisors as to the federal, state, local and foreign tax consequences in their
particular circumstances.
EFFECT OF OFFER ON MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT
The exchange of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and, depending upon the number of Shares so purchased, could adversely affect
the liquidity and market value of the remaining Shares held by the public.
The Shares are listed and principally traded on the NYSE and are also listed
on the BSX, LSE and the FSE. Depending upon the number of Shares acquired
pursuant to the Offer, following consummation of the Offer, the Shares may no
longer meet the requirements of such exchanges for continued listing and the
Shares may no longer constitute "margin securities" for the purposes of the
Federal Reserve Board's margin regulations, in which event the Shares would be
ineligible as collateral for margin loans made by brokers. For a description of
the treatment of Shares in the Amalgamation, see "The Amalgamation."
APPRAISAL RIGHTS
In connection with the Amalgamation and pursuant to Section 106(6) of the
Companies Act, a registered holder of Shares who does not vote in favor of the
Amalgamation, if it is proposed and submitted to a vote of ADT Shareholders,
and who is not satisfied that he or she has been offered fair value for his or
her Shares, may, within one month of the giving of the notice of the general
meeting of ADT Shareholders, apply to the Supreme Court of Bermuda (the
"Court") to have the fair value of such dissenting ADT Shareholder's Shares
appraised by the Court. Western Resources presently intends to condition the
Amalgamation upon, among other things, holders of not more than 5% of the
outstanding Shares having perfected appraisal rights with respect to the
Amalgamation. See "The Amalgamation--Appraisal Rights."
COMPARISON OF THE RIGHTS OF HOLDERS OF SHARES AND WESTERN RESOURCES COMMON
STOCK
As a result of the Offer, ADT Shareholders will become shareholders of
Western Resources, a Kansas corporation. Such holders will have certain rights
as Western Resources shareholders that are different from the rights they
currently have in ADT, both because of the differences between the Western
Resources Articles and Western Resources' by-laws (the "Western Resources
Bylaws"), on the one hand, and the ADT Memorandum of Association and the ADT
Bye-Laws, on the other hand, and because of differences between Kansas and
Bermuda corporation law. For a comparison of the charter and by-law provisions
of Western Resources and ADT and of Kansas and Bermuda law, see "Comparison of
the Rights of Holders of Shares and Western Resources Common Stock."
9
WESTERN RESOURCES' OFFER FOR KCPL
KCPL is a public utility engaged in the generation, transmission,
distribution and sale of electricity to approximately 430,000 customers in
western Missouri and eastern Kansas.
On July 8, 1996, Western Resources commenced the KCPL Offer to exchange
shares of Western Resources Common Stock for each outstanding share of KCPL
Common Stock. See "Western Resources' Offer for KCPL." The purpose of the KCPL
Offer is to obtain control of, and ultimately exchange the entire common equity
interest in, KCPL. Western Resources intends, as soon as practicable after
consummation of the KCPL Offer, to seek to merge KCPL with and into itself (the
"KCPL Merger"). Pursuant to the exchange ratio in the KCPL Offer, KCPL
shareholders would receive $31.00 of Western Resources Common Stock in exchange
for each share of KCPL Common Stock, subject to a maximum of 1.100 and a
minimum of 0.933 shares of Western Resources Common Stock for each share of
KCPL Common Stock. According to KCPL's Quarterly Report on Form 10-Q for the
period ended September 30, 1996, as of November 5, 1996, there were 61,904,744
shares of KCPL Common Stock outstanding. Based on the number of shares of KCPL
Common Stock outstanding on November 5, 1996, if the KCPL Offer and KCPL Merger
were consummated, KCPL shareholders would receive approximately 61,409,506
shares of Western Resources Common Stock, representing approximately 31.5% of
the total Western Resources Common Stock (assuming that the Offer and the
Amalgamation had previously been completed). Western Resources reserves the
right, in its sole discretion, at any time or from time to time to amend or
terminate the KCPL Offer in accordance with its terms.
On November 15, 1996, representatives of Western Resources' and KCPL's
respective boards and managements met and had a cordial discussion regarding
the proposed KCPL Merger. On November 25, 1996, representatives of Western
Resources' and KCPL's respective boards and managements met again and continued
their discussions.
As of December 13, 1996, the most recently scheduled expiration date for the
KCPL Offer, approximately 29.6 million shares of KCPL Common Stock, or 48% of
the outstanding shares of KCPL Common Stock, had been tendered to Western
Resources pursuant to the KCPL Offer. Western Resources believes that this
level of tenders demonstrates the support of KCPL shareholders for a merger of
Western Resources and KCPL. On December 13, 1996, Western Resources issued a
press release which stated that Western Resources and KCPL have agreed to
proceed with substantive merger negotiations between now and January 15, 1997,
the newly scheduled expiration date for the KCPL Offer. Although there can be
no assurance that any agreement will result from such negotiations, if a
definitive merger agreement is reached prior to January 15, 1997, it is Western
Resources' present intention to terminate the KCPL Offer at such time and
proceed with the KCPL Merger.
If an agreement with KCPL is not reached, Western Resources expects that it
will extend the KCPL Offer from time to time in its sole discretion until all
conditions thereto are satisfied, which Western Resources currently expects to
occur prior to the end of 1997. Western Resources' obligation to exchange
shares of Western Resources Common Stock for shares of KCPL Common Stock
pursuant to the KCPL Offer is subject to various terms and conditions set forth
in the KCPL Prospectus. Western Resources reserves the right, in its sole
discretion, at any time or from time to time to amend or terminate the KCPL
Offer in compliance with applicable law.
RECENT DEVELOPMENTS
On December 12, 1996, Western Resources and ONEOK announced that they had
entered into a strategic alliance in which Western Resources will contribute
its regulated local natural gas distribution operations, and MCMC and Westar
Gas Marketing, and will become the largest shareholder of ONEOK. A division of
ONEOK, the Oklahoma Natural Gas Company, provides local natural gas service to
75 percent of the state of Oklahoma. ONEOK also has interests in natural gas
marketing, processing and production.
10
In the transaction, which is expected to close in mid-1997, Western Resources
will receive a 45% equity interest in ONEOK. The equity interest will consist
of 2,996,702 shares of ONEOK common stock ("ONEOK Common Stock") and 19,317,584
shares of a new series of convertible preferred stock of ONEOK ("ONEOK
Preferred Stock"). The ONEOK Preferred Stock will pay an annual dividend of up
to 1.5 times the ONEOK Common Stock dividend, with a minimum dividend of $1.80
per share. The transaction is expected to be accretive to Western Resources in
the first full year.
As a result of its alliance with Western Resources, ONEOK will become the
ninth largest gas distribution company in the United States, serving 1.4
million customers. The strategic alliance will also include a marketing
agreement under which Western Resources will provide electric energy products,
security products and other unregulated services to ONEOK's existing 735,000
customers. The transaction requires the approval of ONEOK's shareholders, the
Oklahoma Corporation Commission (the "OCC"), the KCC and the Commission.
Pursuant to the HSR Act, the transaction may not be consummated unless certain
information has been furnished to the Antitrust Division and the FTC and
certain waiting period requirements have been satisfied. Western Resources
shareholders will not vote on the transaction.
Western Resources has agreed to pay approximately $368 million, subject to
certain adjustments, and assume certain liabilities and obligations for all of
the assets used in, related to or necessary for the operation of the security
installation, monitoring and service business currently operated by
Westinghouse Security, a subsidiary of Westinghouse. Westinghouse Security
serves approximately 300,000 customer accounts. The asset purchase is expected
to be completed prior to the end of 1996.
DESCRIPTION OF WESTERN RESOURCES CAPITAL STOCK
The authorized capital stock of Western Resources consists of 85,000,000
shares of Western Resources Common Stock, par value $5.00 per share, 4,000,000
shares of preference stock, no par value, 6,000,000 shares of preferred stock,
no par value, and 600,000 shares of preferred stock, par value $100.00 per
share. As of December 17, 1996, there were 64,622,390 shares of Western
Resources Common Stock issued and outstanding. As of December 17, 1996, there
were 138,576 shares of 4.5% preferred stock, par value $100.00 per share
("Western Resources 4.5% Preferred Stock"), 60,000 shares of 4.25% preferred
stock, par value $100.00 per share ("Western Resources 4.25% Preferred Stock"),
and 50,000 shares of 5% preferred stock, par value $100.00 per share ("Western
Resources 5% Preferred Stock," and together with the Western Resources 4.5%
Preferred Stock and the Western Resources 4.25% Preferred Stock, the "Western
Resources Preferred Stock"), issued and outstanding. As of December 17, 1996,
there were 500,000 shares of 7.58% Series preference stock ("Western Resources
Preference Stock") outstanding.
Holders of shares of Western Resources Common Stock and Western Resources
Preferred Stock are entitled to one vote per share for each share held (except
with respect to the election of directors, as described herein under
"Description of Western Resources Capital Stock"). Subject to the rights of
holders of shares of outstanding Western Resources Preferred Stock and Western
Resources Preference Stock, holders of shares of Western Resources Common Stock
have equal rights to participate in dividends when declared and, in the event
of liquidation, in the net assets of Western Resources available for
distribution to shareholders. Western Resources may not declare any dividends
on the Western Resources Common Stock unless full preferential amounts to which
holders of Western Resources Preferred Stock and Western Resources Preference
Stock are entitled have been paid or declared and set apart for payment. The
Western Resources Articles also contain restrictions on the payment of
dividends.
For information relating to ownership of Western Resources Common Stock by
certain beneficial owners and directors and executive officers of Western
Resources, see the 1996 Western Resources Annual Meeting Proxy Statement. For
information relating to ownership of Shares by certain beneficial owners and
directors and executive officers of ADT, see Schedule B. As of December 17,
1996, as a group, Western Resources' directors, executive officers and their
affiliates beneficially owned approximately 0.11% of the outstanding shares of
Western Resources Common Stock. According to publicly available information,
ADT's directors, executive officers and their affiliates own approximately 4.5%
of the outstanding Shares.
11
For additional information concerning the capital stock of Western Resources,
see "Description of Western Resources Capital Stock."
MARKET PRICES
The following table sets forth the market price per share of Western
Resources Common Stock and ADT Shares, and the equivalent Offer Consideration
per ADT Share on (i) December 21, 1995, the last day prior to Westar Capital's
announcement of its initial acquisition of Shares, and (ii) December 17, 1996,
the last trading day prior to the public announcement of the Offer and the date
of this Preliminary Prospectus. The historical market prices represent the
closing prices per share on such dates on the NYSE Composite Tape. The
equivalent market prices per Share represent the closing price per share of
Western Resources Common Stock multiplied by the Exchange Ratio together with
the Cash Consideration which is exchangeable in the Offer for each Share. See
"Market Prices and Dividends."
WESTERN
RESOURCES ADT
--------- --------------------
EQUIVALENT AT
OFFER
DATE ACTUAL ACTUAL CONSIDERATION
---- --------- ------ -------------
December 21, 1995................................ $33.00 $13.15 $ 22.50
December 17, 1996................................ $31.25 $20.13 $ 22.50
THE EXCHANGE AGENT
[ ] has been appointed Exchange Agent in connection with the
Offer. The Letter of Transmittal (or facsimile copies thereof) and certificates
for Shares should be sent by each tendering ADT Shareholder or his or her
broker, dealer, bank or nominee to the Exchange Agent at the addresses set
forth on the back cover of this Preliminary Prospectus.
REQUEST FOR ASSISTANCE AND ADDITIONAL COPIES
Requests for information or assistance concerning the Offer may be directed
to the Dealer Managers or the Information Agent at their respective addresses
set forth on the back cover of this Preliminary Prospectus. Requests for
additional copies of this Preliminary Prospectus and the Letter of Transmittal
should be directed to the Information Agent.
12
WESTERN RESOURCES, ADT AND KCPL COMPARATIVE PER SHARE DATA
The following table sets forth comparative per share data of Western
Resources, ADT and KCPL on both a historical and pro forma combined basis. This
table should be read in conjunction with the historical financial statements
and notes thereto contained in the Western Resources 1995 Form 10-K, the ADT
1995 Form 10-K, Western Resources' Quarterly Report on Form 10-Q for the nine
months ended September 30, 1996 (the "Western Resources September Form 10-Q"),
ADT's Quarterly Report on Form 10-Q for the nine months ended September 30,
1996 (the "ADT September Form 10-Q"), ADT's Current Reports on Form 8-K, dated
September 5, 1996, October 21, 1996 and November 12, 1996, the KCPL 1995 Form
10-K, and KCPL's Quarterly Report on Form 10-Q for the nine months ended
September 30, 1996 (the "KCPL September Form 10-Q") each of which is
incorporated by reference herein, and in conjunction with the unaudited pro
forma combined financial information appearing elsewhere in this Preliminary
Prospectus. See "Western Resources, ADT and KCPL Unaudited Pro Forma Combined
Financial Information."
The Amalgamation, pursuant to which Bermuda Sub will amalgamate with and into
ADT, will be accounted for as a purchase and the pro forma information set
forth below assumes the Amalgamation occurred as of January 1, 1995 and 1996,
respectively. The KCPL Merger is expected to be accounted for as a pooling of
interests. Accordingly, the historical results of Western Resources and KCPL
have been restated to reflect the KCPL Merger for all periods presented. Pro
forma information reflecting the Amalgamation and the KCPL Merger has been
presented for the nine months ended September 30, 1996 and the year ended
December 31, 1995. This information does not reflect the estimated cost savings
or revenue enhancements that Western Resources believes may result from the
Amalgamation or the KCPL Merger. The pro forma per share data is not
necessarily indicative of actual results had the Amalgamation and the KCPL
Merger occurred on such dates or of future expected results.
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
1996 DECEMBER 31,
(UNAUDITED) 1995
----------------- ------------
WESTERN RESOURCES
Book value per common share.................... $25.14 $24.71
Earnings per common share...................... 1.93 2.71
ADT
Book value per common share.................... $ 5.56 $10.26
Earnings (loss) per common share before
extraordinary item............................ (4.77) 0.22
PRO FORMA COMBINED (UNAUDITED)
Book value per common share(1)................. $27.30 $27.08
Earnings (loss) per average common share before
extraordinary item............................ (4.96) 0.72
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
1996 -----------------------
(UNAUDITED) 1995 1994 1993
----------------- ------- ------- -------
WESTERN RESOURCES
Book value per common share......... $25.14 $ 24.71 $ 23.93 $ 23.08
Earnings per common share........... 1.93 2.71 2.82 2.76
ADT
Book value per common share......... $ 5.56 $ 10.26 N/A N/A
Earnings (loss) per common share
before extraordinary item.......... (4.77) 0.22 N/A N/A
KCPL
Book value per common share......... $14.81 $ 14.50 $14.13 $ 13.99
Earnings per common share........... 1.38 1.92 1.64 1.66
PRO FORMA COMBINED (UNAUDITED)
Book value per common share(1)...... $23.17 $ 22.89 $18.98 $ 18.48
Earnings (loss) per average common
share before extraordinary item.... (2.88) 1.11 2.22 2.19
- --------
(1) Pro Forma Combined net book value per share reflects 63.1 million
additional shares of Western Resources' Common Stock at ($30.875 per share
(based upon closing prices on December 13, 1996)) needed to acquire the net
remaining outstanding Shares of ADT at September 30, 1996 and December 31,
1995.
13
SELECTED FINANCIAL DATA
The summary below sets forth selected historical financial data and selected
unaudited pro forma financial data. This financial data should be read in
conjunction with the historical financial statements and notes thereto
contained in the Western Resources 1995 Form 10-K, the ADT 1995 Form 10-K and
the KCPL 1995 Form 10-K, each of which is incorporated by reference herein, and
in conjunction with the unaudited pro forma combined financial information,
unaudited forecasted financial data and notes relating to each appearing
elsewhere in this Preliminary Prospectus. See "Western Resources, ADT and KCPL
Unaudited Pro Forma Combined Financial Information."
SELECTED HISTORICAL FINANCIAL DATA OF WESTERN RESOURCES
The selected historical financial data of Western Resources set forth below
has been derived from financial statements of Western Resources as they
appeared in Western Resources' Annual Reports on Form 10-K filed with the
Commission for each of the five fiscal years in the period ended December 31,
1995, and Western Resources' Quarterly Reports on Form 10-Q for the periods
ended September 30, 1996, and September 30, 1995.
NINE MONTHS
ENDED SEPTEMBER 30,
(UNAUDITED) YEAR ENDED DECEMBER 31,
---------------------- ------------------------------------------------------
1996 1995 1995 1994(1) 1993 1992(3) 1991
---------- ----------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
WESTERN RESOURCES
Income Statement Data:
Operating revenues..... $1,481,915 $ 1,285,959 $1,572,071 $1,617,943 $1,909,359 $1,556,248 $1,162,178
Operating income(2).... 300,364 294,648 363,904 269,546 292,063 239,169 129,621
Net income............. 136,484 135,196 181,676 187,447 177,370 127,884 89,645(5)
Earnings applicable to
common stock.......... 122,875 125,132 168,257 174,029 163,864 115,133 83,268(5)
Earnings per common
share................. 1.93 2.02 2.71 2.82 2.76 2.20 2.41(5)
Dividends declared per
common share.......... $ 1.545 $ 1.515 $ 2.02 $ 1.98 $ 1.94 $ 1.90 $ 2.04(4)
SEPTEMBER 30,
(UNAUDITED) DECEMBER 31,
---------------------- ------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ----------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Balance Sheet Data:
Total assets........... $6,083,191 $ 5,265,749 $5,490,677 $5,371,029 $5,412,048 $5,438,906 $2,112,513
Long-term debt......... 1,466,526 1,341,198 1,391,263 1,357,028 1,523,988 1,926,026 586,579
Company-obligated
mandatorily redeemable
preferred securities.. 220,000 -- 100,000 -- -- -- --
Preferred and
preference stock...... 74,858 174,858 174,858 174,858 174,858 176,291 128,891
Common stock equity.... 1,615,060 1,532,267 1,553,110 1,474,455 1,422,175 1,248,367 642,449
Book value per common
share................. $ 25.14 $ 24.50 $ 24.71 $ 23.93 $ 23.08 $ 21.51 $ 18.59
- --------
(1) Information reflects the sale of the Missouri natural gas properties on
January 31, 1994.
(2) For operating income presented for periods beginning in 1995, income taxes
are presented as a separate line item after "Operating Income." Prior to
1995 (periods in which ADT pro forma information is not presented) a
traditional utility income statement format is presented which includes
operating income, net of income taxes.
(3) Information reflects the merger with Kansas Gas and Electric Company on
March 31, 1992.
(4) Includes special, one-time dividend of $0.18 per share paid February 28,
1991.
(5) Includes cumulative effect to January 1, 1991 of change in revenue
recognition, a $17,360,000 or $0.50 per share increase.
14
SELECTED HISTORICAL FINANCIAL DATA OF ADT
The selected historical financial data of ADT set forth below has been
derived from ADT's Quarterly Report on Form 10-Q for the period ended September
30, 1996 and ADT's Current Reports on Form 8-K, dated September 5, 1996,
October 21, 1996 and November 12, 1996 (the "Sentry Form 8-Ks"). The Sentry
Form 8-Ks restate ADT's financial statements to reflect the ASH Transaction
which ADT accounted for as a pooling of interests. The ADT 1995 Form 10-K
should also be read in conjunction with ADT's selected historical financial
data. Income statement data for 1993 and prior periods and balance sheet data
for 1994 and prior periods have been derived by combining publically filed
financial information of ADT and ASH.
NINE MONTHS
ENDED SEPTEMBER 30,
(UNAUDITED) YEAR ENDED DECEMBER 31,
------------------------- ------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
ADT
Income Statement Data:
Operating revenues..... $1,261,600 (1) $1,325,800 $1,783,800 $1,629,400 $1,528,500 $1,585,231 $1,483,907
Operating income
(loss)................ (579,900)(2) 177,700 200,800 206,000 240,380 213,679 191,427
Net income (loss)
before extraordinary
items................. (651,700) 60,900 31,000 82,600 110,700 153,767 (508,903)
Earnings (loss) per
common share before
extraordinary item.... $ (4.77) $ 0.44 $ 0.22 $ 0.50 $ 0.74 $ 1.36 $ (4.49)
SEPTEMBER 30,
(UNAUDITED) DECEMBER 31,
------------------------- ------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Balance Sheet Data:
Total assets........... $2,644,700 N/A $3,419,700 $3,406,800 $3,488,379 $3,486,645 $3,817,891
Long-term debt......... 1,027,600 N/A 1,174,800 1,051,000 1,160,951 1,158,482 1,298,878
Preferred and
preference stock...... 4,900 N/A 4,900 5,200 442,200 470,700 562,400
Common stock equity.... 783,200 N/A 1,425,300 1,299,800 1,195,067 1,015,103 936,716
Book value per common
share................. $ 5.56 N/A $ 10.26 $ 9.55 $ 9.79 $ 8.95 $ 8.27
- --------
(1) Operating revenue decreased for the nine months ended September 30, 1996
compared to the same period in 1995 primarily due to the sale of the
European vehicle auction business in December 1995.
(2) Includes a non-cash charge of approximately $744.7 million to recognize the
impairment of certain long-lived assets, primarily existing goodwill.
15
WESTERN RESOURCES AND ADT SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL
INFORMATION
The following selected unaudited pro forma combined financial information
combines the consolidated balance sheets and income statements of Western
Resources and ADT as if the Amalgamation had occurred for all periods
presented. These statements are prepared on the basis of accounting for the
Amalgamation as a purchase and are based on the assumptions set forth in the
notes thereto. These statements do not reflect the estimated cost savings and
revenue enhancements Western Resources believes will result from the
Amalgamation. Therefore, the following information is not necessarily
indicative of actual results that would have occurred had the Amalgamation
occurred on such dates or of expected future results. See "Western Resources
and ADT Unaudited Pro Forma Combined Financial Information."
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995
-------------- ------------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
PRO FORMA COMBINED (UNAUDITED)
Income Statement Data:
Operating revenues................................ $ 2,743,515 $3,355,871
Operating income (loss)........................... (321,336) 531,404
Net income (loss) before extraordinary item....... (615,265) 103,709
Earnings (loss) applicable to common stock before
extraordinary item............................... (628,874) 90,290
Earnings (loss) per average common share before
extraordinary item............................... $ (4.96) $ 0.72
SEPTEMBER 30,
1996
--------------
(IN THOUSANDS)
PRO FORMA COMBINED (UNAUDITED)
Balance Sheet Data:
Total assets...................................... $10,493,631
Long-term debt, net............................... 3,775,776
Company-obligated mandatorily redeemable preferred
securities....................................... 220,000
Preferred and preference stock.................... 79,758
Common stock equity............................... $ 3,458,661
16
SELECTED HISTORICAL FINANCIAL DATA OF KCPL
The selected historical financial data of KCPL set forth below has been
derived from the financial statements of KCPL as they appeared in KCPL's Annual
Reports on Form 10-K filed with the Commission for each of the five fiscal
years in the period ended December 31, 1995 and KCPL's Current Reports on Form
10-Q for the periods ended September 30, 1996 and September 30, 1995.
NINE MONTHS
ENDED SEPTEMBER 30,
(UNAUDITED) YEAR ENDED DECEMBER 31,
--------------------- ---------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
KCPL
Income Statement Data:
Operating revenues..... $ 703,031 $ 681,881 $ 885,955 $ 868,272 $ 857,450 $ 802,668 $ 825,101
Operating income(2).... 210,287 195,509 244,110 149,691 156,302 140,574 171,308
Net income............. 88,406 99,239 122,586 104,775 105,772 86,334 103,893
Earnings applicable to
common stock.......... 85,566 96,200 118,575 101,318 102,619 83,272 97,870
Earnings per common
share................. 1.38 1.55 1.92 1.64 1.66 1.35(1) 1.58(1)
Dividends declared per
common share.......... $ 1.185 $ 1.15 $ 1.54 $ 1.50 $ 1.46 $ 1.43(1) $ 1.37(1)
SEPTEMBER 30,
(UNAUDITED) DECEMBER 31,
--------------------- ---------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Balance Sheet Data:
Total assets........... $2,895,872 $2,866,584 $2,882,506 $2,770,397 $2,755,068 $2,646,923 $2,615,039
Long-term debt......... 834,136 835,533 835,713 798,470 733,664 788,209 822,680
Preferred and
preference stock...... 90,276 90,436 90,436 90,596 90,756 90,916 41,076
Common stock equity.... 917,092 899,706 897,938 874,699 866,151 853,924 860,229
Book value per common
share................. $ 14.81 $ 14.53 $ 14.50 $ 14.13 $ 13.99 $ 13.79(1) $ 13.90(1)
- --------
(1) Amounts have been restated to reflect the May 1992 two-for-one common stock
split.
(2) For operating income presented for periods beginning in 1995, income taxes
are presented as a separate line item after "Operating Income." Prior to
1995 (periods in which ADT pro forma information is not presented), a
traditional utility income statement format is presented which includes
operating income, net of income taxes.
17
WESTERN RESOURCES, ADT AND KCPL SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL
INFORMATION
The following selected unaudited pro forma combined financial information
combines the consolidated balance sheets and income statements of Western
Resources, ADT and KCPL as if the Amalgamation occurred on January 1, 1995 and
the KCPL Merger had occurred for all periods presented. These statements are
prepared on the basis of accounting for the Amalgamation as a purchase and the
KCPL Merger as a pooling of interests and are based on the assumptions set
forth in the notes thereto. These statements do not reflect the estimated cost
savings and revenue enhancements Western Resources believes will result from
the Amalgamation and the KCPL Merger. Therefore, the following information is
not necessarily indicative of actual results that would have occurred had the
Amalgamation and the KCPL Merger occurred on such dates or of future expected
results. See "Western Resources, ADT and KCPL Unaudited Pro Forma Combined
Financial Information."
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
PRO FORMA COMBINED (UNAUDITED)
Income Statement Data:
Operating revenues............................. $ 3,446,546 $4,241,826
Operating income (loss)........................ (111,049) 775,514
Net income (loss) before extraordinary item.... (526,859) 226,295
Earnings (loss) applicable to common stock
before extraordinary item..................... (543,308) 208,865
Earnings (loss) per average common share before
extraordinary item............................ $ (2.88) $ 1.11
SEPTEMBER 30,
1996
-------------
(IN
THOUSANDS)
PRO FORMA COMBINED (UNAUDITED)
Balance Sheet Data:
Total assets................................... $13,389,503
Long-term debt, net............................ 4,609,912
Company obligated mandatorily redeemable
preferred securities.......................... 220,000
Preferred and preference stock................. 170,034
Common stock equity............................ $ 4,375,753
18
REASONS FOR THE OFFER
OFFER PREMIUM AND DIVIDEND IMPACT
Western Resources believes that the Offer is in the best interests of ADT
Shareholders because, among other things, the Offer Consideration represents a
substantial premium to the price per Share prior to (i) the public
announcement of Westar Capital's initial investment in ADT, and (ii) the
public announcement of the Offer and the date of this Preliminary Prospectus.
The following table shows the premium of the Offer Consideration over the
closing per Share price on the NYSE on the last trading day immediately prior
to such events.
ADT
OFFER SHARE PERCENT
PRICE* PRICE DIFFERENTIAL**
------ ------ --------------
December 21, 1995, the last trading day before
the public announcement of Westar Capital's
initial investment in ADT...................... $22.50 $13.50 66.7%
December 17, 1996, the last trading day before
the public announcement of the Offer and the
date of this Preliminary Prospectus............ $22.50 $20.13 11.8%
- --------
* Assumes the Offer Consideration is $7.50 net in cash and $15.00 of Western
Resources Common Stock per Share.
** Based on the closing prices of Western Resources Common Stock and Shares on
the indicated dates.
In addition to these substantial per Share price premiums, the Offer also
provides ADT Shareholders with the opportunity to receive an ongoing cash
return on their ADT investment in the form of dividends on Western Resources
Common Stock. Western Resources has paid dividends every year since its
formation in 1924 and dividends have been increased every year since 1958
(except for 1975, in which the dividend remained unchanged). It has been
Western Resources' past practice to return a substantial portion of its
earnings to shareholders in the form of dividends. Western Resources does not
anticipate any significant change with respect to such dividend practice as a
result of the Offer or the Amalgamation. However, the declaration of future
dividends will depend upon future earnings, the financial condition of Western
Resources and other factors.
THE EXCHANGE RATIO
The per Share price premium which ADT Shareholders will receive in the
Offer, and the dividend which ADT Shareholders will receive as holders of
Western Resources Common Stock, will depend on the Exchange Ratio at the time
of consummation of the Offer. Such Exchange Ratio will be determined based on
the Western Resources Average Price; provided, that the Exchange Ratio will
not be more than 0.50420 shares of Western Resources Common Stock per Share.
The amount of cash provided in the Offer will be $7.50 net per Share,
regardless of the level of the Exchange Ratio. Pursuant to the Offer, each
Share will be exchanged for $7.50 net in cash and $15.00 of Western Resources
Common Stock as long as the Western Resources Average Price is $29.75 or
higher. If the Western Resources Average Price is less than $29.75, then each
Share will be exchanged for $7.50 net in cash and less than $15.00 of Western
Resources Common Stock.
The following chart sets forth a range of possible Western Resources Average
Prices and the corresponding (i) Exchange Ratio, (ii) dollar value of the
Stock Consideration to be received per Share, (iii) the dollar value of the
Cash Consideration to be received per Share, (iv) the total dollar value of
the Offer Consideration to be received per Share, (v) Share price premium over
the closing Share price on the last trading day prior to the public
announcement of the Offer, (vi) Share price premium over the closing Share
price on the last trading day prior to the public announcement of Westar
Capital's initial investment in ADT, and (vii) equivalent 1996 dividend per
Share. The Western Resources Average Prices set forth below are for
illustrative purposes only and
19
are not intended to be an exhaustive list of Western Resources Average Prices.
There can be no assurance that the actual Western Resources Average Price will
be in the range set forth below.
PREMIUM PREMIUM
TO ADT TO ADT 1996
WESTERN SHAREHOLDERS SHAREHOLDERS EQUIVALENT
RESOURCES VALUE OF TOTAL VALUE (DECEMBER (DECEMBER DIVIDEND
AVERAGE EXCHANGE STOCK VALUE OF CASH OF OFFER 17, 1996 21, 1995 PER ADT
PRICE RATIO CONSIDERATION CONSIDERATION CONSIDERATION CLOSING PRICE) CLOSING PRICE) SHARE
--------- -------- ------------- ------------- ------------- -------------- -------------- ----------
$27.50 0.50420 $13.87 $7.50 $21.37 6.2% 58.3% $1.04
28.00 0.50420 14.12 7.50 21.62 7.4% 60.1% 1.04
28.50 0.50420 14.37 7.50 21.87 8.7% 62.0% 1.04
29.00 0.50420 14.62 7.50 22.12 9.9% 63.9% 1.04
Collar 29.50 0.50420 14.87 7.50 22.37 11.2% 65.7% 1.04
----------------------------------------------------------------------------------------------------------
29.75 0.50420 15.00 7.50 22.50 11.8% 66.7% 1.04
30.00 0.50000 15.00 7.50 22.50 11.8% 66.7% 1.03
30.50 0.49180 15.00 7.50 22.50 11.8% 66.7% 1.01
31.00 0.48387 15.00 7.50 22.50 11.8% 66.7% 1.00
31.50 0.47619 15.00 7.50 22.50 11.8% 66.7% 0.98
32.00 0.46875 15.00 7.50 22.50 11.8% 66.7% 0.97
32.50 0.46154 15.00 7.50 22.50 11.8% 66.7% 0.95
33.00 0.45455 15.00 7.50 22.50 11.8% 66.7% 0.94
33.50 0.44776 15.00 7.50 22.50 11.8% 66.7% 0.92
34.00 0.44118 15.00 7.50 22.50 11.8% 66.7% 0.91
34.50 0.43478 15.00 7.50 22.50 11.8% 66.7% 0.90
35.00 0.42857 15.00 7.50 22.50 11.8% 66.7% 0.88
ENHANCED BUSINESS OPPORTUNITIES
In addition to the per Share price premium and dividend return provided by
the Offer, Western Resources believes that the ADT Shareholders will also
benefit from the Offer as a result of becoming shareholders of Western
Resources. Western Resources has carefully studied the potential benefits of
the combination of the businesses of Western Resources and ADT and, as a
result, believes that such a combination will provide a solid financial base
to support continued growth in the security business as well as a strong
foundation for sustainable long-term growth in the deregulating energy and
energy-related products and services markets. As deregulation continues for
electric and natural gas utilities, individual homes and businesses will have
the opportunity to choose their energy providers. As this process unfolds,
companies with nationally recognized brand will have significant advantage in
marketing energy and energy-related products and services. Consummation of the
Offer and the Amalgamation will position Western Resources to take advantage
of this emerging market, as Western Resources intends to leverage ADT's strong
brand name by marketing energy and energy-related products and services to
existing ADT customers and to new customers who know and trust the ADT brand
name.
GROWTH OPPORTUNITIES IN THE SECURITY INDUSTRY
The U.S. security business is a growth industry with annual revenues of $13
billion estimated to be growing at about 10% per year. Many opportunities for
further growth exist, particularly in the residential segment.
Currently, the security industry serves approximately 17.4 million
residential customers in the U.S. The number of households purchasing security
alarm services each year has grown at a 13% rate in recent years with growth
expected at an annual rate of 10% through the year 2000. This sustained growth
will be driven by a combination of increased demand for security alarm
services and the low current penetration rate. Today, only 22% of single
family households and 18% of total U.S. households have the protection
provided by an electronic security alarm system. With the advent of more
reliable, less costly equipment which is easier to install, the price of the
average alarm system has decreased dramatically, permitting a significantly
larger segment of the population to afford this service. The average price of
a residential alarm system was $1,500 in 1990, compared with only $1,200
today. This decrease has coincided with an increased awareness and concern
over the incidence of crime, and a stronger general desire on the part of
consumers to protect their families and property. Industry estimates project
the penetration rate of the residential market segment to at least double its
current level to over 40% by the year 2005, which would result in the creation
of 17.6 million new residential customers.
20
The commercial market penetration rate is currently estimated to be 50-60%,
with a continued opportunity for growth driven by the same demand factors
affecting the residential market. In addition, a large segment of the existing
customer base requires upgrading of older systems with newer technology, and
the integration of security enhancements such as access control and closed
circuit television equipment. The cost of these technologies has decreased
dramatically and now offers a more economical and reliable alternative to
security guards and outdated methods of controlling and documenting activities
within the workplace.
In order to maximize these growth opportunities, successful industry
participants would ideally utilize sophisticated mass marketing techniques to
reach consumers, develop and leverage strong brand names, and fully achieve
the available economies of scale. This maximization is unlikely within the
current industry structure due to its high fragmentation of providers. There
are presently approximately 9,000-11,000 alarm companies in the U.S. Although
over 90% of such companies have less than $500,000 in annual revenue, these
same companies currently have a 75% share of the market. Only 13% of the U.S.
market is controlled by larger companies with ADT having the largest share at
7%, which is more than three times the size of the next largest provider.
Western Resources believes that the security industry's characteristics of
rapid growth and provider fragmentation offers a unique opportunity for the
emergence of a dynamic, growth-oriented market leader. Western Resources
believes it is one of the first, and most successful, energy companies to
pursue the opportunities presented by the security business. Western
Resources' wholly owned security subsidiary, Westar Security, has grown
through acquisitions and internal growth. Westar Security currently monitors
over 110,000 customer accounts in eleven states, making it the tenth largest
monitoring security company, by customer count, in the nation. With the
addition of Westinghouse Security's customers, Westar Security will have over
400,000 accounts in 44 states, making it the third largest security service
provider in the country. Western Resources believes that a combination of
ADT's 1,100,000 residential and 600,000 commercial customers in the U.S.,
Canada and Europe with Western Resources' financial strength and energy
businesses, will expand and strengthen ADT's current industry leadership in
the security business.
EXPANSION OF BRANDED ENERGY MARKETING
The electric and natural gas utility industry in the United States is
rapidly evolving from a historically regulated monopolistic market to a
dynamic and competitive integrated marketplace. The successful providers of
energy in a deregulated market will not only provide electric or natural gas
service but also a variety of other services, including security. Several
factors are primarily responsible for the current trend toward deregulation in
the energy industry. Three of the most significant factors are: customer
demand, technology and economics. Western Resources believes that customer
demand is a key element as more sophisticated consumers continue to demand new
and innovative options and insist on the development of more efficient
products and services to meet their energy-related needs. Western Resources
believes that its strong core utility business provides it with the platform
to offer the more efficient products and energy services that customers will
desire. Furthermore, Western Resources believes it is necessary to
continuously seek new ways to add value to its customers' lives and
businesses. Recognizing that its current customer base must expand beyond its
existing service area, Western Resources views every person, whether in the
United States or abroad as a potential customer. Western Resources also
recognizes that its potential to emerge as a leading national energy and
energy-related services provider is enhanced by having a strong brand name.
Western Resources has been establishing its brand identity through the Westar
Security name. The combination of Western Resources and ADT would immediately
provide an ideal brand name to capitalize on the emerging security and energy
marketplaces.
The U.S. electric industry had retail revenues of approximately $200
billion, serving approximately 117 million homes and businesses, and the U.S.
natural gas retail industry had revenues of approximately $100 billion,
serving approximately 58 million homes and businesses in 1995. In Western
Resources' view, the
21
deregulation of the energy business will result in a model similar to that used
by the long-distance telecommunications industry, with low-cost providers
serving customers throughout the country. However, unlike the long-distance
telecommunications market which is dominated by large companies with powerful
brands, today's energy market is highly fragmented. In 1995, no utility company
had a market share in the U.S. greater than 4%. It is Western Resources' view
that this market fragmentation presents a superior opportunity for national
industry leaders to emerge. Western Resources believes that a combination with
ADT will give it the brand name recognition and complementary services to excel
in the emerging deregulated electric and natural gas markets.
In Western Resources' view, there are several product and service streams
into any home or business, two being energy and security. The combination of
Western Resources and ADT will allow the combined company to integrate energy,
energy-related products and services, and security, into a packaged group of
products and services to homes and businesses under the internationally
recognized ADT brand name. Western Resources believes that energy and security
are naturally compatible services with many similar operating requirements such
as installation, maintenance, billing and monitoring.
To date, ADT's management has not recognized the opportunities presented by
the deregulation of the energy market. Western Resources believes that a
combination of the strong core utility business and customer service skills of
Western Resources and the brand name, customer base and support infrastructure
of ADT will provide both the Western Resources and ADT shareholders with an
invaluable opportunity to succeed in the security and energy markets. As the
retail electric and natural gas markets become fully open to competition,
substantial opportunities exist to increase market share and to sell a menu of
integrated services which enhance the comfort and security of energy customers.
COST SAVINGS FROM OPERATIONAL SYNERGIES
Western Resources believes that the combination of Western Resources' and
ADT's businesses following consummation of the Offer and the Amalgamation would
lead to cost savings due to various operating synergies. Western Resources
estimates that operational savings would be achieved by adopting the best
practices of each of Western Resources and ADT, consolidating facilities and
redundant operations, and integrating various corporate and administrative
functions, including, but not limited to, finance, accounting, and purchasing.
22
BACKGROUND OF THE OFFER
In the past, ADT has advised Western Resources that it is not interested in
discussing a business arrangement between ADT and Western Resources that could
maximize ADT's potential both in its existing security business and in the
emerging market of deregulated retail energy distribution. After careful study
and consideration, Western Resources has determined that the potential
benefits to ADT, Western Resources and the companies' respective shareholders
can be best realized through combination of Western Resources and ADT, and
has, therefore, decided to proceed with the Offer.
In December 1995, Western Resources entered into a stock purchase agreement
with Laidlaw and Laidlaw, Inc., pursuant to which Westar Capital subsequently
purchased a total of 30,800,000 Shares from Laidlaw at an average price of
$14.40 per Share. Since March 18, 1996, from time to time Westar Capital has
purchased Shares in the open market at prevailing market prices. Westar
Capital owns 38,287,111 Shares, or approximately 27% of the outstanding
Shares, including 14,115 Shares issuable upon exchange of 500 LYONS, each of
which is exchangeable for Shares at a rate of 28.23 Shares per LYON.
On July 1, 1996, ADT entered into the Republic Agreement, pursuant to which
Republic Sub was to be amalgamated with and into ADT, with the amalgamated
company operating under the name of ADT. Under the terms of the Republic
Agreement, ADT granted to Republic a warrant to purchase 15 million Shares at
a purchase price of $20 per share, subject to adjustment. The Republic Warrant
was to become exercisable for a period of six months following the termination
of the Republic Agreement. On September 30, 1996, ADT and Republic jointly
announced the termination of the Republic Agreement citing uncertainty
attributable to market conditions, and amended the Republic Warrant to include
certain restrictions on the issuance of Shares pursuant thereto and the
transfer of such Shares by Republic to persons with interest in 10% or more of
ADT. As described herein, Western Resources has commenced litigation
challenging the validity of the Republic Warrant. See "Litigation."
On November 4, 1996, ADT declared a distribution of one Right for each
outstanding Share, payable to holders of record as of the close of business on
November 15, 1996, pursuant to the Rights Agreement. Pursuant to the terms of
the Rights Agreement, which provides, among other things, that after certain
persons acquire 15% or more (or, in certain limited situations, a greater
percentage) of the issued and outstanding Shares, holders of Shares (other
than such persons) will be entitled to purchase Shares at half of the current
market value and that if, after such an acquisition, ADT is involved in an
amalgamation, other business combination or certain sale transactions, holders
of Shares (other than such persons) will be entitled to purchase either Shares
or common stock of the other party to such transaction at half of the current
market value of such securities. See "Conditions of the Offer--Rights
Agreement" and "The Offer--The ADT Rights."
On November 6, 1996, ADT announced its intention to sell its United States
vehicle auction business.
On December 17, 1996, the Western Resources Board met and determined to
proceed with the Offer. On December 18, 1996, in the letter set forth below to
Mr. Ashcroft, Mr. Hayes informed Mr. Ashcroft and the ADT Board of Western
Resources' intention to pursue the Offer and the Amalgamation and encouraged
Mr. Ashcroft and the ADT Board to meet with Western Resources to discuss the
possibility of a mutually beneficial negotiated transaction.
December 18, 1996
Mr. Michael A. Ashcroft
ADT Limited
Cedar House
41 Cedar Avenue
Hamilton HM12
Bermuda
Dear Michael:
We have demonstrated our belief in ADT's future by investing $589
million to purchase 27% of ADT's outstanding common shares, making us
ADT's largest shareowner. In the past you and your board have advised us
that you are not interested in discussing a business arrangement between
our companies
23
that could maximize ADT's potential, both in its existing security
business and in the emerging market of deregulated retail energy
distribution.
Now, after careful study and consideration, we have determined that the
potential benefits to ADT, Western Resources and ADT's other shareowners
from a combination of Western Resources and ADT are simply too compelling
to ignore. We firmly believe that this combination will provide
significant benefits to our respective shareowners, customers and
employees not available to either company on its own.
We believe ADT's full potential can only be realized in a strategic
business combination. In our proposed transaction, ADT shareowners will
become a part of one of the most innovative and dynamic companies in the
business of making people's lives safer and more comfortable. Our
subsidiary, Westar Security, is one of the fastest growing security
companies in the nation. Combined with ADT, the leading brand name in the
security industry, Western Resources will serve the energy and security
needs of customers across the country and around the world.
Western Resources, therefore, will file with the Securities and Exchange
Commission a preliminary prospectus for an offer by Western Resources to
ADT shareowners. Under our proposed offer, ADT shareowners (other than
Western Resources and its affiliates) will receive $7.50 net in cash and
$15.00 of Western Resources common stock in exchange for each ADT common
share, up to a maximum of 0.50420 shares of Western Resources common
stock. Based upon the closing price of ADT common shares on December 17,
1996, our proposal represents a 12% premium above ADT's market price.
In order to ensure ADT's other shareowners receive the chance to
consider our proposal for themselves, we will also demand a special
general meeting of ADT shareowners for the purposes of (i) removing the
present members of the ADT board, (ii) reducing the number of seats on the
ADT board from eight to two, and (iii) electing Western Resources'
nominees to the ADT board. We will also file preliminary proxy materials
relating to such special meeting. Once the Western Resources nominees are
elected to the ADT board, Western Resources intends to consummate the
exchange offer and a subsequent amalgamation pursuant to which Western
Resources will acquire 100% of ADT's equity.
We trust that you and the other members of ADT's board will consider the
best interests of ADT's shareowners, customers and employees and agree to
meet with us to achieve a mutually beneficial transaction that ensures
that ADT executives and employees will enjoy exciting opportunities for
career growth with the combined company. We are, however, committed to
achieving the strategic benefits of a business combination of ADT and
Western Resources and prepared to take all necessary steps to ensure that
we and ADT's other shareowners have the opportunity to decide the future
of our investment in ADT.
I look forward to hearing from you soon.
Sincerely,
/s/ John
On December 18, 1996, Western Resources also publicly announced its
intention to commence the Offer and Western Resources filed the ADT Proxy
Statement with the Commission for use in soliciting proxies from ADT
Shareholders to approve the Western Resources Proposals at the ADT Special
Meeting. On December 18, 1996 Westar Capital deposited the Requisition with
ADT requiring the ADT Board to convene the ADT Special Meeting. See "The ADT
Special Meeting."
24
LITIGATION
On December 18, 1996, Western Resources announced that Westar Capital had
commenced litigation in the United States District Court for the Southern
District of Florida charging ADT and the ADT Board with breaches of their
fiduciary duties to ADT and the ADT Shareholders. Specifically, the complaint
alleges, among other things, that the ADT Board breached its fiduciary duty to
ADT and the ADT Shareholders in connection with the grant of the Republic
Warrant and use of the ADT Rights Agreement. Republic is also joined in the
lawsuit.
The lawsuit seeks injunctive relief and unspecified damages.
25
THE ADT SPECIAL MEETING
THE REQUISITION
As more fully set forth in the Western Resources Proxy Statement, on
December 18, 1996, Westar Capital deposited the Requisition with ADT, pursuant
to Section 74 of the Companies Act and Bye-Law 42 of the ADT Bye-Laws,
requiring the ADT Board to convene the ADT Special Meeting so that the ADT
Shareholders will have the opportunity to vote on the Western Resources
Proposals and thereby satisfy the ADT Shareholder Approval Condition. Under
the Companies Act and the ADT Bye-Laws, the ADT Board is required to convene
the ADT Special Meeting. In the event that the ADT Board does not within
twenty-one days from the date of the deposit of the Requisition convene the
ADT Special Meeting, Westar Capital may itself convene the ADT Special
Meeting. Westar Capital has requested that the date of the ADT Special Meeting
be February 18, 1997; however, as of the date of this Preliminary Prospectus,
the date, time and place for the ADT Special Meeting have not been determined
and there can be no assurances that the ADT Special Meeting will be convened
on such date.
MATTERS TO BE BROUGHT BEFORE THE ADT SPECIAL MEETING
In connection with the ADT Special Meeting, Western Resources is soliciting
ADT Shareholders' proxies in favor of (i) the removal of all of the present
members of the ADT Board and any person or persons elected or designated by
any such director to fill any vacancy or newly created directorship pursuant
to Section 93 of the Companies Act and Bye-Law 71 of the ADT Bye-Laws, (ii)
the reduction of the number of seats on the ADT Board to two, and (iii) the
election of the Western Resources Nominees, Steven L. Kitchen and Steven A.
Millstein, as the directors of ADT (or, if either Western Resources Nominee is
unable to serve as a director of ADT due to death, disability or otherwise,
any other person designated as a Western Resources Nominee by Western
Resources). In order to comply with the requirement of Bye-Law 53 of the ADT
Bye-Laws that a director of ADT own one Share, each of the Western Resources
Nominees will own at least one Share at the time of the ADT Special Meeting.
Each of the Western Resources Proposals is designed to facilitate the prompt
consummation of the Offer and the Amalgamation.
Only persons entered in the register of members of ADT as holders of Shares
at the time of the ADT Special Meeting will be entitled to vote at such
meeting unless the ADT Board sets a record date for the ADT Special Meeting.
In the event the ADT Board sets a record date for the ADT Special Meeting,
only holders of Shares at the close of business on such record date will be
entitled to vote at the ADT Special Meeting. Each Share is entitled to one
vote upon each matter presented at the ADT Special Meeting. Holders of ADT
Preferred Stock are not entitled to vote on any of the Western Resources
Proposals. Pursuant to Bye-Law 43 of the ADT Bye-Laws, at any general meeting
of ADT not less than two holders of Shares present either in person or by
proxy constitutes a quorum for the transaction of business. Each of the
Western Resources Proposals may be approved by the affirmative vote of a
majority of those Shares voted at the ADT Special Meeting.
Western Resources and Westar Capital intend to vote Westar Capital's Shares
and those Shares for which Western Resources or its representatives hold valid
proxies at the ADT Special Meeting for each of the Western Resources
Proposals. It is not expected that any matter other than those referred to
herein will be brought before the ADT Special Meeting.
The effect of the Western Resources Proposals will be to replace the current
directors of ADT, Michael A. Ashcroft, John E. Dannenberg, Alan B. Henderson,
James S. Pasman, Jr., Stephen J. Ruzika, W. Peter Slusser, William W. Stinson
and Raymond S. Troubh, with the Western Resources Nominees. The Western
Resources Nominees have stated their intention to take, subject to the
fulfillment of the fiduciary duties they would have as directors of ADT, all
action necessary and desirable to facilitate consummation of the Offer and the
Amalgamation including, among other things, (i) either redeeming the Rights or
amending the Rights Agreement to make the Rights inapplicable to the Offer, if
necessary, in order to satisfy the Rights Plan Condition, (ii) not invoking
the provisions of Bye-Law 104 or 46 of the ADT Bye-Laws (as described herein)
in connection with the acquisition of Shares by Western Resources pursuant to
the Offer or otherwise, (iii) adopting and approving the Amalgamation
Agreement pursuant to which Bermuda Sub will amalgamate with and into ADT,
with the amalgamated company operating under the name of ADT, and ADT
Shareholders (other than Western Resources and ADT and their respective
affiliates, and ADT Shareholders who perfect appraisal rights under Bermuda
law) will receive the Offer Consideration in exchange for the cancellation of
each Share, and (iv) proposing the Bye-Law Amendment providing that an
amalgamation may be approved by the affirmative vote of a simple majority of
the votes cast at a general meeting of ADT. For a more complete description of
the Western Resources Proposals and for more information regarding the Western
Resources Nominees, see the Western Resources Proxy Statement, which is being
mailed separately to ADT Shareholders.
26
THE OFFER
GENERAL
Western Resources hereby offers, upon the terms and subject to the
conditions set forth herein and in the related Letter of Transmittal, to
exchange the Offer Consideration for each outstanding Share validly tendered
on or prior to the Expiration Date and not properly withdrawn. The Offer
Consideration consists of $7.50 net in cash and that number of shares of
Western Resources Common Stock equal to the Exchange Ratio. The term "Exchange
Ratio" means the quotient (rounded to the nearest 1/100,000) determined by
dividing $15.00 by the average of the high and low sales prices of Western
Resources Common Stock (as reported on the NYSE Composite Transactions
reporting system as published in The Wall Street Journal or, if not published
therein, in another authoritative source) on each of the twenty consecutive
trading days ending with the third trading day immediately preceding the
Expiration Date; provided, that the Exchange Ratio shall not be greater than
0.50420. Pursuant to the Exchange Ratio, each Share will be exchanged for
$7.50 net in cash and $15.00 of Western Resources Common Stock, as long as the
Western Resources Average Price is $29.75 or higher. If the Western Resources
Average Price is less than $29.75, each share will be exchanged for $7.50 net
in cash and less than $15.00 of Western Resources Common Stock. On December
17, 1996, the closing price of Western Resources Common Stock on the NYSE was
$31.25. Based on such closing price, each Share would be converted into $7.50
net in cash and $15.00 of Western Resources Common Stock. The Exchange Ratio
will change as the market price of the Western Resources Common Stock changes.
ADT Shareholders may call (800) any time on or after the date hereof
through the Expiration Date for the current Exchange Ratio calculated based on
the then-current Western Resources Average Price for the twenty consecutive
trading days ending with the third trading day immediately preceding the date
the call is placed. The actual Western Resources Average Price and Exchange
Ratio will be calculated as of the third trading day immediately prior to the
Expiration Date, as described above, and a press release will be issued
announcing the actual Exchange Ratio prior to the opening of the second
trading day prior to the Expiration Date (as it may be extended from time to
time).
Tendering shareholders will not be obligated to pay any charges or expenses
of the Exchange Agent. Except as set forth in the Instructions to the Letter
of Transmittal, transfer taxes on the exchange of Shares pursuant to the Offer
will be paid by or on behalf of Western Resources.
The purpose of the Offer is to enable Western Resources to obtain control of
ADT. Western Resources presently intends, as soon as practicable after
consummation of the Offer, to propose and seek to have ADT effect the
Amalgamation. In the Amalgamation, each outstanding Share (other than Shares
owned by Western Resources or any of its affiliates, Shares held in the
treasury of ADT (if ADT is so authorized) or by any subsidiary of ADT and
Shares owned by ADT Shareholders who perfect appraisal rights under Bermuda
law) would be cancelled in exchange for the right to receive the Offer
Consideration. See "The Amalgamation."
Western Resources and Westar Capital believe that the Offer constitutes a
scheme or contract for the purpose of Section 102 of the Companies Act and
that holders of Shares which are validly tendered and not withdrawn prior to
the Expiration Date will have assented to the Offer in accordance therewith.
In certain circumstances, Section 102 would enable Westar Capital to purchase,
upon notice, Shares not tendered pursuant to the Offer. See "Comparison of
Rights of Holders of Shares and Western Resources Common Stock--Voting Rights
in Connection with Business Combinations--Section 102 of the Companies Act."
In the event that Western Resources obtains all of the Shares pursuant to
the Offer and/or the Amalgamation, former holders of Shares would own
approximately 51.6% of the outstanding shares of Western Resources Common
Stock, based on the number of Shares outstanding on November 4, 1996 and stock
prices as of December 17, 1996 (the last trading day prior to the date of this
Preliminary Prospectus). Such calculation does not give effect to the KCPL
Offer or the KCPL Merger.
Western Resources' obligation to exchange the Offer Consideration for Shares
pursuant to the Offer is subject to the Minimum Tender Condition, the Western
Resources Shareholder Approval Condition, the ADT Shareholder Approval
Condition, the Rights Plan Condition, the ADT Bye-Law Condition and the
Regulatory Approval Condition (in each case as defined on the cover page of
this Preliminary Prospectus) and the other conditions set forth under "--
Certain Conditions of the Offer."
27
According to ADT's Quarterly Report on Form 10-Q for the period ended
September 30, 1996, as of November 4, 1996, there were 141,119,159 Shares
outstanding, including 3,182,787 Shares which are owned by a subsidiary of
ADT. Westar Capital beneficially owns 38,287,111 Shares, or approximately 27%
of the outstanding Shares, including 14,115 Shares issuable upon exchange of
500 LYONS, which are exchangeable for Shares at a rate of 28.23 Shares per
LYON.
Requests are being made to ADT pursuant to Rule 14d-5 promulgated under the
Exchange Act and Section 66 of the Companies Act for the use of ADT's
shareholder lists and security position listings for the purpose of
communications with ADT Shareholders and disseminating the Offer to holders of
Shares. A final Prospectus and the related Letter of Transmittal and other
relevant materials will be mailed to registered holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on such
shareholder lists, the register of members of ADT or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares by Western Resources
following receipt of such list or listings from ADT.
ADT RIGHTS
No separate payment will be made by Western Resources or Westar Capital for
the Rights pursuant to the Offer. The Rights are presently evidenced by the
certificates for the Shares and the tender by an ADT Shareholder of his or her
Shares prior to the Distribution Date (as defined below) will also constitute
a tender of the associated Rights. Upon the earlier to occur of (i) 10 days
(or such later date as may be designated by a majority of the Continuing
Directors (as defined below)) following a public announcement that a person
has acquired beneficial ownership of 15% or more of the outstanding Shares (an
"Acquiring Person") or (ii) 10 business days (or such later date as may be
designated by a majority of the Continuing Directors) following the
commencement of a tender offer or exchange offer which would result in the
person making the offer becoming an Acquiring Person (the earlier of such
dates being called the "Distribution Date"), separate certificates evidencing
the Rights will be mailed to holders of record of the Shares as of the close
of business on the Distribution Date and such separate Rights certificates
alone will evidence the Rights.
If the Distribution Date occurs and separate certificates representing the
Rights are distributed by ADT or the Rights Agent to holders of Shares prior
to the time a holder's Shares are tendered pursuant to the Offer, certificates
representing a number of Rights equal to the number of Shares tendered must be
delivered to the Exchange Agent, or, if available, a book-entry confirmation
received by the Exchange Agent with respect thereto, in order for such Shares
to be validly tendered. If a Distribution Date occurs and separate
certificates representing the Rights are not distributed prior to the time
Shares are tendered pursuant to the Offer, Rights may be tendered prior to an
ADT Shareholder receiving the certificates for Rights by use of the guaranteed
delivery procedure described under "--Procedure for Tendering" below.
Western Resources' obligation to exchange the Offer Consideration for Shares
pursuant to the Offer is conditioned upon satisfaction of the Offer
Conditions. See "--Conditions of the Offer."
TIMING OF THE OFFER
The Offer is currently scheduled to expire on , 1997; however, it is
Western Resources' current intention to extend the Offer from time to time as
necessary until all conditions to the Offer have been satisfied or waived. See
"--Extension, Termination and Amendment." Western Resources expects that the
Western Resources Shareholder Approval Condition will be satisfied by February
11, 1997, the date on which it has called the Western Resources Special
Meeting to approve the issuance of shares of Western Resources Common Stock in
connection with the Offer and an amendment to the Western Resources Articles
to increase the number of shares of Western Resources Common Stock authorized
for issuance. Western Resources currently anticipates that all of the other
conditions to the Offer will be satisfied by the time that each of the ADT
Shareholder Approval and the Rights Plan Condition is satisfied. See "--
Conditions of the Offer."
28
EXTENSION, TERMINATION AND AMENDMENT
Western Resources expressly reserves the right (but will not be obligated),
in its sole discretion, at any time or from time to time, and regardless of
whether any of the events set forth in "--Conditions of the Offer" shall have
occurred or shall have been determined by Western Resources to have occurred,
to extend the period of time during which the Offer is to remain open by
giving oral or written notice of such extension to the Exchange Agent, which
extension will be announced no later than 9:00 a.m., Eastern time, on the next
business day after the previously scheduled Expiration Date. There can be no
assurance that Western Resources will exercise its right to extend the Offer.
However, it is Western Resources' current intention to extend the Offer until
all Offer Conditions have been satisfied or waived. During any such extension,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the right of a tendering ADT Shareholder to withdraw his or
her Shares. See "--Withdrawal Rights."
Subject to the applicable rules and regulations of the Commission, Western
Resources also reserves the right, in its sole discretion, at any time or from
time to time, (i) to delay acceptance for, exchange of, or, regardless of
whether such Shares were theretofore accepted for exchange, exchange of any
Shares pursuant to the Offer, or to terminate the Offer and not accept for
exchange or exchange any Shares not theretofore accepted for exchange, or
exchanged, upon the failure of any of the conditions of the Offer to be
satisfied and (ii) to waive any condition (other than the Western Resources
Shareholder Approval Condition, the Regulatory Approval Condition and the
condition relating to the effectiveness of the Registration Statement) or
otherwise amend the Offer in any respect, by giving oral or written notice of
such delay, termination or amendment to the Exchange Agent and by making a
public announcement thereof. Any such extension, termination, amendment or
delay will be followed as promptly as practicable by public announcement
thereof, such announcement in the case of an extension to be issued no later
than 9:00 a.m., Eastern time, on the next business day after the previously
scheduled Expiration Date. Subject to applicable law (including Rules 14d-4(c)
and 14d-6(d) under the Exchange Act, which require that any material change in
the information published, sent or given to ADT Shareholders in connection
with the Offer be promptly disseminated to ADT Shareholders in a manner
reasonably designed to inform ADT Shareholders of such change) and without
limiting the manner in which Western Resources may choose to make any public
announcement, Western Resources shall have no obligation to publish, advertise
or otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service.
Western Resources confirms that if it makes a material change in the terms
of the Offer or the information concerning the Offer, or if it waives a
material condition of the Offer, Western Resources will extend the Offer to
the extent required under the Exchange Act. If, prior to the Expiration Date,
Western Resources shall increase or decrease the percentage of Shares being
sought or the consideration offered to holders of Shares, such increase or
decrease shall be applicable to all holders whose Shares are accepted for
exchange pursuant to the Offer, and, if at the time notice of any such
increase or decrease is first published, sent or given to holders of Shares,
the Offer is scheduled to expire at any time earlier than the tenth business
day from and including the date that such notice is first so published, sent
or given, the Offer will be extended until the expiration of such ten business
day period. For purposes of the Offer, a "business day" means any day other
than a Saturday, Sunday or a Federal holiday and consists of the time period
from 12:01 a.m. through 12:00 midnight, Eastern time.
EXCHANGE OF SHARES; DELIVERY OF WESTERN RESOURCES COMMON STOCK AND CASH
CONSIDERATION
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), Western Resources will accept for exchange, and will exchange,
Shares (and Rights, if applicable) validly tendered and not properly withdrawn
as promptly as practicable following the Expiration Date. In addition, subject
to applicable rules of the Commission, Western Resources expressly reserves
the right to delay acceptance of or the exchange of Shares (and Rights, if
applicable) in order to comply with any applicable law. In all cases, exchange
of Shares (and Rights, if applicable) tendered and accepted for exchange
pursuant to the Offer will be made only after receipt by the Exchange Agent of
certificates for such Shares (or a confirmation of a book-entry transfer of
such Shares in the
29
Exchange Agent's account at The Depository Trust Company or the Philadelphia
Depository Trust Company (collectively, the "Book-Entry Transfer
Facilities")), a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other required documents.
For purposes of the Offer, Western Resources will be deemed to have accepted
for exchange Shares (and Rights, if applicable) validly tendered and not
withdrawn as, if and when Western Resources gives oral or written notice to
the Exchange Agent of its acceptance of the tenders of such Shares (and
Rights, if applicable) pursuant to the Offer. Delivery of Western Resources
Common Stock and Cash Consideration in exchange for Shares (and Rights, if
applicable), pursuant to the Offer and cash in lieu of fractional shares of
Western Resources Common Stock will be made by the Exchange Agent as soon as
practicable after receipt of such notice. The Exchange Agent will act as agent
for tendering ADT Shareholders for the purpose of receiving Western Resources
Common Stock, the Cash Consideration and cash to be paid in lieu of fractional
shares of Western Resources Common Stock from Western Resources and
transmitting such Western Resources Common Stock and cash to tendering ADT
Shareholders. Under no circumstances will interest with respect to fractional
shares be paid by Western Resources by reason of any delay in making such
exchange.
If any tendered Shares are not accepted for exchange pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted
for more Shares than are tendered, certificates for such unexchanged Shares
will be returned without expense to the tendering ADT Shareholder or, in the
case of Shares tendered by book-entry transfer of such Shares into the
Exchange Agent's account at a Book-Entry Transfer Facility pursuant to the
procedures set forth below under "--Procedure for Tendering," such Shares will
be credited to an account maintained within such Book-Entry Transfer Facility
as soon as practicable following expiration or termination of the Offer.
CASH IN LIEU OF FRACTIONAL SHARES OF WESTERN RESOURCES COMMON STOCK
No certificates representing fractional shares of Western Resources Common
Stock will be issued pursuant to the Offer. In lieu thereof, each tendering
shareholder who would otherwise be entitled to a fractional share of Western
Resources Common Stock will receive cash in an amount equal to such fraction
(expressed as a decimal and rounded to the nearest 0.01 of a share) times the
closing price for shares of Western Resources Common Stock on the NYSE
Composite Tape on the date such ADT Shareholder's Shares are accepted for
exchange by Western Resources.
WITHDRAWAL RIGHTS
Tenders of Shares (and Rights, if applicable) made pursuant to the Offer are
irrevocable, except that Shares (and Rights, if applicable) tendered pursuant
to the Offer may be withdrawn pursuant to the procedures set forth below at
any time prior to the Expiration Date, and, unless theretofore accepted for
exchange and exchanged by Western Resources for the Offer Consideration
pursuant to the Offer, may also be withdrawn at any time after , 1997.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Exchange
Agent at one of its addresses set forth on the back cover of this Preliminary
Prospectus, and must specify the name of the person having tendered the Shares
(and Rights, if applicable) to be withdrawn, the number of Shares (and Rights,
if applicable) to be withdrawn and the name of the registered holder, if
different from that of the person who tendered such Shares (and Rights, if
applicable).
The signature(s) on the notice of withdrawal must be guaranteed by a
financial institution (including most banks, savings and loan associations and
brokerage houses) which is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program (an "Eligible Institution") unless such
Shares (and Rights, if applicable) have been tendered for the account of any
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry tender as set forth below under "--Procedure for Tendering,"
any notice of withdrawal must specify the name
30
and number of the account at the Book-Entry Transfer Facility to be credited
with the withdrawn Shares and must otherwise comply with such Book-Entry
Transfer Facility's procedures. If certificates have been delivered or
otherwise identified to the Exchange Agent, the name of the registered holder
and the serial numbers of the particular certificates evidencing the Shares
withdrawn must also be furnished to the Exchange Agent as aforesaid prior to
the physical release of such certificates.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Western Resources, in its sole
discretion, which determination shall be final and binding. Neither Western
Resources, the Exchange Agent, the Information Agent, the Dealer Managers nor
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or will incur any liability for
failure to give any such notification. Any Shares (and Rights, if applicable)
properly withdrawn will be deemed not to have been validly tendered for
purposes of the Offer. However, withdrawn Shares (and Rights, if applicable)
may be retendered by following one of the procedures described under "--
Procedure for Tendering" at any time prior to the Expiration Date.
A withdrawal of Shares shall also constitute a withdrawal of the associated
Rights. Rights may not be withdrawn unless the associated Shares are also
withdrawn.
PROCEDURE FOR TENDERING
For an ADT Shareholder validly to tender Shares (and Rights, if applicable)
pursuant to the Offer, (i) a properly completed and duly executed Letter of
Transmittal (or manually executed facsimile thereof), together with any
required signature guarantees, or an Agent's Message (as defined below) in
connection with a book-entry transfer, and any other required documents, must
be transmitted to and received by the Exchange Agent at one of its addresses
set forth on the back cover of this Preliminary Prospectus and either
certificates for tendered Shares (and Rights, if applicable) must be received
by the Exchange Agent at such address or such Shares (and Rights, if
applicable) must be tendered pursuant to the procedures for book-entry tender
set forth below (and a confirmation of receipt of such tender received (such
confirmation, a "Book-Entry Confirmation")), in each case prior to the
Expiration Date, or (ii) such ADT Shareholders must comply with the guaranteed
delivery procedure set forth below.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Exchange Agent, and forming a part
of a Book-Entry Confirmation, which states that such Book-Entry Transfer
Facility has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares (and Rights, if applicable)
that such participant has received and agrees to be bound by the terms of the
Letter of Transmittal and that Western Resources may enforce such agreement
against such participant.
ADT Shareholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares, unless the Rights Plan
Condition has been satisfied or waived. Unless the ADT Distribution Date
occurs, a tender of Shares will constitute a tender of the associated Rights.
If the ADT Distribution Date occurs and separate certificates representing the
Rights are distributed by ADT or the Rights Agent to holders of Shares prior
to the time a holder's Shares are tendered pursuant to the Offer, certificates
representing a number of Rights equal to the number of Shares tendered must be
delivered to the Exchange Agent, or, if available, a Book-Entry Confirmation
received by the Exchange Agent with respect thereto, in order for such Shares
to be validly tendered. If the ADT Distribution Date occurs and separate
certificates representing the Rights are not distributed prior to the time
Shares are tendered pursuant to the Offer, Rights may be tendered prior to a
shareholder receiving the certificates for Rights by use of the guaranteed
delivery procedure described below. If Rights certificates are distributed but
are not available to a shareholder prior to the time Shares are tendered
pursuant to the Offer, a tender of Shares constitutes an agreement by the
tendering shareholder to deliver to the Exchange Agent pursuant to the
guaranteed delivery procedure described below, prior to the expiration of the
period to be specified in the Notice of Guaranteed Delivery and the related
Letter of Transmittal for delivery of Rights certificates or a Book-Entry
Confirmation for Rights (the "Rights Delivery Period"), Rights certificates
31
representing a number of Rights equal to the number of Shares tendered.
Western Resources reserves the right to require that it receive such Rights
certificates (or a Book-Entry Confirmation with respect to such Rights) prior
to accepting Shares for exchange.
Nevertheless, Western Resources will be entitled to accept for exchange
Shares tendered by a shareholder prior to receipt of the Rights certificates
required to be tendered with such Shares or a Book-Entry Confirmation with
respect to such Rights and either (i) subject to complying with applicable
rules and regulations of the Commission, withhold payment for such Shares
pending receipt of the Rights certificates or a Book-Entry Confirmation for
such Rights or (ii) exchange Shares accepted for exchange pending receipt of
the Rights certificates or a Book-Entry Confirmation for such Rights in
reliance upon the guaranteed delivery procedure described below. In addition,
after expiration of the Rights Delivery Period, Western Resources may instead
elect to reject as invalid a tender of Shares with respect to which Rights
certificates or a Book-Entry Confirmation for an equal number of Rights have
not been received by the Exchange Agent. Any determination by Western
Resources to make payment for Shares in reliance upon such guaranteed delivery
procedure or, after expiration of the Rights Delivery Period, to reject as
invalid, shall be made, subject to applicable law, in the sole and absolute
discretion of Western Resources.
The Exchange Agent will establish accounts with respect to the Shares at the
Book-Entry Transfer Facilities for purposes of the Offer within two business
days after the date of the mailing of the final Prospectus, and any financial
institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of the Shares by causing such
Book-Entry Transfer Facility to transfer such Shares into the Exchange Agent's
account in accordance with such Book-Entry Transfer Facility's procedure for
such transfer. However, although delivery of Shares may be effected through
book-entry at the Book-Entry Transfer Facilities, the Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or an Agent's
Message in connection with a book-entry transfer, and any other required
documents, must, in any case, be transmitted to and received by the Exchange
Agent at one or more of its addresses set forth on the back cover of this
Preliminary Prospectus prior to the Expiration Date, or the guaranteed
delivery procedure described below must be complied with. No assurance can be
given, however, that book-entry delivery of Rights will be available. If book-
entry delivery is not available, a tendering shareholder will be required to
tender Rights by means of delivery of Rights certificates or pursuant to the
guaranteed delivery procedure set forth below.
No signature guarantee is required on the Letter of Transmittal in cases
where (a) the Letter of Transmittal is signed by the registered holder(s) of
the Shares (including any participant in one of the Book-Entry Transfer
Facilities whose name appears on a security position listing as the owner of
Shares) tendered therewith and such holder(s) have not completed the
instruction entitled "Special Issuance Instructions" on the Letter of
Transmittal or (b) such Shares are tendered for the account of an Eligible
Institution. Otherwise, all signatures on the Letter of Transmittal must be
guaranteed by an Eligible Institution. If the certificates for Shares or
Rights (if any) are registered in the name of a person other than the signer
of the Letter of Transmittal, or if certificates for unexchanged Shares or
Rights (if any) are to be issued to a person other than the registered
holder(s), the certificates must be endorsed or accompanied by appropriate
stock powers, in either case signed exactly as the name or names of the
registered owner or owners appear on the certificates, with the signature(s)
on the certificates or stock powers guaranteed as aforesaid.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO CASH
CONSIDERATION AND CASH RECEIVED IN LIEU OF FRACTIONAL SHARES OF WESTERN
32
RESOURCES COMMON STOCK, A SHAREHOLDER MUST PROVIDE THE EXCHANGE AGENT WITH HIS
OR HER CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY WHETHER SUCH
SHAREHOLDER IS SUBJECT TO BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL.
CERTAIN SHAREHOLDERS (INCLUDING, AMONG OTHERS, ALL CORPORATIONS AND CERTAIN
FOREIGN INDIVIDUALS) ARE NOT SUBJECT TO THESE BACKUP WITHHOLDING AND REPORTING
REQUIREMENTS. IN ORDER FOR A FOREIGN INDIVIDUAL TO QUALIFY AS AN EXEMPT
RECIPIENT, THE SHAREHOLDER MUST SUBMIT A FORM W-8, SIGNED UNDER PENALTIES OF
PERJURY, ATTESTING TO THAT INDIVIDUAL'S EXEMPT STATUS.
If an ADT Shareholder desires to tender Shares (and Rights, if applicable)
pursuant to the Offer and such shareholder's certificates are not immediately
available or such shareholder cannot deliver the certificates and all other
required documents to the Exchange Agent prior to the Expiration Date or such
shareholder cannot complete the procedure for book-entry transfer on a timely
basis, such Shares (and Rights, if applicable) may nevertheless be tendered,
provided that all of the following conditions are satisfied:
(a) such tenders are made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Western Resources, is received
by the Exchange Agent as provided below on or prior to the Expiration Date;
and
(c) the certificates for all tendered Shares (or a confirmation of a
book-entry transfer of such securities into the Exchange Agent's account at
a Book-Entry Transfer Facility as described above), in proper form for
transfer, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message) and all
other documents required by the Letter of Transmittal are received by the
Exchange Agent within three NYSE trading days after the date of execution
of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, telex, facsimile transmission or mail to the Exchange Agent and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice.
In all cases, exchanges of Shares (and Rights, if applicable) tendered and
accepted for exchange pursuant to the Offer will be made only after timely
receipt by the Exchange Agent of certificates for Shares (and Rights, if
applicable) (or timely confirmation of a book-entry transfer of such
securities into the Exchange Agent's account at a Book-Entry Transfer Facility
as described above), properly completed and duly executed Letter(s) of
Transmittal (or facsimile(s) thereof), or an Agent's Message in connection
with a book-entry transfer, and any other required documents. Accordingly,
tendering ADT Shareholders may be paid at different times depending upon when
certificates for Shares (and Rights, if applicable) or confirmations of book-
entry transfers of such Shares (and Rights, if applicable) are actually
received by the Exchange Agent.
By executing a Letter of Transmittal as set forth above, the tendering ADT
Shareholder irrevocably appoints designees of Western Resources as such
shareholder's attorneys-in-fact and proxies, each with full power of
substitution, to the full extent of such shareholder's rights with respect to
the Shares (and Rights, if applicable) tendered by such shareholder and
accepted for exchange by Western Resources and with respect to any and all
other Shares (and Rights, if applicable) and other securities issued or
issuable in respect of the Shares (and Rights, if applicable) on or after ,
1997. Such appointment is effective, and voting rights will be affected, when
and only to the extent that Western Resources deposits the shares of Western
Resources Common Stock and Cash Consideration for Shares tendered by such
shareholder with the Exchange Agent. All such proxies shall be considered
coupled with an interest in the tendered Shares and therefore shall not be
revocable. Upon the effectiveness of such appointment, all prior proxies given
by such shareholder will be revoked, and no subsequent proxies may be given
(and, if given, will not be deemed effective). Western Resources' designees
will, with respect to the Shares for which the appointment is effective, be
empowered, among other things, to exercise all voting and other rights of such
shareholder as they, in their sole discretion, deem proper at any annual,
special or
33
adjourned meeting of ADT Shareholders, by written consent in lieu of any such
meeting or otherwise. Western Resources reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon Western
Resources' exchange of such Shares, Western Resources must be able to exercise
full voting rights with respect to such Shares.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Shares (and Rights, if
applicable) will be determined by Western Resources, in its sole discretion,
which determination shall be final and binding. Western Resources reserves the
absolute right to reject any and all tenders of Shares (and Rights, if
applicable) determined by it not to be in proper form or the acceptance of or
exchange for which may, in the opinion of Western Resources' counsel, be
unlawful. Western Resources also reserves the absolute right to waive any of
the conditions of the Offer (other than the Western Resources Shareholder
Approval Condition, the Regulatory Approval Condition and the condition
relating to the effectiveness of the Registration Statement), or any defect or
irregularity in the tender of any Shares (and Rights, if applicable). No
tender of Shares (and Rights, if applicable) will be deemed to have been
validly made until all defects and irregularities in tenders of Shares have
been cured or waived. Neither Western Resources, the Exchange Agent, the
Information Agent, the Dealer Managers nor any other person will be under any
duty to give notification of any defects or irregularities in the tender of
any Shares or will incur any liability for failure to give any such
notification. Western Resources' interpretation of the terms and conditions of
the Offer (including the Letter of Transmittal and instructions thereto) will
be final and binding.
The tender of Shares and Rights (if any) pursuant to any of the procedures
described above will constitute a binding agreement between the tendering ADT
Shareholder and Western Resources upon the terms and subject to the conditions
of the Offer.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax consequences of the
Offer and the Amalgamation. It does not address any tax consequences of the
Offer and the Amalgamation to persons who exercise dissenters' rights, if any,
to the Amalgamation. This summary may not apply to certain classes of persons,
including, without limitation, foreign persons, insurance companies, tax-
exempt organizations, financial institutions, dealers in securities, persons
who acquired Shares pursuant to the exercise of employee stock options or
rights or otherwise as compensation and persons who hold Shares as part of a
straddle or conversion transaction. This summary is based upon laws,
regulations, rulings and decisions, all of which are subject to change
(possibly with retroactive effect), and no ruling has been or will be
requested from the Internal Revenue Service (the "Service") on the tax
consequences of the Offer and the Amalgamation.
The exchange of Shares for Western Resources Common Stock and cash pursuant
to the Offer and Amalgamation will be a taxable transaction for U.S. federal
income tax purposes and may also be taxable under applicable state, local and
foreign tax laws. In general, for U.S. federal income purposes, each ADT
Shareholder will realize gain or loss equal to the difference between (x) the
amount of cash and the fair market value of the shares Western Resources
Common Stock received and (y) the ADT Shareholder's adjusted tax basis in the
Shares exchanged therefor. Such gain or loss will be capital gain or loss if
the ADT Shareholder holds the Shares as a capital asset and will be long-term
gain or loss if the ADT Shareholder's holding period for the Shares is more
than one year. The ADT Shareholder will have a tax basis in the Western
Resources Common Stock received equal to the fair market value thereof and the
shareholder's holding period for the Western Resources Common Stock will begin
on the day following the date of the exchange.
This summary does not address state, local or foreign tax consequences of
the Offer and the Amalgamation. Consequently, each holder should consult such
holder's own tax advisor as to the specific tax consequences of the Offer and
the Amalgamation to such holder.
34
EFFECT OF OFFER ON MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT
The exchange of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and, depending upon the number of Shares so purchased, could adversely affect
the liquidity and market value of the remaining Shares held by the public.
The Shares are listed and principally traded on the NYSE and are also listed
on the LSE, the BSX and the FSE. Depending upon the number of Shares acquired
pursuant to the Offer, following consummation of the Offer, the Shares may no
longer meet the requirements of such exchanges for continued listing. For
example, published guidelines of the NYSE indicate that the NYSE would
consider delisting the outstanding Shares if, among other things, (i) the
number of publicly held Shares (exclusive of holdings of officers, directors
and members of their immediate families and other concentrated holdings of 10%
or more) should fall below 600,000, (ii) the number of record holders of 100
or more Shares should fall below 1,200 or (iii) the aggregate market value of
publicly held Shares should fall below $5 million.
According to ADT's Quarterly Report on Form 10-Q for the period ended
September 30, 1996, there were, as of November 4, 1996, 141,119,159 Shares
outstanding, including 3,182,787 Shares which were owned by a subsidiary of
ADT. According to the ADT 1995 Form 10-K, there were, as of February 29, 1996,
15,519 holders of record of Shares.
If such exchanges were to delist the Shares, the market therefor could be
adversely affected. It is possible that the Shares would be traded on other
securities exchanges or in the over-the-counter market, and that price
quotations would be reported by such exchanges, or through the National
Association of Securities Dealers, Inc., Automated Quotations System
("Nasdaq") or by other sources. The extent of the public market for the Shares
and the availability of such quotations would, however, depend upon the number
of holders and/or the aggregate market value of the Shares remaining at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of Shares under the
Exchange Act, as described below, and other factors.
The Shares are presently "margin securities" under the regulations of the
Federal Reserve Board, which has the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares. Depending on
factors similar to those described above with respect to listing and market
quotations, following consummation of the Offer the Shares may no longer
constitute "margin securities" for the purposes of the Federal Reserve Board's
margin regulations, in which event the Shares would be ineligible as
collateral for margin loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated by ADT upon application to the Commission if
the outstanding Shares are not listed on a national securities exchange and if
there are fewer than 300 holders of record of Shares. Termination of
registration of the Shares under the Exchange Act would reduce the information
required to be furnished by ADT to its shareholders and to the Commission and
would make certain provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b) and the requirement of furnishing
a proxy statement in connection with shareholders' meetings pursuant to
Section 14(a) and the related requirement of furnishing an annual report to
shareholders, no longer applicable with respect to the Shares. Furthermore,
the ability of "affiliates" of ADT and persons holding "restricted securities"
of ADT to dispose of such securities pursuant to Rule 144 under the Securities
Act may be impaired or eliminated. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be eligible for
Nasdaq reporting or for continued inclusion on the Federal Reserve Board's
list of "margin securities."
According to the ADT Form 8-A, the Rights currently are registered under the
Exchange Act and are listed on the NYSE and the LSE, but currently are
attached to the outstanding Shares and are not separately transferable.
35
PURPOSE OF THE OFFER; THE AMALGAMATION
The purpose of the Offer is to enable Western Resources to obtain control of
ADT. Western Resources presently intends, following consummation of the Offer,
to propose and seek to have ADT effect the Amalgamation. In the Amalgamation,
each outstanding Share (other than Shares owned by Western Resources or any of
its affiliates, Shares held in the treasury of ADT (if ADT is so authorized)
or by any subsidiary of ADT and Shares owned by ADT Shareholders who perfect
appraisal rights under Bermuda law) would be cancelled in exchange for the
right to receive the Offer Consideration. Assuming the Minimum Tender
Condition and the Rights Plan Condition are satisfied and Western Resources
consummates the Offer, Western Resources believes it would have sufficient
voting power to effect the Amalgamation without the vote of any other
shareholder of ADT. See "The Amalgamation--Appraisal Rights."
The Amalgamation will be subject to certain conditions, including the
consent of the Minister of Finance. As soon as practicable following the
acceptance of Shares by Western Resources pursuant to the Offer, the newly
elected ADT Board presently intends to cause all necessary actions to be taken
to seek the consent of the Minister of Finance to the Amalgamation. Western
Resources has no reason to believe that the Minister of Finance will not grant
approval for the Amalgamation; however, there can be no assurance that the
Minister of Finance would grant his consent to the Amalgamation. An adverse
decision by the Minister of Finance may not be subject to appeal or review in
any court. Western Resources also presently intends to condition the
Amalgamation upon holders of not more than 5% of the outstanding Shares at the
effective time of the Amalgamation perfecting appraisal rights with respect to
the Amalgamation pursuant to Section 106(6) of the Companies Act. See
"Appraisal Rights."
ADT BYE-LAWS AND PROVISIONS OF THE UNITED KINGDOM CITY CODE
Following their election, the Western Resources Nominees do not currently
intend to serve notice pursuant to Bye-Law 104 or Bye-Law 46 of the ADT Bye-
Laws upon Western Resources or any affiliate of Western Resources who,
following consummation of the Offer, owns 30% or more of the Shares. Thus, in
the event the Western Resources Nominees are elected at the ADT Special
Meeting, Western Resources believes that Bye-Law 104 and Bye-Law 46 should not
apply to Western Resources or its affiliates and the ADT Bye-Law Condition
should, therefore, be satisfied.
Pursuant to Bye-Law 104(1)(A) of the ADT Bye-Laws, where any person is or
becomes "interested" in Shares, whether as a result of one transaction or a
series of transactions, in circumstances in which such person would be
obligated to make an offer to shareholders of ADT or to the holders of every
class of securities convertible into, or of rights to subscribe for, share
capital of ADT under the Rules of the City Code on Take-overs and Mergers of
the United Kingdom of Great Britain and Northern Ireland, as amended (the
"City Code"), the ADT Board may require such person to make an offer under the
City Code as if the City Code applied to ADT but so references in the City
Code to the "Panel" are construed as if they were references to the ADT Board.
Rule 9 of the City Code, as it is applied by the ADT Bye-Laws, provides that,
except with the consent of the ADT Board, when any person (and persons acting
"in concert" with such person) acquires shares which carry 30% or more of the
voting rights of a company, such person must make an offer for all shares of
that class (whether voting or non-voting). The offer must be for cash or offer
a cash alternative, in each case at not less than the highest price paid (in
cash or otherwise) for shares of the same class by the offeror, or anyone
acting in concert with the offeror, during the offer period and within the 12
months prior to commencement of the offer.
Pursuant to Bye-Law 104(3) of the ADT Bye-Laws, where any person is
interested, whether as a result of a series of transactions over a period of
time or not, in 30% or more of the outstanding Shares, the ADT Board may
demand that a cash offer for all of the outstanding voting or non-voting
securities of ADT be made if the ADT Board determines that an offer pursuant
to Bye-Law 104(1)(A) of the ADT Bye-Laws is not expedient or if a person
required to make such an offer fails to do so. Pursuant to Bye-Law 104(4) of
the ADT Bye-Laws, if the ADT Board serves a notice under Bye-Law 104(3) of the
ADT Bye-Laws, the ADT Board may also require that the offeror offer to
purchase securities of ADT convertible into voting or non-voting shares of ADT
on terms
36
considered "fair and reasonable" by the ADT Board in its sole discretion. Such
offer must be made within 30 days of the demand.
Unless the ADT Board otherwise agrees, an offer for each class of ADT
capital stock under Bye-Laws 104(3) and 104(4) of the ADT Bye-Laws must be for
cash or must offer a cash alternative at not less than the highest price paid
by the offeror or any person acting in concert with it for shares of such
class within the preceding 12 months. Such offer must remain open for at least
14 days after the date on which it becomes unconditional as to acceptances
and, in the case of an offer under Bye-Law 104(3), must provide that all
shares will be purchased within 21 days of the offer becoming unconditional in
all respects.
Subject to any rights or restrictions attached to any class of capital stock
of ADT, at any meeting of ADT, a shareholder present in person or by proxy is
entitled, on a poll, to one vote for each share held by such shareholder.
Pursuant to Bye-Law 46 of the ADT Bye-Laws, a ADT Shareholder is not entitled
(except as a proxy for another shareholder) to be present or to vote at any
meeting if such ADT Shareholder received a notice under Bye-Law 104 of the ADT
Bye-Laws stating that upon failure to make an offer pursuant to Bye-Law 104
before a period of not less than 28 days from the date of service of such
notice the ADT Shareholder would not be entitled to vote and the shareholder
upon whom such notice was served (i) fails to make such an offer within the
period so specified, or (ii) having made such an offer or acquired shares of
ADT in contravention of a notice served under Bye-Law 104 of the ADT Bye-Laws,
fails to remedy such noncompliance.
If elected, the Western Resources Nominees intend to take all actions
necessary and desirable to facilitate consummation of the Offer and the
Amalgamation, including, among other things, not invoking the provisions of
Bye-Law 104 or Bye-Law 46 of the ADT Bye-Laws in connection with the
acquisition of Shares by Western Resources pursuant to the Offer or otherwise.
The foregoing does not purport to be a complete description of Bye-Law 104
or Bye-Law 46 of the ADT Bye-Laws. ADT Shareholders are urged to, and should,
read Bye-Law 104 and Bye-Law 46 of the ADT Bye-Laws, copies of which are
included herein as Schedules C and D, respectively.
CONDITIONS OF THE OFFER
Minimum Tender Condition. The Offer is conditioned upon, among other things,
there being validly tendered and not withdrawn prior to the Expiration Date a
number of Shares which, together with Shares owned by Western Resources and
its affiliates, will constitute at least a majority of the total number of
outstanding Shares on a fully diluted basis (as though all options or other
securities convertible into or exercisable or exchangeable for Shares had been
so converted, exercised or exchanged) as of the date the Shares are accepted
for exchange by Western Resources pursuant to the Offer. Based upon
information set forth in ADT's Quarterly Report on Form 10-Q for the period
ended September 30, 1996, as of November 4, 1996, there were 141,119,159
Shares outstanding, including 3,182,787 Shares which were owned by a
subsidiary of ADT. Approximately 181,605,215 Shares are expected to be
outstanding immediately prior to the consummation of the Offer. Westar Capital
owns 38,287,111 Shares, or approximately 27% of the outstanding Shares,
including 14,115 Shares issuable upon exchange of 500 LYONS, which are
exchangeable for Shares at a rate of 28.23 Share per LYON. Based on the
foregoing, Western Resources believes that the Minimum Tender Condition would
be satisfied if at least an aggregate of 52,515,497 Shares (or 28.9%) of the
Shares expected to be outstanding immediately prior to the consummation of the
Offer) had been validly tendered pursuant to the Offer and not withdrawn.
Western Resources reserves the right (but shall not be obligated), subject to
the rules and regulations of the Commission, to waive or amend the Minimum
Tender Condition and to exchange fewer than such number of Shares as would
satisfy the Minimum Tender Condition pursuant to the Offer; provided, however,
that, in the event of such waiver or amendment, the Offer shall expire no
sooner than ten business days from the date of such waiver or amendment.
Western Resources Shareholder Approval Condition. The Offer is conditioned,
among other things, upon the satisfaction of the Western Resources Shareholder
Approval Condition. Pursuant to the rules of the NYSE
37
(on which the Western Resources Common Stock is listed), the issuance of
Western Resources Common Stock pursuant to the Offer and the Amalgamation must
be approved by the holders of a majority of the shares of Western Resources
Common Stock and Western Resources Preferred Stock ("Western Resources Voting
Stock"), voting as a single class, voted at a meeting of such holders at which
the total number of votes cast represents over 50% in interest of all shares of
Western Resources Voting Stock outstanding on the applicable record date. In
addition, pursuant to the Western Resources Articles, approval of the holders
of a majority of the shares of Western Resources Voting Stock, voting as a
single class, is required to amend the Western Resources Articles to increase
the number of shares of Western Resources Common Stock authorized for issuance
taking into account the terms of the Offer. Western Resources intends to seek
such approvals at the Western Resources Special Meeting to be held on February
11, 1997, at a.m., at , Topeka, Kansas.
ADT Shareholder Approval Condition. The Offer is conditioned upon, among
other things, the satisfaction of the ADT Shareholder Approval Condition. As
more fully set forth in the Western Resources Proxy Statement, on December 18,
1996, Westar Capital deposited the Requisition with ADT, pursuant to Section 74
of the Companies Act and Bye-Law 42 of the ADT Bye-Laws, requiring the ADT
Board to convene the ADT Special Meeting so that ADT Shareholders will have the
opportunity to vote on the Western Resources Proposals and thereby satisfy the
ADT Shareholder Approval Condition. Under the Companies Act and the ADT Bye-
Laws, the ADT Board is required to convene the ADT Special Meeting. In the
event that the ADT Board does not within twenty-one days from the date of the
deposit of the Requisition convene the ADT Special Meeting, Westar Capital may
itself convene the ADT Special Meeting. Westar Capital has requested that the
date of the ADT Special Meeting be February 18, 1997; however, as of the date
of this Preliminary Prospectus, the date, time and place for the ADT Special
Meeting have not been determined and there can be no assurance that the ADT
Special Meeting will be convened on such date. See "The ADT Special Meeting."
At the ADT Special Meeting, ADT Shareholders will vote on each of the Western
Resources Proposals, as more fully described herein. See "The ADT Special
Meeting." Only persons entered in the register of members of ADT as holders of
Shares at the time of the ADT Special Meeting will be entitled to vote at such
meeting unless the ADT Board sets a record date for the ADT Special Meeting. In
the event the ADT Board sets a record date for the ADT Special Meeting, only
holders of Shares at the close of business on such record date will be entitled
to vote at the ADT Special Meeting. Each Share is entitled to one vote upon
each matter presented at the ADT Special Meeting. Holders of ADT Preferred
Stock, if any, are not entitled to vote on any of the Western Resources
Proposals. Pursuant to Bye-Law 43 of the ADT Bye-Laws, at any general meeting
of ADT not less than two holders of Shares present either in person or by proxy
constitutes a quorum for the transaction of business. Each of the Western
Resources Proposals may be approved by the affirmative vote of a majority of
Shares voted at the ADT Special Meeting.
Rights Plan Condition. The Rights Plan Condition may be satisfied in a number
of ways, including the following: (i) the current ADT Board may redeem the
Rights or amend the Rights Agreement so that the Rights would not be triggered
by the Offer and the Amalgamation, (ii) following the satisfaction of the ADT
Shareholder Approval Condition, the newly elected ADT Board may, subject to its
fiduciary obligations, take such actions as may be necessary with respect to
the Rights so that they would not be triggered by the Offer and the
Amalgamation, or (iii) Western Resources may be successful in its litigation
seeking, among other things, the invalidation of the Rights or an injunction
requiring the ADT Board to redeem the Rights. See "Prospectus Summary--
Litigation" and "Litigation."
Set forth below is certain additional information concerning the Rights.
Rights Agreement
On November 4, 1996, the ADT Board declared a dividend of one Series A First
Preference Share Purchase Right for each Share in issue at the close of
business on November 15, 1996 and the issuance of one Right with respect to
each Share issued after such date but prior to the Distribution Date (as
defined below).
38
The terms of the Rights are set forth in the Rights Agreement. The following
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement which is further described
and filed as an exhibit to the ADT Form 8-A.
After the Distribution Date, each Right entitles the holder thereof to
purchase from ADT one hundredth of a Series A First Preference Share at a
price of $90 (the "Purchase Price"), subject to adjustment for dilution. The
Rights are not exercisable and will not separate from the Shares until the
distribution date (the "Distribution Date") which occurs on the earlier to
occur of (i) the close of business on the tenth day (or such later date as may
be designated by a majority of the Continuing Directors (as defined below))
following the date of the first public announcement that a person (other than
certain persons described below) has become the beneficial owner of 15% or
more of the Shares then issued and outstanding (an "Acquiring Person") (such
date of public announcement being a "Share Acquisition Date") or (ii) the
close of business on the tenth business day (or such later date as may be
designated by a majority of the Continuing Directors) following the
commencement of a tender or exchange offer which would result in the person
making the tender or exchange offer becoming an Acquiring Person. None of ADT,
a subsidiary of ADT, an employee benefit plan of ADT or of any of its
subsidiaries or any person organized, appointed or established by ADT or any
of its subsidiaries for or pursuant to such a plan may be considered an
Acquiring Person. In addition, a person (together with its affiliates and
associates) (a "Grandfathered Person") owning 15% or more of the issued and
outstanding Shares (such person's share percentage being a "Grandfathered
Percentage") is not an Acquiring Person if such person acquired its Shares
prior to 5:00 p.m., Eastern time, on November 4, 1996, provided that such
Grandfathered Person will become an Acquiring Person if its Grandfathered
Percentage increases. Under this formulation, each of Western Resources and
Westar Capital is a "Grandfathered Person."
A "Continuing Director" is defined under the Rights Agreement to be any
member of the ADT Board who, while such person is a member of the ADT Board,
is not an Acquiring Person (or an affiliate or associate thereof) or a
representative or nominee of an Acquiring Person or of any such affiliate or
associate and either (i) was a member of the ADT Board immediately prior to
the time any person becomes an Acquiring Person or (ii) subsequently becomes a
member of the ADT Board, if such person's nomination for election or election
to the ADT Board is recommended or approved by a majority of the Continuing
Directors.
After any person becomes an Acquiring Person, each Right (other than Rights
beneficially owned by an Acquiring Person and its affiliates and associates,
or transferees thereof) will entitle the holder thereof to purchase for the
Purchase Price, Shares having a market value equal to twice the Purchase
Price.
In the event that, after a Share Acquisition Date, (i) ADT consolidates,
amalgamates, or otherwise combines with any other person and ADT is either not
the continuing or surviving corporation or the Shares are changed or exchanged
or (ii) ADT or one of its subsidiaries sell, or otherwise transfer, assets or
earning power aggregating more than 50% of the assets or earning power of ADT
and its subsidiaries taken as a whole, each Right will entitle the holder
thereof to purchase, for the Purchase Price, a number of shares of common
stock of the other party to such business combination or sale having a market
value equal to twice the Purchase Price.
The Rights may be redeemed at a redemption price of $.01 per Right at any
time prior to the earlier of (i) the close of business on the tenth day
following the Share Acquisition Date (or such later date as a majority of the
Continuing Directors may designate prior to such time as the Rights are no
longer redeemable) and (ii) November 14, 2005. If the Rights are to be
redeemed on or after the Share Acquisition Date or after there has been a
change in the majority of the directors on the ADT Board as a result of a
proxy or consent solicitation and a participant in such solicitation has
stated that such person intends to take, or may consider taking, any action
which would result in such person becoming an Acquiring Person or would result
in the occurrence of any of the events specified in the immediately preceding
paragraph, a majority of the Continuing Directors will be required to
authorize such redemption.
The Rights Agreement may be amended in any respect prior to the Distribution
Date. After the Distribution Date, the Rights Agreement may be amended in
certain respects, if such amendments would not adversely affect
39
the interest of the holders of Rights (other than the Acquiring Person and any
of its affiliates or associates). After an Acquiring Person has become such,
to be effective, any amendment must be approved by a majority of the
Continuing Directors.
Unless previously redeemed in accordance with terms of its Agreement, the
Rights will expire on November 14, 2005.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group of persons that attempts to acquire
ADT in a manner which causes the Rights to become exercisable.
ADT Bye-Law Condition. The Offer is conditioned upon Western Resources and
Westar Capital being satisfied, in their sole discretion, that the provisions
of Bye-Law 104 and Bye-Law 46 of the ADT Bye-Laws do not and will not apply to
Western Resources, Westar Capital or the acquisition of Shares pursuant to the
Offer so as (a) to require Western Resources or Westar Capital to comply with
the provisions of Bye-Law 104 of the ADT Bye-Laws or (b) to prevent Western
Resources, Westar Capital or any of their affiliates from voting Shares owned
by any of them at any time. The ADT Bye-Law Condition will be satisfied
following the election of the Western Resources Nominees at the ADT Special
Meeting, as the newly elected ADT Board (subject to their fiduciary duties
under Bermuda law) do not currently intend to serve notice pursuant to Bye-Law
104 or Bye-Law 46 of the ADT Bye-Laws upon Western Resources or any affiliate
of Western Resources who becomes interested, following consummation of the
Offer, in 30% or more of the Shares. Thus, in the event the Western Resources
Nominees are elected at the ADT Special Meeting, Western Resources believes
that Bye-Law 104 and Bye-Law 46 of the ADT Bye-Laws should not apply to
Western Resources or its affiliates and the ADT Bye-Law Condition should be
satisfied.
For a description of Bye-Law 104 and Bye-Law 46, see "The ADT Special
Meeting--ADT Bye-Laws and City Code Provisions" and "Comparison of the Rights
of Holders of Shares and Western Resources Common Stock." ADT Shareholders are
urged to, and should, read Bye-Law 104 and Bye-Law 46, copies of which are
included herein as Schedules C and D, respectively.
Republic Warrant Condition. The Offer is conditioned upon, among other
things, the receipt by Westar Capital of a final judgment from a court of
competent jurisdiction declaring the Republic Warrant invalid or the
expiration of the Republic Warrant prior to the Expiration Date without having
been exercised. On December 18, 1996, Western Resources announced that Westar
Capital had commenced litigation in the United States District Court for the
Southern District of Florida charging ADT and the ADT Board with breaches of
their fiduciary duties to ADT and the ADT Shareholders. Specifically, the
complaint alleges, among other things, that the ADT Board breached its
fiduciary duty to ADT and the ADT Shareholders when it granted the Republic
Warrant without receiving adequate consideration from Republic. Republic is
also joined in the lawsuit.
Regulatory Approval Condition. The Offer is conditioned upon, among other
things, all regulatory approvals required to consummate the Offer (the
"Requisite Regulatory Approvals") having been obtained and remaining in full
force and effect, all statutory waiting periods in respect thereof having
expired and no such approval containing any conditions or restrictions which
the Western Resources Board determines will or reasonably could be expected to
materially impair the strategic and financial benefits expected to result from
the Offer. Western Resources will use its reasonable best efforts to obtain
the Requisite Regulatory Approvals. As described below, applications and
notices seeking the Requisite Regulatory Approvals have been or will be
promptly filed. The Offer cannot proceed in the absence of the Requisite
Regulatory Approvals. Although no assurances can be given, Western Resources
anticipates that it will receive all regulatory approvals on a timely basis.
Antitrust. Under the HSR Act, and the Rules that have been promulgated
thereunder, certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division and the FTC
and certain waiting period requirements have been satisfied. The acquisition
of Shares by Western Resources pursuant to the Offer is subject to the HSR
Act.
40
Western Resources currently has approval under the HSR Act to acquire up to
50% of the outstanding Shares. Western Resources intends to file with the
Antitrust Division and the FTC a Hart-Scott-Rodino Notification and Report Form
with respect to the Offer to acquire over 50% of the Shares. Under the
applicable provisions of the HSR Act, the purchase of Shares pursuant to the
Offer could not be consummated until the expiration of a 30-day waiting period
following the filing of such Form by Western Resources.
Federal and state antitrust enforcement agencies frequently scrutinize under
the antitrust laws transactions such as Western Resources' acquisition of
Shares pursuant to the Offer. At any time before or after Western Resources'
acquisition of Shares, any such agency could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the acquisition of Shares pursuant to the Offer or
otherwise or seeking divestiture of Shares acquired by Western Resources or
divestiture of substantial assets of Western Resources and/or ADT. Private
parties may also bring legal action under the antitrust laws under certain
circumstances.
Based upon an examination of publicly available information relating to the
businesses in which both Western Resources and ADT are engaged, Western
Resources believes that the Offer will not violate the antitrust laws.
Nevertheless, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or that, if such a challenge is made,
Western Resources will prevail.
The State Corporation Commission of the State of Kansas (the KCC). Western
Resources is subject, as an operating electric and natural gas utility, to the
jurisdiction of the KCC with respect to the issuance of certain securities and
indebtedness. An application for approval, or waiver of approval, of the
issuance of Western Resources Common Stock and debt in connection with the
Offer, has been or will be filed with the KCC.
The Antitrust Division, the FTC and the KCC are referred to herein as the
"Regulatory Commissions."
General. Except as set forth above, based upon an examination of publicly
available information filed by ADT with the Commission and other publicly
available information with respect to ADT, Western Resources is not aware of
(a) any license or regulatory permit which appears to be material to the
business of ADT and its subsidiaries, taken as a whole, and which is likely to
be adversely affected by Western Resources' acquisition of Shares pursuant to
the Offer or (b) any approval or other action by any state, federal or foreign
governmental administrative or regulatory agency or authority that would be
required prior to the acquisition of Shares pursuant to the Offer. Western
Resources presently intends to take such actions with respect to any approvals
as will enable it to consummate the Offer. In this regard, Western Resources
expressly reserves the right to challenge the validity and applicability of any
state, foreign or other statutes or regulations purporting to require approval
of the consummation of the Offer.
There can be no assurance that any license, permit, approval or other action,
if needed, would be obtained, or would be obtained without substantial
conditions, or, if so obtained, when it would be obtained, or that adverse
consequences might not result to ADT, Western Resources or to their respective
businesses in the event of adverse regulatory action or inaction.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, WESTERN RESOURCES HAVING
RECEIVED ALL NECESSARY OR DESIRABLE GOVERNMENTAL AND REGULATORY APPROVALS AND
CONSENTS FOR THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE OTHER
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING APPROVALS AND CONSENTS FROM THE
REGULATORY COMMISSIONS AND SUCH APPROVALS AND CONSENTS HAVING BECOME FINAL
ORDERS AND SUCH FINAL ORDERS NOT HAVING IMPOSED TERMS OR CONDITIONS WHICH, IN
THE AGGREGATE, WOULD HAVE OR, INSOFAR AS REASONABLY CAN BE FORESEEN, COULD HAVE
A MATERIAL ADVERSE EFFECT ON THE BUSINESS, ASSETS, FINANCIAL CONDITION, OR
RESULTS OF OPERATIONS OF WESTERN RESOURCES, ADT AND THEIR RESPECTIVE
SUBSIDIARIES TAKEN AS A WHOLE.
Certain Other Conditions of the Offer. Notwithstanding any other provision of
the Offer and subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to Western
Resources' obligation to exchange or return tendered Shares promptly after the
termination or withdrawal of the Offer), Western Resources shall not be
required to accept for exchange or exchange any
41
Shares, may postpone the acceptance for exchange or exchange for tendered
Shares and may, in its sole discretion, terminate or amend the Offer as to any
Shares not then exchanged if at the Expiration Date any of the Offer Conditions
have not been satisfied or waived or if on or after the date of this
Preliminary Prospectus and at or prior to the time of exchange of any such
Shares (whether or not any Shares have theretofore been accepted for exchange
or exchanged pursuant to the Offer), any of the following events shall not have
occurred:
(a) The shares of Western Resources Common Stock which shall be issued to
the ADT Shareholders in the Offer and the Amalgamation shall have been
authorized for listing on the NYSE, subject to official notice of issuance.
(b) The Registration Statement shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission.
(c) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Offer and/or the Amalgamation or any of the other
transactions contemplated by this Preliminary Prospectus shall be in
effect. No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any court,
administrative agency or commission or other governmental authority or
instrumentality which prohibits, restricts or makes illegal the
consummation of the Offer and/or the Amalgamation.
(d) All required material governmental authorizations, permits, consents,
orders or approvals which do not impose terms or conditions that could
reasonably be expected to have a material adverse effect on Western
Resources and/or ADT have been received.
(e) There shall not have occurred or been threatened (i) any general
suspension of trading in, or limitation on times or prices for, securities
on any national securities exchange or in the over-the-counter market in
the United States, (ii) any significant adverse change in interest rates,
the financial markets or major stock exchange indices in the United States
or abroad or in the market price of Shares, including, without limitation,
a decline of at least 10% in either the Dow Jones Average of Industrial
Stocks or the Standard & Poor's 500 Index from that existing at the close
of business on , 1996, (iii) any change in the general political,
market, economic, regulatory or financial conditions in the United States
or abroad that could, in the sole judgment of Western Resources, have a
material adverse effect upon the business, properties, assets, liabilities,
capitalization, stockholders' equity, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of
ADT or any of its subsidiaries or the trading in, or value of, the Shares,
(iv) any material change in United States currency exchange rates or any
other currency exchange rates or a suspension of, or limitation on, the
markets therefor, (v) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (vi) any
limitation (whether or not mandatory) by any government, domestic, foreign
or supranational, or governmental entity on, or other event that, in the
sole judgment of Western Resources, might affect, the extension of credit
by banks or other lending institutions, (vii) a commencement of a war or
armed hostilities or other national or international calamity directly or
indirectly involving the United States or (viii) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof.
(f) Western Resources shall be satisfied, in its sole discretion, that
consummation of the Offer and the Amalgamation will not adversely effect
Western Resources' status as an exempt holding company under the Public
Utility Holding Company Act of 1935.
The foregoing conditions are for the sole benefit of Western Resources and
may be asserted by Western Resources regardless of the circumstances giving
rise to any such conditions (including any action or inaction by Western
Resources) or may be waived by Western Resources in whole or in part (other
than the Western Resources Shareholder Approval Condition, the Regulatory
Approval Condition and the condition relating to effectiveness of the
Registration Statement). Although Western Resources reserves the right to do
so, Western Resources does not currently intend to waive any Offer Condition
unless it determines that doing so would not prevent it from consummating the
Amalgamation promptly after consummating the Offer. The determination as to
whether any condition has been satisfied shall be in the sole judgment of
Western Resources and will be final
42
and binding on all parties. The failure by Western Resources at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed a continuing right which may be
asserted at any time and from time to time. Notwithstanding the fact that
Western Resources reserves the right to assert the failure of a condition
following acceptance for exchange but prior to exchange in order to delay
exchange or cancel its obligation to exchange properly tendered Shares,
Western Resources will either promptly exchange such Shares or promptly return
such Shares.
SOURCE AND AMOUNT OF FUNDS
Western Resources estimates that the total amount of funds required pursuant
to the Offer to purchase for the Cash Consideration the number of Shares
outstanding on a fully diluted basis and to pay fees and expenses related to
the Offer will be approximately $900 million. See "The Offer--Fees and
Expenses." Western Resources plans to obtain the funds necessary to finance
the Cash Consideration pursuant to credit facilities to be arranged by an
affiliate of The Chase Manhattan Bank ("Chase Manhattan Bank"). Western
Resources has received a letter from Chase Manhattan Bank and such affiliate
in which they state that they are highly confident that they can arrange
credit facilities in the amount necessary to fund payment of the Cash
Consideration with Chase Manhattan Bank and other lenders. Their view is
based, among other things, upon their review of the terms of the Offer, their
understanding of Western Resources and public information regarding ADT, and
current conditions in the banking and syndicated loan markets.
Election of the Western Resources Nominees and consummation of the Offer
may, among other things, (i) result in acceleration of credit facilities
currently available to ADT Operations, Inc., a subsidiary of ADT ("ADT
Operations"), (ii) enable the holders of certain debt instruments of ADT
Operations to require the repurchase of their securities, and (iii) accelerate
the date on which certain options outstanding under ADT's stock option plans
become exercisable. Although Western Resources and Westar Capital do not
believe that these events would materially and adversely impact the financial
condition of ADT, the actual impact of such events cannot be presently
ascertained and will depend, among other things, on interest rates and future
conditions in the credit markets.
RELATIONSHIPS WITH ADT
Except as set forth herein under the captions "Prospectus Summary--
Background of the Offer" and "Background of the Offer," neither Western
Resources nor, to the best of its knowledge, any of the persons listed on
Schedule A hereto nor any associate or majority-owned subsidiary of any of the
foregoing, beneficially owns or has a right to acquire any equity securities
of ADT. Except as set forth herein, neither Western Resources nor to the best
of its knowledge, any of the persons or entities referred to above, nor any
director, executive officer or subsidiary of any of the foregoing, has
effected any transaction in such equity securities during the last 60 days.
Except as described herein, neither Western Resources nor, to the best of
its knowledge, any of the persons listed on Schedule A hereto has any
contract, arrangement, understanding or relationship with any other person
with respect to any securities of ADT, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer
or the voting of any such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or
the giving or withholding of proxies. Except as described herein, there have
been no contacts, negotiations or transactions, between Western Resources or,
to the best of its knowledge, any of the persons listed on Schedule A hereto,
on the one hand, and ADT or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors, or a sale or other transfer of a
material amount of assets. Neither Western Resources, nor, to the best of its
knowledge, any of the persons listed on Schedule A hereto, has had any
transaction with ADT or any of its executive officers, directors or affiliates
that would require disclosure under the rules and regulations of the
Commission applicable to the Offer.
FEES AND EXPENSES
Western Resources has retained [ ]("[ ]") to act as Information Agent in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph and personal
43
interviews and may request brokers, dealers and other nominee shareholders to
forward the Offer materials to beneficial owners of Shares. The Information
Agent will be paid a customary fee of [$ ] for such services, plus
reimbursement of out-of-pocket expenses, and Western Resources will indemnify
the Information Agent against certain liabilities and expenses in connection
with the Offer, including liabilities under federal securities laws.
Salomon is acting as financial advisor to Western Resources in connection
with its effort to acquire ADT, for which services, and for assistance
rendered by Salomon in connection with prior purchases of Shares by Westar
Capital, Western Resources has agreed to pay Salomon aggregate fees up to a
maximum of $5 million (a substantial portion of which is contingent upon the
consummation of an acquisition of 50% or more of the Shares of ADT or upon
consummation of the Amalgamation).
Bear Stearns is acting as financial advisor to Western Resources in
connection with its effort to acquire ADT, for which services, and for
assistance rendered by Bear Stearns in connection with prior purchases of
Shares by Westar Capital, Western Resources has agreed to pay Bear Stearns
aggregate fees up to a maximum of $4.3 million (a substantial portion of which
is contingent upon the consummation of an acquisition of 50% or more of the
Shares of ADT or upon consummation of the Amalgamation).
Chase is acting as financial advisor to Western Resources in connection with
its effort to acquire ADT, for which services Western Resources has agreed to
pay Chase aggregate fees up to a maximum of $1.5 million (a substantial
portion of which is contingent upon the consummation of an acquisition of 50%
or more of the Shares of ADT or upon consummation of the Amalgamation).
In addition to the compensation set forth above, Western Resources has
agreed to reimburse each of the Dealer Managers for its reasonable travel and
other out-of-pocket expenses. Western Resources has also agreed to reimburse
each of the Financial Advisors for necessary and reasonable attorney's fees
incurred in connection with its engagement, and has agreed to indemnify each
of Salomon, Bear Stearns, Chase and certain related persons and entities
against certain liabilities and expenses in connection with each Dealer
Manager's engagement, including certain liabilities under the federal
securities laws. In connection with each of Salomon's, Bear Stearns' and
Chase's engagement as financial advisor, Western Resources anticipates that
certain employees of Salomon, Bear Stearns and Chase may communicate in
person, by telephone or otherwise with a limited number of institutions,
brokers or other persons who are ADT Shareholders for the purpose of assisting
in the Proxy Solicitation. Neither Salomon, Bear Stearns or Chase will receive
any fee for or in connection with such solicitation activities by its
employees apart from the fees it is otherwise entitled to receive as described
above.
In addition to the fees to be received by each of Salomon, Bear Stearns and
Chase in connection with its engagement as financial advisor to Western
Resources, each of Salomon, Bear Stearns and Chase has in the past rendered
various investment banking and financial advisory services for Western
Resources for which each has received customary compensation.
Western Resources will pay the Exchange Agent reasonable and customary
compensation for its services in connection with the Offer, plus reimbursement
for out-of-pocket expenses, and will indemnify the Exchange Agent against
certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws. Western Resources will not pay
any fees or commissions to any broker or dealer or other person (other than
the Dealer Managers and the Information Agent) for soliciting tenders of
Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust
companies will be reimbursed by Western Resources for customary mailing and
handling expenses incurred by them in forwarding material to their customers.
44
ACCOUNTING TREATMENT
Western Resources will account for the acquisition of Shares pursuant to the
Offer and the Amalgamation using the purchase method of accounting.
Accordingly, the purchase price will be allocated to assets acquired and
liabilities assumed based on their estimated fair values at the acquisition
date. ADT's financial position and results of operations will not be included
in Western Resources' consolidated accounts prior to the consummation date of
the Amalgamation.
STOCK EXCHANGE LISTING
The Western Resources Common Stock is listed on the NYSE. Application will
be made to list the Western Resources Common Stock to be issued pursuant to
the Offer and the Amalgamation on the NYSE. As described above under "The
Offer--Conditions of the Offer--Western Resources Shareholder Approval
Condition," pursuant to the rules of the NYSE, the issuance of Western
Resources Common Stock in the Offer and the Amalgamation must be approved by
the holders of a majority of the shares of Western Resources Voting Stock,
voting as a single class, voted at a meeting of such holders at which the
total number of votes cast represents over 50% in interest of all shares of
Western Resources Voting Stock outstanding on the applicable record date.
45
THE AMALGAMATION
GENERAL
If the Western Resources Offer is consummated following the ADT Special
Meeting, then it is also presently intended that the newly elected ADT Board
will, in accordance with its fiduciary duties, (i) propose an amendment to the
ADT Bye-Laws providing that an amalgamation of ADT may be approved by the
affirmative vote of a simple majority of those Shares voted at a general
meeting of ADT, (ii) propose and approve the Amalgamation Agreement, containing
customary terms and conditions, pursuant to which a newly created subsidiary of
Western Resources incorporated under the laws of Bermuda will amalgamate with
and into ADT, with the amalgamated company operating under the name of ADT, and
ADT Shareholders (other than Western Resources and ADT and their respective
affiliates and ADT Shareholders who perfect appraisal rights under Bermuda law)
will receive the Offer Consideration in exchange for the cancellation of each
Share, and (iii) take all other actions as may be necessary to effect the
Amalgamation. See "--Appraisal Rights."
Pursuant to the Companies Act, each of the Bye-Law Amendment and the
Amalgamation Agreement require the approval of ADT Shareholders in order to
take effect. Under Section 77(2) of the Companies Act, approval of the Bye-Law
Amendment requires the affirmative vote of a majority of votes cast at a
general meeting of ADT. Section 106(4A) of the Companies Act provides in part
that, unless a company's bye-laws specifically provide otherwise, an
amalgamation of a Bermuda company must be approved by a majority vote of three-
fourths of those shareholders voting at a duly called meeting. The ADT Bye-Laws
do not currently specify the vote required to approve an amalgamation.
Therefore, upon the adoption of the Bye-Law Amendment, approval of the
Amalgamation Agreement will also require the affirmative vote of a majority of
votes cast at a general meeting of ADT (including Shares owned by Western
Resources or its affiliates).
If the Offer is consummated, Western Resources and its affiliates will own a
majority of the outstanding Shares. Accordingly, Western Resources and its
affiliates will at such time have sufficient voting power in ADT to approve the
Bye-Law Amendment and the Amalgamation Agreement independently of the votes of
any other ADT Shareholders, and Western Resources presently intends to vote any
and all Shares then owned by Western Resources and its affiliates to approve
such proposals.
The Amalgamation will be subject to certain conditions, including the consent
of the Minister of Finance. As soon as practicable following the acceptance of
Shares by Western Resources pursuant to the Offer, the newly elected ADT Board
presently intends to cause all necessary actions to be taken to seek the
consent of the Minister of Finance to the Amalgamation. Western Resources has
no reason to believe that the Minister of Finance will not grant approval for
the Amalgamation; however, there can be no assurance that the Minister of
Finance would grant his consent to the Amalgamation. An adverse decision by the
Minister of Finance may not be subject to appeal or review in any court.
Western Resources also presently intends to condition the Amalgamation upon
holders of not more than 5% of the outstanding Shares at the effective time of
the Amalgamation perfecting appraisal rights with respect to the Amalgamation
pursuant to Section 106(6) of the Companies Act. See "--Appraisal Rights."
Rule 13e-3 of the General Rules and Regulations under the Exchange Act, which
Western Resources does not believe would be applicable to the Amalgamation as
long as the Amalgamation occurred within one year of consummation of the Offer,
would require, among other things, that certain financial information
concerning ADT, and certain information relating to the fairness of the
proposed transaction and the consideration offered to ADT Shareholders therein,
be filed with the Commission and disclosed to ADT Shareholders prior to
consummation of the Amalgamation.
In addition, Western Resources reserves the right to acquire, following the
consummation or termination of the Offer, additional Shares through open-market
purchases, privately negotiated transactions, a tender offer or exchange offer,
or otherwise, upon such terms and at such prices as it shall determine, which
may be more or less favorable than those of the Offer. Western Resources and
its affiliates also reserve the right to dispose of
46
any or all Shares acquired by them pursuant to the Offer or otherwise, upon
such terms and at such prices as they shall determine.
In connection with the Offer, Western Resources has reviewed, and will
continue to review, on the basis of available information, various possible
business strategies that it might consider in the event that it acquires all
or substantially all of the common equity interest in ADT. Western Resources
also intends to conduct a detailed review of ADT and its assets, corporate
structure, capitalization, operations, properties, policies, management and
personnel and consider which changes, if any, would be desirable in light of
the circumstances which then exist. Such strategies could include, among other
things, changes in ADT's business, corporate structure, Memorandum of
Association, Bye-Laws, capitalization, the ADT Board or management, and
consideration of disposition of certain assets or lines of business of ADT.
Except as noted herein, Western Resources does not have any present plans or
proposals that would result in an extraordinary corporate transaction, such as
a merger, reorganization or liquidation, or sale or transfer of a material
amount of assets, involving ADT or any of its subsidiaries, or any material
changes in ADT's corporate structure or business. However, because Western
Resources has not had access to ADT's books and records, additional changes
may be made after a full review of ADT's operations is completed.
APPRAISAL RIGHTS
ADT Shareholders do not have appraisal rights with respect to the Offer.
However, pursuant to Section 106(6) of the Companies Act, a registered
holder of Shares who does not vote in favor of the Amalgamation, if it is
proposed and submitted to a vote of ADT Shareholders, and who is not satisfied
that he or she has been offered fair value for his or her Shares may, within
one month of the giving of the notice of the meeting of ADT Shareholders,
apply to the Court to have the fair value of such Shares appraised by the
Court.
A beneficial owner of Shares who is not the registered holder may not assert
appraisal rights. If the stock is owned in a fiduciary capacity, such as by a
trustee, guardian or custodian, or by a nominee, the notice asserting
appraisal rights must be executed by the fiduciary or nominee as the
registered holder of the Shares. If the Shares are owned of record by more
than one person, as in a joint tenancy or tenancy in common, the notice must
be executed by all joint owners. An authorized agent, including an agent for
two or more joint owners, may execute the notice for a registered shareholder;
however, the agent must identify the registered holder, disclose the fact
that, in executing the notice, he is acting as agent for the registered holder
and provide evidence of his authority.
The right of a dissenting shareholder to be paid the fair value of his or
her Shares shall cease if the shareholder fails to comply with the procedures
set forth in Section 106(6) of the Companies Act, or if the Amalgamation is
abandoned for any reason.
Western Resources presently intends to condition the Amalgamation upon,
among other things, holders of not more than 5% of the outstanding Shares
perfecting appraisal rights with respect to the Amalgamation.
The foregoing does not purport to be a complete statement of the procedures
to be followed by ADT Shareholders desiring to exercise dissenters' rights
and, in view of the fact that exercise of such rights requires adherence to
the relevant provisions of the Companies Act, shareholders who desire to
exercise appraisal rights are advised to review with care all applicable
provisions of law and to obtain legal counsel in Bermuda concerning proper
compliance with applicable provisions of the Companies Act. ADT Shareholders
are urged to, and should, read Section 106 of the Companies Act, a copy of
which is included herein as Schedule E.
47
WESTERN RESOURCES' OFFER FOR KCPL
On July 8, 1996, Western Resources commenced the KCPL Offer to exchange
shares of Western Resources Common Stock for each outstanding share of KCPL
Common Stock. The purpose of the KCPL Offer is to obtain control of, and
ultimately exchange the entire common equity interest in, KCPL. Western
Resources intends, as soon as practicable after consummation of the KCPL
Offer, to seek to effect the KCPL Merger, pursuant to which KCPL will be
merged with and into ADT. Pursuant to the exchange ratio in the KCPL Offer,
KCPL Shareholders would receive $31.00 of Western Resources Common Stock in
exchange for each share of KCPL Common Stock subject to a maximum of 1.100 and
a minimum of 0.933 shares of Western Resources Common Stock for each share of
KCPL Common Stock. According to KCPL's Quarterly Report on Form 10-Q for the
period ended September 30, 1996, as of November 5, 1996, there were 61,904,744
shares of KCPL Common Stock outstanding. Based on the number of shares of KCPL
Common Stock outstanding on November 5, 1996, if the KCPL Offer and KCPL
Merger were consummated, KCPL shareholders would receive approximately
61,409,506 shares of Western Resources Common Stock, representing
approximately 31.5% of the total Western Resources Common Stock (assuming that
the Offer and the Amalgamation had previously been completed). Western
Resources reserves the right, in its sole discretion, at any time or from time
to time to amend or terminate the KCPL Offer in accordance with its terms.
On November 15, 1996, representatives of Western Resources' and KCPL's
respective boards and managements met and had a cordial discussion regarding
the proposed KCPL Merger. On November 25, 1996, representatives of Western
Resources' and KCPL's respective boards and managements met again and
continued their discussions.
As of December 13, 1996, the most recently scheduled expiration date for the
KCPL Offer, approximately 29.6 million shares of KCPL Common Stock or 48% of
the outstanding shares of KCPL Common Stock, had been tendered to Western
Resources pursuant to the KCPL Offer. Western Resources believes that this
level of tenders demonstrates the support of KCPL shareholders for a merger of
Western Resources and KCPL. On December 13, 1996, Western Resources issued a
press release which stated that Western Resources and KCPL have agreed to
proceed with substantive merger negotiations between now and January 15, 1997,
the newly scheduled expiration date for the KCPL Offer. Although there can be
no assurance that any agreement will result from such negotiations, if a
definitive merger agreement is reached prior to January 15, 1997, it is
Western Resources' present intention to terminate the KCPL Offer at such time
and proceed with the KCPL Merger.
If an agreement with KCPL is not reached, Western Resources expects that it
will extend the KCPL Offer from time to time in its sole discretion until all
conditions thereto are satisfied, which Western Resources currently expects to
occur prior to the end of 1997. Western Resources' obligation to exchange
shares of Western Resources Common Stock for shares of KCPL Common Stock
pursuant to the KCPL Offer is subject to various terms and conditions set
forth in the KCPL Prospectus.
RECENT DEVELOPMENTS
On December 12, 1996, Western Resources and ONEOK announced that they had
entered into a strategic alliance in which Western Resources will contribute
its regulated local natural gas distribution operations, and MCMC and Westar
Gas Marketing, and will become the largest shareholder of ONEOK. A division of
ONEOK, the Oklahoma Natural Gas Company, provides local natural gas service to
75 percent of the state of Oklahoma. ONEOK also has interests in natural gas
marketing, processing and production.
In the transaction, which is expected to close in mid-1997, Western
Resources will receive a 45% equity interest in ONEOK. The equity interest
will consist of 2,996,702 shares of ONEOK Common Stock and 19,317,584 shares
of ONEOK Preferred Stock. The ONEOK Preferred Stock will pay an annual
dividend of up to 1.5 times the ONEOK Common Stock dividend, with a minimum
dividend of $1.80 per share. The transaction is expected to be accretive to
Western Resources in the first full year.
48
As a result of its alliance with Western Resources, ONEOK will become the
ninth largest gas distribution company in the United States, serving 1.4
million customers. The strategic alliance will also include a marketing
agreement under which Western Resources will provide electric energy products,
security products and other unregulated services to ONEOK's existing 735,000
customers. The transaction requires the approval of ONEOK's shareholders, the
OCC, the KCC and the Commission. Pursuant to the HSR Act, the transaction may
not be consummated unless certain information has been furnished to the
Antitrust Division and the FTC and certain waiting period requirements have
been satisfied. Western Resources shareholders will not vote on the
transaction.
Western Resources has agreed to pay approximately $368 million, subject to
certain adjustments, and assume certain liabilities and obligations for all of
the assets used in, related to or necessary for the operation of the security
installation, monitoring and service business currently operated by
Westinghouse Security, a subsidiary of Westinghouse. Westinghouse Security
serves approximately 300,000 customer accounts. The asset purchase is expected
to be completed prior to the end of 1996.
BUSINESS OF WESTERN RESOURCES
Western Resources and its divisions and wholly owned subsidiaries include
KPL, a rate-regulated electric and natural gas division of Western Resources,
KGE, a rate-regulated utility and wholly owned subsidiary of Western
Resources, Westar Capital, Westar Security, Inc., Westar Energy, Inc., The
Wing Group, Inc., non-utility subsidiaries, and MCMC, Inc., a regulated gas
transmission service provider. KGE owns 47% of WCNOC, the operating company
for Wolf Creek. Western Resources' non-utility subsidiaries market natural gas
primarily to large commercial and industrial customers, provide electronic
security services, engage in international large power project development and
provide other energy-related products and services.
Western Resources is engaged principally in the production, purchase,
transmission, distribution and sale of electricity and the delivery and sale
of natural gas. Western Resources serves approximately 601,000 electric
customers in eastern and central Kansas and approximately 648,000 natural gas
customers in Kansas and northeastern Oklahoma. On December 12, 1996, Western
Resources and ONEOK announced a strategic alliance pursuant to which Western
Resources will contribute its regulated local natural gas distribution
operations, and MCMC and Westar Gas Marketing, and will become the largest
shareholder of ONEOK. See "Prospectus Summary--Recent Developments" and
"Recent Developments."
Westar Capital is a private investment company, wholly owned by Western
Resources, with investments in energy-related and technology-oriented
businesses. As of December 17, 1996, the last trading day prior to the date of
this Preliminary Prospectus, Westar Capital owned 38,287,111 Shares, or
approximately 27% of the outstanding Shares, including 500 LYONS exchangeable
for Shares at a ratio of 28.23 Shares per LYON.
Western Resources Security is a rapidly growing electronic security services
business with 110,000 customer accounts. Western Resources Security has grown
through acquisitions and is currently the tenth largest security company in
the United States, by customer count, with operations in eleven states. On
December 16, 1996, Western Resources announced an agreement pursuant to which
Western Resources will acquire all of the assets of Westinghouse Security.
Westinghouse Security is a national security system monitoring company. See
"Prospectus Summary--Recent Developments" and "Recent Developments."
Western Resources was incorporated under the laws of the State of Kansas in
1924. Western Resources' corporate headquarters is located at 818 S. Kansas
Avenue, Topeka, Kansas 66612 and its telephone number is (913) 575-6300.
49
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information presents
the consolidated balance sheets and statements of income for the following:
(i) Western Resources and ADT, assuming the Amalgamation is accounted for as a
purchase; and (ii) Western Resources, ADT and KCPL, assuming the Amalgamation
is accounted for as a purchase and the KCPL Merger is accounted for as a
pooling of interests.
ADT's financial position and operating results have been presented for the
interim period ended September 30, 1996 and the twelve-month period ended
December 31, 1995, as if the purchase was consummated on January 1 of each
respective period. ADT's financial position and operating results reflect the
ASH Transaction, which was accounted for by ADT as a pooling of interests. The
combined results of Western Resources and KCPL have been presented for each of
the last three fiscal years and the most recent interim period ended September
30, 1996.
The information shown below should be read in conjunction with the
consolidated historical financial statements of Western Resources, ADT and
KCPL, including ADT's restated financial statements which reflect the ASH
Transaction as a pooling of interests, which are incorporated by reference in
this Preliminary Prospectus and the KCPL Prospectus (as defined herein). The
following information is being presented for illustrative purposes only and is
not necessarily indicative of the financial position or operating results that
would have occurred had the Amalgamation and the KCPL Merger been consummated
at the beginning of the periods for which the Amalgamation and the KCPL Merger
are being given effect, nor is it necessarily indicative of future operating
results or financial position.
THE AMALGAMATION
Western Resources currently owns approximately 38.3 million Shares, or
approximately 27% of the outstanding Shares. This represents a $589.4 million
investment, at cost, in ADT. Western Resources proposes to acquire the
remaining common equity interest of ADT for $22.50 per Share, subject to
adjustment as described herein, and account for such acquisition as a
purchase. ADT Shareholders would receive $15.00 of value in Western Resources
Common Stock, subject to certain limitations, and the balance of the purchase
price ($7.50 per Share) would be paid in cash. The pro forma combined balance
sheet assumes the recorded amounts of ADT's assets and liabilities approximate
their fair values. The preliminary purchase price allocation was made using
only publicly available information for ADT and is subject to change. The pro
forma combined financial statements do not give effect to any anticipated cost
savings or revenue enhancements that may result from the Amalgamation.
During the first quarter of 1996, ADT recorded a non-cash charge of
approximately $744.7 million to recognize the impairment of certain long-lived
assets. The impairment charge was largely attributable to reducing the amount
of recorded goodwill and had no significant tax effect.
In September 1996, ADT consummated the ASH Transaction, which is to be
accounted for as a pooling of interests. In connection with the ASH
Transaction, ADT exchanged 7,034,940 Shares for the entire equity interest in
ASH. The unaudited pro forma combined financial statements were prepared
utilizing the historical audited financial statements and the unaudited
interim financial statements, including the notes thereto, of KCPL and ADT.
Certain information was derived from the audited consolidated financial
statements of ADT contained in the ADT 1995 Form 10-K, and the unaudited
interim financial statements, including the notes thereto, contained in ADT's
Quarterly Report on Form 10-Q for the period ended September 30, 1996, and
ADT's Current Reports on Form 8-K, dated September 5, 1996, October 21, 1996
and November 12, 1996, relating to the ASH Transaction.
50
THE KCPL MERGER
Terms of the KCPL Offer permit holders of KCPL Shares to exchange each KCPL
Share held for $31.00 of Western Resources Common Stock, subject to certain
limitations, as set forth more fully in the KCPL Prospectus. Pro Forma shares
and related earnings and dividends per share information have been calculated
assuming an exchange ratio of 1.00405 based on a Western Resources' December
13, 1996 closing stock price of $30.875.
The KCPL Merger is assumed to generate substantial cost savings. The assumed
cost savings, have not been reflected in the pro forma combined balance sheet
and statements of income. Transaction costs associated with the KCPL Merger
including fees for advisors, attorneys and other consultants and incremental
direct costs of completing the KCPL Merger are estimated to approximate $88
million (which amount includes an additional termination fee of approximately
$53 million that may be payable under the terms of KCPL's Amended and Restated
Agreement and Plan of Merger with UtiliCorp). These costs will be expensed in
the first reporting period subsequent to the closing of the KCPL Merger to the
extent they are required to be paid.
There are no anticipated changes in either Western Resources' or KCPL's
accounting policies as a result of the KCPL Merger. Both companies accrue
unbilled revenue for energy delivered at the end of each reporting period, use
composite depreciation methods at group rates specified pursuant to regulation
and have certain other accounting policies which differ from each other as
well as from other commercial enterprises due to the nature of how regulators
have allowed certain costs to be recovered from customers.
Western Resources has joint interests with KCPL in the LaCygne Station and
Wolf Creek. These generating facilities represent approximately 23% of Western
Resources' total generating capacity, 39% of KCPL's total generating capacity
and 29% of the combined company's total generating capacity.
51
WESTERN RESOURCES AND ADT
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1996
(IN THOUSANDS)
ASSETS
PRO FORMA
WESTERN --------------------------------
RESOURCES ADT TOTAL WESTERN
(HISTORICAL) (HISTORICAL) ADJUSTMENTS RESOURCES/ADT
----------- ----------- ----------- -------------
Current Assets:
Cash and cash equiva-
lents................ $ 969 $ 141,800 $ (45,160)(a) $ 97,609
Accounts receivable
and unbilled revenues
(net)................ 232,682 261,900 -- 494,582
Other current assets.. 192,024 84,400 -- 276,424
---------- ---------- ---------- -----------
Total current as-
sets............... 425,675 488,100 (45,160) 868,615
---------- ---------- ---------- -----------
Property, Plant and
Equipment, Net......... 4,349,167 1,545,000 -- 5,894,167
---------- ---------- ---------- -----------
Deferred Charges and
Other Assets:
Goodwill, net......... -- 448,600 2,400,300 (b) 2,848,900
Deferred future income
taxes................ 282,476 -- -- 282,476
Other assets.......... 1,025,873 163,000 (589,400)(h) 599,473
---------- ---------- ---------- -----------
Total deferred
charges and other
assets............. 1,308,349 611,600 1,810,900 3,730,849
---------- ---------- ---------- -----------
Total Assets............ $6,083,191 $2,644,700 $1,765,740 $10,493,631
========== ========== ========== ===========
LIABILITIES AND CAPITALIZATION
PRO FORMA
WESTERN --------------------------------
RESOURCES ADT TOTAL WESTERN
(HISTORICAL) (HISTORICAL) ADJUSTMENTS RESOURCES/ADT
----------- ----------- ----------- -------------
Current Liabilities:
Short-term debt....... $ 646,400 $ 44,400 $ (589,400)(h) $ 101,400
Accounts payable...... 111,878 160,000 -- 271,878
Other current liabili-
ties................. 205,457 203,100 -- 408,557
---------- ---------- ---------- -----------
Total current lia-
bilities........... 963,735 407,500 (589,400) 781,835
---------- ---------- ---------- -----------
Other Liabilities and
Deferred Credits:
Deferred income tax-
es................... 1,167,550 147,800 13,089 (f) 1,328,439
Deferred investment
tax credits.......... 127,218 -- -- 127,218
Other................. 448,244 273,700 -- 721,944
---------- ---------- ---------- -----------
Total other liabili-
ties and deferred
credits............ 1,743,012 421,500 13,089 2,177,601
---------- ---------- ---------- -----------
Capitalization:
Long-term debt, net... 1,466,526 1,027,600 1,281,650 (c) 3,775,776
Company-obligated
mandatorily
redeemable preferred
securities........... 220,000 -- -- 220,000
Preferred and prefer-
ence stock........... 74,858 4,900 -- 79,758
Common stock equity... 1,615,060 783,200 1,060,401 (g)(j) 3,458,661
---------- ---------- ---------- -----------
Total capitaliza-
tion............... 3,376,444 1,815,700 2,342,051 7,534,195
---------- ---------- ---------- -----------
Total Liabilities and
Capitalization......... $6,083,191 $2,644,700 $1,765,740 $10,493,631
========== ========== ========== ===========
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
52
WESTERN RESOURCES AND ADT
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)
PRO FORMA
WESTERN -------------------------------
RESOURCES ADT TOTAL WESTERN
(HISTORICAL) (HISTORICAL) ADJUSTMENTS RESOURCES/ADT
------------ ------------ ----------- -------------
Operating Revenues...... $1,481,915 $1,261,600 $ -- $2,743,515
Operating Expenses:
Cost of Sales......... 463,102 674,200 -- 1,137,302
Operations, adminis-
trative and selling.. 573,697 257,500 -- 831,197
Depreciation and amor-
tization............. 144,752 165,100 41,800 (d) 351,652
Restructuring and
other non-recurring
charges.............. -- 744,700 -- 744,700
---------- ---------- --------- ----------
Operating Income
(Loss)................. 300,364 (579,900) (41,800) (321,336)
---------- ---------- --------- ----------
Interest Expense........ 78,568 78,600 45,160 (e) 202,328
Other Income
(Expenses)............. (14,212) 21,300 -- 7,088
---------- ---------- --------- ----------
Income (Loss) Before
Income Taxes........... 207,584 (637,200) (86,960) (516,576)
Income Taxes............ 71,100 14,500 13,089 (f) 98,689
---------- ---------- --------- ----------
Net Income (Loss) Before
Extraordinary Item..... 136,484 (651,700) (100,049) (615,265)
Preferred and Preference
Dividends.............. 13,609 -- -- 13,609
---------- ---------- --------- ----------
Earnings (Loss)
Applicable to Common
Stock Before
Extraordinary Item..... $ 122,875 $ (651,700) $(100,049) $ (628,874)
========== ========== ========= ==========
Average Common Shares
Outstanding............ 63,599 136,824 (73,715)(i)(j) 126,708
Earnings (Loss) per
Average Common Share
Before Extraordinary
Item................... $ 1.93 $ (4.77) $ (4.96)
Other Data:
EBITDA(k)............. $ 445,116 $ 329,900 $ 775,016
EBITDA Margin(l)...... 30.0% 26.1% 28.2%
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
53
WESTERN RESOURCES AND ADT
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS EXCEPT PER SHARE DATA)
PRO FORMA
WESTERN -------------------------------
RESOURCES ADT TOTAL WESTERN
(HISTORICAL) (HISTORICAL) ADJUSTMENTS RESOURCES/ADT
------------ ----------- ----------- -------------
Operating Revenues...... $1,572,071 $1,783,800 $ -- $3,355,871
Operating Expenses:
Cost of sales......... 510,948 990,400 -- 1,501,348
Operations,
administrative and
selling.............. 522,759 365,100 887,859
Depreciation and
amortization......... 174,460 193,300 33,300 (d) 401,060
Restructuring and
other non-recurring
charges.............. -- 34,200 -- 34,200
---------- ---------- --------- ----------
Operating Income
(Loss)................. 363,904 200,800 (33,300) 531,404
---------- ---------- --------- ----------
Interest Expense........ 95,962 116,300 107,390 (e) 319,652
Other Income
(Expenses)............. 2,254 (25,400) -- (23,146)
---------- ---------- --------- ----------
Income (Loss) Before
Income Taxes........... 270,196 59,100 (140,690) 188,606
Income Taxes............ 88,520 28,100 (31,723)(f) 84,897
---------- ---------- --------- ----------
Net Income (Loss) Before
Extraordinary Item..... 181,676 31,000 (108,967) 103,709
Preferred and Preference
Dividends.............. 13,419 -- -- 13,419
---------- ---------- --------- ----------
Earnings (Loss)
Applicable to Common
Stock Before
Extraordinary Item..... $ 168,257 $ 31,000 $(108,967) $ 90,290
========== ========== ========= ==========
Average Common Shares
Outstanding............ 62,157 138,283 (75,174)(i)(j) 125,266
Earnings per Average
Common Share Before
Extraordinary Item..... $ 2.71 $ 0.22 $ 0.72
Other Data:
EBITDA(k).............. $ 538,364 $ 428,300 $ 966,664
EBITDA Margin(l)....... 34.2% 24.0% 28.8%
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
54
WESTERN RESOURCES, ADT AND KCPL
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1996
(IN THOUSANDS)
ASSETS
WESTERN PRO FORMA
RESOURCES ADT KCPL ------------------------------
(HISTORICAL) (HISTORICAL) (HISTORICAL) ADJUSTMENTS TOTAL COMBINED
------------ ------------ ------------ ----------- --------------
Current Assets:
Cash and cash equiva-
lents................. $ 969 $ 141,800 $ 23,229 $ (45,160)(a) $ 120,838
Accounts receivable
and unbilled revenues
(net)................. 232,682 261,900 70,156 -- 564,738
Other current assets... 192,024 84,400 69,766 -- 346,190
---------- ---------- ---------- ---------- -----------
Total current as-
sets................ 425,675 488,100 163,151 (45,160) 1,031,766
---------- ---------- ---------- ---------- -----------
Property, Plant and
Equipment, Net......... 4,349,167 1,545,000 2,349,785 -- 8,243,952
---------- ---------- ---------- ---------- -----------
Deferred Charges and
Other Assets:
Goodwill, net.......... -- 448,600 -- 2,400,300 (b) 2,848,900
Deferred future income
taxes................. 282,476 -- 123,000 -- 405,476
Other assets........... 1,025,873 163,000 259,936 (589,400)(h) 859,409
---------- ---------- ---------- ---------- -----------
Total deferred
charges and other
assets.............. 1,308,349 611,600 382,936 1,810,900 4,113,785
---------- ---------- ---------- ---------- -----------
$13,389,503
Total Assets............ $6,083,191 $2,644,700 $2,895,872 $1,765,740
========== ========== ========== ========== ===========
LIABILITIES AND CAPITALIZATION
WESTERN PRO FORMA
RESOURCES ADT KCPL ---------------------------------
(HISTORICAL) (HISTORICAL) (HISTORICAL) ADJUSTMENTS TOTAL COMBINED
------------ ------------ ------------ ----------- --------------
Current Liabilities:
Short-term debt........ $ 646,400 $ 44,400 $ 35,000 $ (589,400)(h) $ 136,400
Long-term debt due
within one year....... -- -- 46,591 -- 46,591
Accounts payable....... 111,878 160,000 45,982 -- 317,860
Other current liabili-
ties.................. 205,457 203,100 118,498 -- 527,055
---------- ---------- ---------- ---------- -----------
Total current liabil-
ities............... 963,735 407,500 246,071 (589,400) 1,027,906
---------- ---------- ---------- ---------- -----------
Other Liabilities and
Deferred Credits:
Deferred income tax-
es.................... 1,167,550 147,800 650,056 13,089 (f) 1,978,495
Deferred investment
tax credits........... 127,218 -- 68,164 -- 195,382
Other.................. 448,244 273,700 90,077 -- 812,021
---------- ---------- ---------- ---------- -----------
Total other
liabilities and
deferred credits.... 1,743,012 421,500 808,297 13,089 2,985,898
---------- ---------- ---------- ---------- -----------
Capitalization:
Long-term debt, net.... 1,466,526 1,027,600 834,136 1,281,650 (c) 4,609,912
Company-obligated
mandatorily
redeemable preferred
securities............ 220,000 -- -- -- 220,000
Preferred and
preference stock...... 74,858 4,900 90,276 -- 170,034
Common stock equity.... 1,615,060 783,200 917,092 1,060,401 (g)(j) 4,375,753
---------- ---------- ---------- ---------- -----------
Total
capitalization...... 3,376,444 1,815,700 1,841,504 2,342,051 9,375,699
---------- ---------- ---------- ---------- -----------
Total Liabilities and $13,389,503
Capitalization......... $6,083,191 $2,644,700 $2,895,872 $1,765,740
========== ========== ========== ========== ===========
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
55
WESTERN RESOURCES, ADT AND KCPL
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)
PRO FORMA
----------------------------
WESTERN
RESOURCES ADT KCPL TOTAL
(HISTORICAL) (HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------ ------------ ------------ ----------- ----------
Operating Revenues...... $1,481,915 $1,261,600 $703,031 $ -- $3,446,546
Operating Expenses:
Cost of Sales......... 463,102 674,200 144,921 -- 1,282,223
Operations, adminis-
trative and selling.. 573,697 257,500 262,542 -- 1,093,739
Depreciation and amor-
tization............. 144,752 165,100 85,281 41,800 (d) 436,933
Restructuring and
other non-recurring
charges.............. -- 744,700 -- -- 744,700
---------- ---------- -------- --------- ----------
Operating Income
(Loss)................. 300,364 (579,900) 210,287 (41,800) (111,049)
---------- ---------- -------- --------- ----------
Interest Expense........ 78,568 78,600 39,726 45,160 (e) 242,054
Other Income (Ex-
penses)................ (14,212) 21,300 (45,530) -- (38,442)
---------- ---------- -------- --------- ----------
Income (Loss) Before In-
come Taxes............. 207,584 (637,200) 125,031 (86,960) (391,545)
Income Taxes............ 71,100 14,500 36,625 13,089 (f) 135,314
---------- ---------- -------- --------- ----------
Net Income (Loss) Before
Extraordinary Item..... 136,484 (651,700) 88,406 (100,049) (526,859)
Preferred and Preference
Dividends.............. 13,609 -- 2,840 -- 16,449
---------- ---------- -------- --------- ----------
Earnings (Loss)
Applicable to Common
Stock Before
Extraordinary Item..... $ 122,875 $ (651,700) $ 85,566 $(100,049) $ (543,308)
========== ========== ======== ========= ==========
Average Common Shares
Outstanding............ 63,599 136,824 61,902 (73,457)(i)(j) 188,868
Earnings (Loss) per
Average Common Share
Before Extraordinary
Item................... $ 1.93 $ (4.77) $ 1.38 $ (2.88)
Other Data:
EBITDA(k)............. $ 445,116 $ 329,900 $295,568 $1,070,584
EBITDA Margin(l)...... 30.0% 26.1% 42.0% 31.1%
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
56
WESTERN RESOURCES, ADT AND KCPL
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS EXCEPT PER SHARE DATA)
WESTERN PRO FORMA
RESOURCES ADT KCPL --------------------------------
(HISTORICAL) (HISTORICAL) (HISTORICAL) ADJUSTMENTS TOTAL COMBINED
------------ ------------ ------------ ----------- --------------
Operating Revenues...... $1,572,071 $1,783,800 $885,955 $ -- $4,241,826
Operating Expenses:
Cost of Sales......... 510,948 990,400 178,154 -- 1,679,502
Operations,
administrative and
selling.............. 522,759 365,100 353,859 -- 1,241,718
Depreciation and
amortization......... 174,460 193,300 109,832 33,300 (d) 510,892
Restructuring and
other non-recurring
charges.............. -- 34,200 -- -- 34,200
---------- ---------- -------- --------- ----------
Operating Income
(Loss)................. 363,904 200,800 244,110 (33,300) 775,514
---------- ---------- -------- --------- ----------
Interest Expense........ 95,962 116,300 52,184 107,390 (e) 371,836
Other Income
(Expenses)............. 2,254 (25,400) 7,722 -- (15,424)
---------- ---------- -------- --------- ----------
Income (Loss) Before
Income Taxes........... 270,196 59,100 199,648 (140,690) 388,254
Income Taxes............ 88,520 28,100 77,062 (31,723)(f) 161,959
---------- ---------- -------- --------- ----------
Net Income (Loss) Before
Extraordinary Item..... 181,676 31,000 122,586 (108,967) 226,295
Preferred and Preference
Dividends.............. 13,419 -- 4,011 -- 17,430
---------- ---------- -------- --------- ----------
Earnings (Loss)
Applicable to Common
Stock Before
Extraordinary Item..... $ 168,257 $ 31,000 $118,575 $(108,967) $ 208,865
========== ========== ======== ========= ==========
Average Common Shares
Outstanding............ 62,157 138,283 61,902 (74,916)(i)(j) 187,426
Earnings per Average
Common Share Before
Extraordinary Item..... $ 2.71 $ 0.22 $ 1.92 $ 1.11
Other Data:
EBITDA(k).............. $ 538,364 $ 428,300 $353,942 $1,320,606
EBITDA Margin(l)....... 34.2% 24.0% 40.0% 31.1%
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
57
WESTERN RESOURCES AND KCPL
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS EXCEPT PER SHARE DATA)
WESTERN PRO FORMA
RESOURCES KCPL ----------------------
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------ ------------ ----------- ----------
Operating Revenues:
Electric................... $1,121,781 $868,272 $ $1,990,053
Natural gas................ 496,162 -- 496,162
---------- -------- ---- ----------
Total operating
revenues.............. 1,617,943 868,272 2,486,215
---------- -------- ---- ----------
Operating Expenses:
Fuel....................... 234,328 135,106 369,434
Power purchased............ 15,438 33,929 49,367
Natural gas purchases...... 312,576 -- 312,576
Operations and
maintenance............... 416,577 274,772 691,349
Depreciation and
amortization.............. 151,630 107,463 259,093
Amortization of phase-in
revenues.................. 17,544 -- 17,544
Income taxes............... 95,622 70,949 166,571
General taxes.............. 104,682 96,362 201,044
---------- -------- ---- ----------
Total operating
expenses.............. 1,348,397 718,581 2,066,978
---------- -------- ---- ----------
Operating Income............. 269,546 149,691 419,237
Other Income and Deductions
(net of taxes).............. 33,856 2,500 36,356
---------- -------- ---- ----------
Income Before Interest
Charges..................... 303,402 152,191 455,593
Interest Charges:
Long-term debt............. 98,483 43,962 142,445
Other...................... 20,139 5,298 25,437
Allowance for borrowed
funds used during
construction (credit)..... (2,667) (1,844) (4,511)
---------- -------- ---- ----------
Total interest
charges............... 115,955 47,416 163,371
---------- -------- ---- ----------
Net Income................... 187,447 104,775 292,222
Preferred and Preference
Dividends................... 13,418 3,457 16,875
---------- -------- ---- ----------
Earnings Applicable to Common
Stock....................... $ 174,029 $101,318 $ $ 275,347
========== ======== ==== ==========
Average Common Shares
Outstanding................. 61,618 61,903 258(i) 123,779
Earnings per Average Common
Share Outstanding........... $ 2.82 $ 1.64 $ 2.22
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
58
WESTERN RESOURCES AND KCPL
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS EXCEPT PER SHARE DATA)
WESTERN PRO FORMA
RESOURCES KCPL ------------------------
(HISTORICAL) (HISTORICAL) ADJUSTMENTS COMBINED
------------ ------------ ----------- ----------
Operating Revenues:
Electric................ $1,104,537 $857,450 $ $1,961,987
Natural gas............. 804,822 -- 804,822
---------- -------- -------- ----------
Total operating
revenues............. 1,909,359 857,450 2,766,809
---------- -------- -------- ----------
Operating expenses:
Fuel.................... 250,328 130,117 380,445
Power purchased......... 16,396 31,403 47,799
Natural gas purchases... 500,189 -- 500,189
Operations and
maintenance............ 467,003 263,183 730,186
Depreciation and
amortization........... 164,364 111,284 275,648
Amortization of phase-in
revenues............... 17,545 -- 17,545
Income taxes............ 77,978 69,502 147,480
General taxes........... 123,493 95,659 219,152
---------- -------- -------- ----------
Total operating
expenses............. 1,617,296 701,148 2,318,444
---------- -------- -------- ----------
Operating Income.......... 292,063 156,302 448,365
Other Income and
Deductions (net of
taxes)................... 25,482 1,909 27,391
---------- -------- -------- ----------
Income Before Interest
Charges.................. 317,545 158,211 475,756
Interest Charges:
Long-term debt.......... 123,551 50,118 173,669
Other................... 19,255 4,863 24,118
Allowance for borrowed
funds used during
construction (credit).. (2,631) (2,542) (5,173)
---------- -------- -------- ----------
Total interest
charges.............. 140,175 52,439 192,614
---------- -------- -------- ----------
Net Income................ 177,370 105,772 283,142
Preferred and Preference
Dividends................ 13,506 3,153 16,659
---------- -------- -------- ----------
Earnings Applicable to
Common Stock............. $ 163,864 $102,619 $ $ 266,483
========== ======== ======== ==========
Average Common Shares
Outstanding.............. 59,294 61,909 258(i) 121,461
Earnings per Average
Common Share
Outstanding.............. $ 2.76 $ 1.66 $ 2.19
The accompanying Notes to Unaudited Pro Forma Combined Financial Information
are an integral part of this statement and should be read in their entirety.
59
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The pro forma adjustments have been made to the unaudited Pro Forma Combined
Financial Statements to reflect the following:
(a) To record the reduction in cash resulting from interest paid on short-
and long-term debt as described in note (e) below.
(b) To record goodwill resulting from the Amalgamation. The net tangible
assets of ADT are expected to approximate their fair value. Goodwill is
based upon the total consideration paid in excess of the estimated fair
value of the net assets acquired. Goodwill is calculated assuming
Western Resources acquires all the outstanding Shares of ADT which
Western Resources and its affiliates do not presently hold, the
conversion of the LYONS convertible debt to Shares and the exercise of
all outstanding options held principally by ADT management for $22.50
per Share. (See note (j) for a discussion of the Republic Warrant and
ADT anti-takeover devices.)
Calculation of outstanding ADT Shares and Shares to be purchased:
(MILLIONS EXCEPT
PRICE PER SHARE)
----------------
Shares outstanding.......................................... 141.1
Treasury shares (shares held by ADT Subsidiary)............. (3.2)
LYONS convertible debt (i).................................. 21.9
Conversion of option shares (ii)............................ 8.4
--------
Total Shares outstanding.................................. 168.2
Shares already owned...................................... (38.3)
--------
Net Shares to be purchased................................ 129.9
Purchase price per share.................................. $ 22.50
--------
Total cost of Shares not presently held..................... $2,922.8
Plus: Basis in 38.3 million Shares currently owned.......... 589.4
Plus: Estimated transaction costs........................... 40.0
--------
Total purchase price...................................... $3,552.2
Less: Estimated fair value of net assets acquired........... 661.5
--------
Estimated Goodwill........................................ $2,890.7
Less: Existing ADT Goodwill................................. 448.6
Less: Incremental goodwill amortization for 1996............ 41.8
--------
Adjustment................................................ $2,400.3
========
- --------
(i) Liquid Yield Option Notes (LYONS) subordinated zero coupon securities are
exchangeable for Shares of ADT or redeemable for cash at the option of the
holder upon a change of control transaction. Conversion terms allow the
holder to exchange each note for 28.23 Shares of ADT. The pro forma
calculation of total ADT Shares outstanding assumes the LYONS are converted
to common equity.
(ii) Conversion of approximately 18.6 million outstanding option shares held
by management has been calculated using the treasury stock method.
(c) To record the additional long-term debt to be incurred for the $7.50 per
Share Cash Consideration and to refinance short-term debt used to
acquire existing Shares, less the elimination of the LYONS convertible
debt securities which are expected to be converted to Shares of ADT.
(MILLIONS)
Additional long-term debt: ----------
129.9 million Shares times $7.50 per Share Cash Consideration... $ 974.3
Plus: Permanent financing of Western Resources' existing inter-
est ........................................................... 589.4
Transaction costs............................................. 40.0
Less: Estimated LYONS debt outstanding at acquisition date...... (322.0)
--------
Total......................................................... $1,281.7
========
60
(d) To record the amortization of goodwill created in the purchase of ADT
over a 40-year period. The annual goodwill amortization is expected to
approximate $72.3 million. The adjustment represents the difference
between this amount and the historical amount recorded by ADT.
(e) To record the net effect of interest expense resulting from the
following:
(i) The reduction of interest expense associated with the short-term
debt incurred by Western Resources to acquire its initial equity
interest in ADT and the increase in interest expense in connection
with the issuance of additional long-term debt as detailed in note
(c) above to finance the exchange of Shares for the Cash
Consideration and refinance short-term debt used to acquire Shares.
See note (c). The interest rate on such borrowings is expected to be
approximately 8%.
(ii) The interest expense savings resulting from the conversion of
the LYONS debt, which accreted interest at a rate of 6.5%.
(f) To adjust the income tax provision. The income tax provision exceeds the
federal statutory rate of 35% primarily due to the non-deductible
goodwill amortization and state income taxes.
(g) To reflect the net increase to common equity resulting from Western
Resources issuing additional common shares needed to acquire the net
remaining Shares of ADT, to reflect the impact of the pro forma
adjustments and eliminate ADT's stand-alone equity.
(h) To reflect the elimination of the equity investment recorded by Western
Resources for the 38.3 million Shares presently held as an equity
investment and the related short-term debt incurred to finance this
equity investment which is to be refinanced with long-term debt. See
note (c).
(i) To reflect the issuance of Western Resources Common Stock in connection
with the Offer and the Amalgamation, assuming the Republic Warrant
expires unexercised:
Stock Consideration to be paid in Western Resources Common
Stock......................................................... $ 15.00
Divided by the price per share of Western Resources Common
Stock as of
December 13, 1996............................................. $ 30.875
--------
Exchange Ratio................................................ .48583
Multiplied by Net Shares to be purchased by Western
Resources..................................................... 129.9
--------
Shares of Western Resources Common Stock needed to acquire Net
Shares........................................................ 63.1
========
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(IN THOUSANDS)
ADT Average Common Shares Outstanding........ 136,824 138,283
Less: Shares of Western Resources Common
Stock to be issued.......................... 63,109 63,109
------- -------
Adjustment................................... (73,715) (75,174)
======= =======
Terms of the KCPL Offer allow KCPL shareholders to exchange each KCPL
Share held for $31.00 of Western Resources Common Stock, subject to
certain limitations as set forth more fully in the KCPL Prospectus. Pro
forma shares and related earnings per share have been calculated
assuming an exchange ratio of 1.00405 based on Western Resources'
December 13, 1996 closing stock price of $30.875. This exchange ratio
increases common shares outstanding by approximately 258,000 shares for
the nine months ended September 30, 1996 and the twelve month period
ended December 31, 1995.
(j) On July 1, 1996, ADT entered into the Republic Agreement, pursuant to
which Republic Sub was to be amalgamated with and into ADT with ADT
being the surviving company. Under the terms of the Republic Agreement,
ADT granted to Republic the Republic Warrant to purchase 15,000,000
Shares at a purchase price of $20 per Share, subject to adjustment. The
Republic Warrant was to become exercisable for a period of six months
following the termination of the Republic Agreement. On September 30,
1996, ADT and Republic jointly announced the termination of the Republic
Agreement,
61
citing uncertainty attributable to market conditions, and amended the
Republic Warrant to include certain restrictions on the issuance of
Shares pursuant thereto and the transfer of such Shares by Republic to
persons with an interest in 10% or more of ADT. As described herein,
Western Resources has commenced litigation challenging the validity of
the Republic Warrant. See "Litigation." The unaudited pro forma combined
financial information assumes the Republic Warrant expires unexercised
and Western Resources does not incur any significant costs as a result of
any anti-takeover initiatives undertaken by ADT. As described herein,
Western Resources is initiating steps to hold a special meeting of the
ADT Shareholders, and among other matters, Western Resources will be
soliciting proxies in favor of the removal of the present members of the
ADT Board and the election of the Western Resources Nominees to the ADT
Board, who will then take steps needed to either redeem or amend the
Rights Agreement to make it inapplicable to the Offer.
(k) EBITDA represents income before interest expense, income taxes,
depreciation and amortization and other income (expenses). EBITDA is a
meaningful measure of performance because it is commonly used in the
security industry to analyze and compare security companies on the basis
of operating performance, leverage and liquidity. Presentation of EBITDA
is not in accordance with generally accepted accounting principles and
should not be considered an alternative to, or more meaningful than,
operating income or operating cash flows. EBITDA does not include amounts
required for capital additions or to service outstanding debt
obligations.
(l) Represents EBITDA as a percent of operating revenues.
62
DESCRIPTION OF WESTERN RESOURCES CAPITAL STOCK
The authorized capital stock of Western Resources consists of 85,000,000
shares of Western Resources Common Stock, par value $5.00 per share, 4,000,000
shares of Western Resources Preference Stock, 600,000 shares of Western
Resources Preferred Stock, par value $100.00 per share (the "Par Value
Preferred Stock") and 6,000,000 shares of preferred stock, without par value
(the "No Par Value Preferred Stock"). The Par Value Preferred Stock and the No
Par Value Preferred Stock are referred to herein together as the "Western
Resources Preferred Stock."
WESTERN RESOURCES COMMON STOCK
As of December 17, 1996, Western Resources had 64,622,390 shares of Western
Resources Common Stock issued and outstanding. The holders of Western
Resources Common Stock and Western Resources Preferred Stock, voting as one
class, are entitled to one vote per share on all matters requiring stockholder
action (except for the election of directors) subject to the special voting
rights of holders of Western Resources Preferred Stock and Western Resources
Preference Stock described below. In all elections for directors, each holder
of Western Resources Preferred Stock or Western Resources Common Stock has the
right to cast as many votes in the aggregate as equals the number of shares
held by him multiplied by the number of directors to be elected; provided,
however, that if the holders of the Western Resources Preferred Stock or the
holders of the Western Resources Preference Stock are entitled to vote
separately as a class for the election of certain directors, the holders of
the Western Resources Common Stock shall be entitled to vote separately as a
class for the remaining directors. The holders of Western Resources Preferred
Stock are entitled to elect a majority of the board of directors if, and so
long as, dividends payable on outstanding Western Resources Preferred Stock
are in default in an amount equal to four or more quarterly dividends, whether
or not consecutive. The holders of Western Resources Preference Stock are
entitled to elect two directors if, and so long as, dividends payable on
outstanding Western Resources Preference Stock are in default in an amount
equal to six or more quarterly dividends, whether or not consecutive. The
holders of the Western Resources Common Stock participate ratably in
liquidation, subject to the payment to the holders of the Western Resources
Preferred Stock and Western Resources Preference Stock of the preferential
amounts to which they are respectively entitled.
Dividends on the Western Resources Common Stock may be declared and paid
only out of surplus or net profits legally available for the payment of
dividends and only when the full dividends on the Western Resources Preferred
Stock and the Western Resources Preference Stock have been paid or declared
and a sum sufficient for the payment thereof shall have been set apart. In
addition, in the event the Capitalization Ratio (as defined below) is less
than 20%, dividends (including the proposed payment) on the Western Resources
Common Stock and the Western Resources Preference Stock during the twelve
month period ending with and including the date of the proposed payment of
such dividends may not exceed 50% of the net income available for dividends
during the twelve calendar month period ending with and including the second
calendar month immediately preceding the date of the proposed payment of
dividends on such shares of capital stock. Similarly, if the Capitalization
Ratio is 20% or more, but less than 25%, then the payment of dividends on the
Western Resources Common Stock and the Western Resources Preference Stock
(including the proposed payment) during the twelve month period ending with
and including the date of the proposed payment of such dividends may not
exceed 75% of the net income of Western Resources available for dividends for
the twelve calendar months ending with and including the second calendar month
immediately preceding the date of the proposed payment of dividends on such
shares of capital stock. Except as permitted by the provisions of the Western
Resources Articles summarized in this paragraph, Western Resources may not pay
dividends on the Western Resources Common Stock and the Western Resources
Preference Stock which would reduce the Capitalization Ratio to less than 25%.
"Capitalization Ratio" is defined to mean the ratio of the capital represented
by the Western Resources Common Stock and the Western Resources Preference
Stock, including premiums on the capital stock of Western Resources, plus the
surplus accounts of Western Resources, to the total capital of Western
Resources, plus the surplus accounts of Western Resources, at the end of the
second calendar month immediately preceding the date of the proposed payment
of dividends, adjusted to reflect the proposed payment of dividends.
63
WESTERN RESOURCES PREFERRED STOCK
Western Resources is authorized to issue 6,600,000 shares of Western
Resources Preferred Stock, which may be issued from time to time in one or
more series, each such series to have such distinctive designation or title as
may be fixed by the Western Resources board of directors prior to the issuance
of any shares thereof. Each series may differ from each other series already
outstanding as may be declared from time to time by the Western Resources
Board in the following respects: (i) the rate of dividend; (ii) the amount per
share, if any, which the Western Resources Preferred Stock shall be entitled
to receive upon redemption, liquidation, distribution or sale of assets,
dissolution or winding up of Western Resources; (iii) terms and conditions of
conversions, if any; and (iv) terms of sinking fund, redemption or purchase
account, if any. As of December 17, 1996, Western Resources had three series
of Par Value Preferred Stock outstanding: the 4 1/2% Series (138,576 shares
outstanding); the 4 1/4% Series (60,000 shares outstanding); and the 5% Series
(50,000 shares outstanding), and no shares of No Par Value Preferred Stock
were outstanding.
The Western Resources Preferred Stock has special voting rights which are
triggered when dividends on the stock are in default in an amount equal to
four or more quarterly dividends, whether or not consecutive. If dividends are
not paid for four or more dividend periods on all series of Western Resources
Preferred Stock then outstanding, the holders of the Western Resources
Preferred Stock are entitled to elect the smallest number of directors
necessary to constitute a majority of the full Western Resources board of
directors until such unpaid dividends shall be paid. In addition, Western
Resources may not, without the consent of the holders of at least two-thirds
of the Western Resources Preferred Stock then outstanding, (i) define or
specify preferences, qualifications, limitations or other rights for
authorized but unissued shares of Western Resources Preferred Stock superior
to those of outstanding shares of such stock (except for differences
attributable to variations in dividend rates, liquidation preferences and
redemption prices) or amend, alter, change or repeal any of the express terms
or provisions of the then outstanding Western Resources Preferred Stock in a
manner substantially prejudicial to the holders thereof, or (ii) issue or sell
any Western Resources Preferred Stock or any class of stock ranking prior to
or on a parity with the Western Resources Preferred Stock other than in
exchange for or for the purpose of effecting the retirement of not less than a
like number of shares of Western Resources Preferred Stock or shares of stock
ranking prior to or on a parity therewith or securities convertible into not
less than a like number of such shares unless (a) aggregate capital applicable
to Western Resources Common Stock and Western Resources Preference Stock plus
surplus equals the involuntary liquidation preference of all Western Resources
Preferred Stock and any such other stock ranking prior thereto or on a parity
therewith and (b) Western Resources' net earnings (as defined) for a period of
twelve consecutive calendar months within the fifteen calendar months
preceding the date of issuance, available for the payment of dividends, shall
have been at least two times the annual dividend requirements on the Western
Resources Preferred Stock and on any such other stock ranking prior thereto or
on a parity therewith after giving effect to the proposed issuance, and the
net earnings (as defined), for the same period, available for payment of
interest shall have been at least one and one-half times the sum of annual
interest requirements and dividend requirements on Western Resources Preferred
Stock and such other stock ranking prior thereto or on a parity therewith
after giving effect to the proposed issuance.
The Western Resources Articles also provide that without the consent of the
holders of at least a majority of the Western Resources Preferred Stock then
outstanding, voting as a class, or if more than one-third shall vote
negatively, Western Resources shall not: (i) merge or consolidate with or into
any other corporation; (ii) sell, lease or exchange all or substantially all
of its property or assets unless the fair value of the net assets of Western
Resources after completion of such transaction shall at least equal the
liquidation value of all outstanding shares of Western Resources Preferred
Stock; or (iii) reacquire or pay any dividends or make any other distribution
upon shares of the Western Resources Preference Stock or the Western Resources
Common Stock or any other class of the stock of Western Resources over which
the Western Resources Preferred Stock has preference with respect to the
payment of dividends or the distribution of assets, unless after any such
action the sum of (a) the capital of Western Resources represented by the
outstanding Western Resources Preference Stock, Western Resources Common Stock
or other stock over which the Western Resources Preferred Stock has
preference, (b) Western Resources' earned surplus, and (c) any capital surplus
of Western Resources, shall not
64
be less than the sum of $10,500,000 plus an amount equal to twice the annual
dividend requirement on all outstanding shares of the Western Resources
Preferred Stock and on any such other stock ranking prior thereto or on a
parity therewith.
At Western Resources' 1996 Annual Shareholders Meeting, a proposal was
approved to amend the Western Resources Articles by removing the voting rights
of the holders of Western Resources Preferred Stock relating to the issuance of
unsecured indebtedness.
WESTERN RESOURCES PREFERENCE STOCK
Western Resources is authorized to issue 4,000,000 shares of Western
Resources Preference Stock, which may be issued from time to time in one or
more series, each such series to have such distinctive designation or title as
may be fixed by the board prior to the issuance of any shares thereof. Each
series may differ from each other series already outstanding, as may be
declared from time to time by the Western Resources Board, in the following
respects: (i) the rate of dividend; (ii) whether shares of Western Resources
Preference Stock are subject to redemption, and if so, the amount or amounts
per share which the shares of such series would be entitled to receive in case
of redemption, and the terms on which such shares may be redeemed; (iii) the
amounts payable in the case of the liquidation, distribution or sale of assets,
dissolution or winding up of Western Resources; (iv) terms and conditions of
conversion, if any; (v) terms of sinking fund, redemption or purchase account,
if any; and (vi) any designations, preferences and relative participating,
optional or other special rights and qualifications, limitations or
restrictions thereof. As of December 17, 1996, Western Resources had 500,000
shares of 7.58% Series Preference Stock outstanding.
The Western Resources Preference Stock has voting rights which are triggered
when dividends on the stock are in default in an amount equal to six or more
quarterly dividends, whether or not consecutive. If dividends are not paid for
six or more dividend periods, the holders of the Western Resources Preference
Stock are entitled to elect two directors to the Western Resources board of
directors until such unpaid dividends shall be paid. In addition, Western
Resources may not, without the consent of the holders of at least two-thirds of
the Western Resources Preference Stock then outstanding, voting as a class, (i)
amend, alter, change or repeal any of the express terms and conditions of the
then outstanding Western Resources Preference Stock in a manner substantially
prejudicial to the holders thereof, or (ii) create any class of stock ranking
prior to the Western Resources Preference Stock as to dividends or upon
liquidation, or securities convertible into shares ranking prior to the Western
Resources Preferred Stock in such respects; provided, no such consent shall be
required with respect to the taking of any such action relating to the Western
Resources Preferred Stock.
65
COMPARISON OF THE RIGHTS OF HOLDERS OF SHARES AND WESTERN RESOURCES COMMON
STOCK
As a consequence of the exchange of Shares in the Offer, shareholders of
ADT, a company incorporated under the laws of Bermuda, will become
shareholders of Western Resources, a Kansas corporation. The rights of ADT
Shareholders are currently governed by Bermuda law (including the Companies
Act), the ADT Memorandum of Association and the ADT Bye-Laws. Upon the
exchange of Shares for Western Resources Common Stock, the rights of ADT
Shareholders will be governed by Kansas law (including the KGCC), the Western
Resources Articles and the Western Resources Bylaws. The following is a
summary of certain similarities and material differences between the rights of
holders of Shares and the rights of holders of Western Resources Common Stock.
The following summary does not purport to be a complete statement of the
rights of ADT Shareholders under Bermuda law, the ADT Memorandum of
Association, the ADT Bye-Laws and the Rights Agreement as compared with the
rights of Western Resources shareholders under Kansas law, the Western
Resources Articles and the Western Resources Bylaws, or a complete description
of the specific provisions referred to herein. The summary discusses certain
material aspects of the above-mentioned corporate laws and instruments but is
qualified in its entirety by reference to such laws and instruments, including
the aforementioned instruments of ADT and Western Resources. Complete copies
of all such laws and instruments may be obtained in the manner set forth above
under the caption "Available Information."
Voting at Meetings. Pursuant to Section 77 of the Companies Act, any
question proposed for consideration at a general meeting shall be decided on a
simple majority of votes or by such majority as the bye-laws of a company may
prescribe. Section 77 of the Companies Act provides that it is lawful for any
question proposed for consideration at a general meeting to be decided on a
show of hands in which each shareholder present in person or by proxy is
entitled to one vote and casts such vote by raising his hand. However, before
or on the declaration of the result of a show of hands, a poll may be demanded
by (i) the Chairman of the meeting, (ii) at least three shareholders present
in person or represented by proxy, (iii) any shareholder or shareholders
present in person or represented by proxy holding between them one-tenth of
the total voting rights of all the shareholders entitled to vote at such
meeting, or (iv) a shareholder or shareholders present in person or
represented by proxy holding shares in such company conferring the right to
vote at such meeting and on which an aggregate sum has been paid up equal to
not less than one-tenth of the total sum paid up on all such shares conferring
such right. Where a poll has been demanded, every shareholder present in
person or by proxy is entitled to one vote for each share held by him.
Section 17-6502 of the KGCC provides that unless otherwise provided in the
articles of incorporation of a Kansas corporation and subject to K.S.A. 17-
6503, each shareholder of a Kansas corporation is entitled to one vote for
each share of capital stock held by such shareholder. The KGCC makes no
provision for voting by a show of hands.
Special Meetings of Shareholders. Pursuant to section 74 of the Companies
Act and Bye-Law 42 of the ADT Bye-Laws, the ADT Board is required, on the
written requisition of shareholders of ADT holding at the date of the deposit
of the requisition not less than one-tenth of the paid-up capital of ADT as at
the date of the deposit carries the right of voting at general meetings of
ADT, to convene a special general meeting of ADT. If the directors do not
within twenty-one days from the date of the deposit of the requisition convene
a meeting, the requisitionists, or any of them representing more than one half
of the total voting rights of all of them, may themselves convene a meeting,
but any meeting so convened may not be held after the expiration of three
months from the date of deposit of the requisition.
Section 17-6501(e) of the KGCC provides that special meetings of
shareholders may be called by the board of directors or by such person or
persons as may be authorized by the articles of incorporation or bylaws. The
Western Resources Bylaws provide that a special meeting of shareholders may be
called by the Western Resources Board, or by the Chairman or the President of
Western Resources.
66
Number of Directors. Section 91(1) of the Companies Act provides that the
affairs of a company shall be managed by not less than two directors, who
shall be individuals elected in the first place at the statutory meeting and
thereafter at each annual general meeting of the company or elected or
appointed by the shareholders in such other manner and for such term as may be
provided in the company's bye-laws. Section 91(2) of the Companies Act
provides that shareholders at a general meeting of a company may authorize the
directors of the company to elect or appoint on their behalf an individual or
individuals to act as additional directors up to a maximum determined by the
shareholders in general meeting. Bye-Law 52(A) of the ADT Bye-Laws provides
that the number of directors shall be such number, not less than two, as the
shareholders in general meeting may from time to time determine.
Section 17-6301(b) of the KGCC provides that the board of directors of a
corporation shall consist of one or more members. The number of directors
shall be fixed by, or in the manner provided in, the bylaws, unless the
articles of incorporation establish the number of directors, in which case a
change in the number of directors shall be made only by amendment of the
articles of incorporation. The Western Resources Articles provide that the
number of directors shall not be less than seven nor more than fifteen, the
precise number to be set by the Western Resources Board, provided that unless
approved by a majority of shareholders entitled to vote, the number of
directors shall not be reduced if such reduction will shorten the term of an
existing director.
Advance Notice of Shareholder Nominations of Directors. Under Bye-Law 52(B)
of the ADT Bye-Laws, no person, other than a director retiring at a general
meeting of shareholders, shall, unless recommended by the ADT Board, be
eligible for election to the office of director at any general meeting unless
not less than six and not more than twenty-eight clear days before the day
appointed for the meeting there has been given to the Secretary of ADT notice
in writing by some shareholder (not being the person to be proposed) entitled
to attend and vote at the meeting for which such notice is given of such
shareholder's intention to propose such person for election and also notice in
writing signed by the person to be proposed of such person's willingness to be
elected.
The Western Resources Articles provide a similar advance notice provision.
Nominations of persons for election to the Western Resources Board may be made
at a meeting of shareholders by any shareholder, provided that the Secretary
of Western Resources receives written notice not less than thirty-five days
nor more than fifty days prior to the meeting. In the event that less than
forty-five days' notice or prior public disclosure of the date of the meeting
is given or made by Western Resources to shareholders, the notice of
nomination must be received not later than the close of business on the tenth
day following the day on which such notice of the date of the meeting was
mailed or public disclosure was made. For notice by the shareholder to be
timely, it must be received in any event not later than the close of business
on the seventh day preceding the day on which the meeting is to be held. Such
notice shall contain (i) the names of the nominees and all other information
required to be disclosed in a proxy statement, (ii) the name and address of
the shareholder making the nomination, (iii) a representation that the
shareholder is a holder of record of the stock entitled to vote at the meeting
on the date of the notice and intends to appear in person or by proxy at the
meeting to nominate the person specified in the notice and (iv) a description
of all arrangements or understandings between the shareholder and each nominee
and any other person on whose behalf such nominations are being made.
Shareholder Proposal Procedures. Other than advance notice requirements for
shareholder proposals involving the election or removal of directors or
amendments to the ADT Bye-Laws, neither the Companies Act nor the ADT Bye-Laws
require advance notice (other than notice of the meeting itself) of
shareholder proposals prior to a meeting of shareholders.
The Western Resources Articles permit any shareholder who is a holder of
record at the time of giving the required notice and who is entitled to vote
at the shareholders meeting, to bring business before such shareholders
meeting. Required notice must be received by the Secretary of Western
Resources not less than thirty-five days nor more than fifty days prior to the
meeting. In the event that less than forty-five days' notice or prior public
disclosure of the date of the meeting is given or made by Western Resources to
shareholders, the notice must be received not later than the close of business
on the tenth day following the day on which such notice of the date of the
meeting was mailed or public disclosure was made. For notice by the
shareholder to be timely, it must be
67
received in any event not later than the close of business on the seventh day
preceding the day on which the meeting is to be held. The notice shall contain
(i) a brief description of the business desired to be brought forth and the
reasons for considering the business, (ii) the name and address of the
shareholder as they appear on the books of Western Resources, (iii) a
representation that such shareholder is a holder of record of the stock
entitled to vote at the meeting on the date of the notice and intends to
appear in person or by proxy to present the business specified in the notice
and (iv) disclosure of any material interest of the shareholder in such
proposal.
Classification of Board of Directors. The ADT Board is not classified and
the ADT Bye-Laws do not contemplate a classified board.
Section 17-6301(d) of the KGCC provides that the directors of any
corporation may be divided into one, two or three classes by the articles of
incorporation or by the corporation's initial bylaws, or by bylaws adopted by
a vote of the shareholders; the term of office of those of the first class to
expire at the annual meeting next ensuing, of the second class one year
thereafter, of the third class two years thereafter, and at each annual
election held after such classification and election, directors shall be
chosen for a full term, as the case may be, to succeed those whose terms
expire. The Western Resources Bylaws provide for three classes of directors as
nearly equal in number as possible with no class containing fewer than two
directors and with each director holding office for a term of three years.
Cumulative Voting. Both the Companies Act and the KGCC allow, but do not
require, cumulative voting for the election of directors. Under the ADT Bye-
Laws, ADT Shareholders do not have cumulative voting rights for the election
of directors. The Western Resources Bylaws provide for cumulative voting of
all shares entitled to vote for the election of directors. Each holder of
shares eligible to vote for the election of directors may cast a number of
votes in the aggregate equal to the number of shares held by that holder
multiplied by the number of directors to be elected, and such votes may be
cast for one candidate or distributed among two or more candidates at the
shareholder's discretion.
Removal of Directors; Filling Vacancies on the Board of Directors. Section
93 of the Companies Act provides that, subject to a company's bye-laws, the
shareholders of a company may at a special general meeting called for that
purpose remove a director, provided that notice of any such meeting shall be
served on the director concerned not less than fourteen days before the
meeting and that the director shall be entitled to be heard at the meeting.
Bye-Law 71 of the ADT Bye-Laws provides that any director may at any time be
removed from office as a director of ADT either by resolution of the ADT
shareholders to that effect or upon a written resolution specifying that a
director has been so removed and signed by all the other directors of ADT.
Bye-Law 57 of the ADT Bye-Laws provides that the remaining directors have the
power from time to time and at any time to appoint any qualified person to
fill a casual vacancy in the board of directors who shall hold office until
the next following annual general meeting, and the existing directors may act
notwithstanding any vacancy in their number.
Section 17-6301 of the KGCC provides that any director or the entire board
of directors may be removed, with or without cause, by the holders of a
majority of shares then entitled to vote at an election of directors, except
that in the case of a corporation having a classified board of directors, such
as Western Resources, shareholders may remove a director only for cause,
unless the articles of incorporation provide otherwise. Under the Western
Resources Articles and the Western Resources Bylaws, no director, other than
one elected because of a default in the payment of dividends on Western
Resources Preferred Stock or Western Resources Preference Stock, may be
removed except for cause. Pursuant to Section 17-6301 of the KGCC, if less
than the entire board of a corporation with cumulative voting is to be
removed, no director may be removed without cause if the votes cast against
such director's removal would be sufficient to elect such director if then
cumulatively voted at an election of the entire board of directors or, if the
corporation has classes of directors, as does Western Resources, at an
election of the class of directors of which such director is a part.
68
Pursuant to the Western Resources Bylaws, vacancies in the Western Resources
Board caused by death, resignation or otherwise may be filled at any meeting
of the Western Resources Board and the replacement directors shall serve until
the next annual meeting of shareholders and until their successors are elected
and qualified.
Shareholder Action by Written Consent. Pursuant to Section 77A of the
Companies Act, anything which may be done by resolution of a company in
general meeting or by resolution of a meeting of any class of the shareholders
of a company may, without a meeting and without any previous notice being
required, be done by resolution in writing signed by all of the shareholders
of the company who at the date of the resolution would be entitled to attend
the meeting and vote on the resolution; provided, however, that no action by
unanimous written consent shall be valid if taken with respect to a resolution
to remove either a director or an auditor before the expiration of such
director's or auditor's term of office.
Under Section 17-6518 of the KGCC, any action which may be taken by
shareholders at any annual or special meeting may be taken without a meeting
by unanimous written consent, unless otherwise provided in the articles of
incorporation.
Preemptive Rights. No shareholder of ADT or Western Resources has preemptive
rights with regard to shares of common or preferred stock.
Amendment of ADT Memorandum of Association and Western Resources
Articles. Section 12 of the Companies Act provides that a company may, with
the consent of the Minister of Finance, by resolution passed at a general
meeting of members of which due notice has been given, alter the provisions of
its memorandum of association.
The Western Resources Articles provide that unless and until a specific
provision for amending the Western Resources Articles is specially adopted,
Western Resources reserves the right, except as otherwise provided, to amend,
alter, change or repeal any provision contained in the Western Resources
Articles in the manner now or hereafter prescribed by the applicable
provisions of the laws of the State of Kansas for amending the articles of
incorporation of a Kansas corporation, and all rights conferred upon
shareholders are granted subject to such reservation.
The KGCC provides that in connection with every amendment authorized by
Section 17-6602 of the KGCC, the board of directors shall adopt a resolution
setting forth the amendment proposed, declaring its advisability, and either
calling a special meeting of the shareholders entitled to vote for the
consideration of such amendment or directing that the amendment proposed be
considered at the next annual meeting of the shareholders. Kansas law further
provides that such special or annual meeting shall be called and held upon
notice in accordance with the manner for the giving of notice of meetings of
shareholders. The notice shall set forth such amendment in full or a brief
summary of the changes to be effected. If a majority of the outstanding stock
entitled to vote thereon and a majority of the outstanding stock of each class
entitled to vote thereon as a class have been voted in favor of the amendment,
a certificate setting forth the amendment and certifying that such amendment
has been duly adopted shall be executed, acknowledged, filed and recorded.
Amendment of Bylaws. Pursuant to Bye-Law 101 of the ADT Bye-Laws and Section
13(5) of the Companies Act, the ADT Board may amend the ADT Bye-Laws, provided
that no such amendment will be operative unless and until it is confirmed by
the ADT Shareholders at a general meeting of ADT.
The Western Resources Board may make and from time to time alter, amend or
repeal any Western Resources Bylaw, subject to the power of the shareholders
to amend, alter or repeal the Western Resources Bye-Laws. The provisions of
the Western Resources Bylaws regarding the classification of the Western
Resources board of directors, the filling of vacancies by directors and the
removal of directors may not be amended without the affirmative vote of at
least 80% of the outstanding shares of Western Resources entitled to vote.
69
Interested Directors. Under Bye-Law 64 of the ADT Bye-Laws, no director is
disqualified from contracting with ADT and no contract will be avoided by
reason of such director holding that office or of the fiduciary relationship
thereby established if the requisite disclosure by the interested director is
made. Bye-Law 64(7) of the ADT Bye-Laws indicates that a director who to his
knowledge is in any way, whether directly or indirectly, interested in a
contract or arrangement with ADT shall declare the nature of his interest at
the meeting of the directors at which the question of entering into the
contract or arrangement is first taken into consideration, if he knows his
interest then exists, or in any other case at the first meeting of the
directors after he knows that he is or has become so interested.
Under Section 17-6304 of the KGCC, no contract or transaction between a
corporation and one or more of its directors or officers or any other
corporation or organization in which such directors or officers are directors
or officers or have a financial interest shall be void or voidable solely
because the directors or officers are present at or participate in the meeting
of the board or committee which authorizes the contract or transaction, or
solely because such directors' or officers' votes are counted for such
purposes if: (1) the material facts as to the relationship or interest and the
contract or transaction are disclosed or known to, and the board or committee
authorized the contract or transaction by, a majority of the disinterested
directors; (2) the material facts are disclosed or known to shareholders
entitled to vote thereon and the contract or transaction is approved by them
in good faith; or (3) the contract or transaction is fair as to the
corporation as of the time it is authorized or approved.
Business Combinations.
Article XVII of the Western Resources Articles provides that an affirmative
vote of at least 80% of the voting stock of Western Resources and the
affirmative vote of at least a majority of the voting stock held by
shareholders other than an Interested Shareholder shall be required for the
approval or authorization of any Business Combination with an Interested
Shareholder; provided, however, that the 80% and majority voting requirements
shall not be applicable if: (a) the Business Combination shall have been
approved by a majority of the Continuing Directors; or (b) the cash or the
Fair Market Value (as determined by a majority of the Continuing Directors) of
the property, securities or other consideration to be received in such
Business Combination is not less than the highest per share price paid on
behalf of the Interested Shareholder for any shares of the Western Resources
stock.
"Business Combinations" requiring such a vote include: (i) any merger or
consolidation of Western Resources or any of its subsidiaries with any
Interested Shareholder; (ii) any sale, lease, exchange, transfer or other
disposition of any substantial part of the assets of Western Resources or a
subsidiary to an Interested Shareholder; (iii) the issuance of any securities
of Western Resources or a subsidiary to an Interested Shareholder other than
an issuance on a pro rata basis to all holders of shares pursuant to a stock
split or dividend; (iv) any recapitalization or reclassification that would
increase the proportionate voting power of an Interested Shareholder; (v) the
adoption of any plan or proposal for the liquidation or dissolution of Western
Resources proposed on behalf of an Interested Shareholder; (vi) any sale,
lease, exchange, transfer or other disposition of all or a substantial part of
the assets of an Interested Shareholder to Western Resources or one of its
subsidiaries; or (vii) any agreement, contract, arrangement or understanding
providing for any of the above transactions. For purposes of the foregoing
provisions, an "Interested Shareholder" is defined as (i) any individual,
corporation, partnership or other person or entity which, together with its
"Affiliates" or "Associates" as such terms are defined in Rule 12b-2 under the
Exchange Act, beneficially owns, as such term is defined in Rule 13d-3 under
the Exchange Act, in the aggregate 10% or more of the outstanding Voting Stock
and (ii) any Affiliate or Associate of such Interested Shareholder;
"Continuing Directors" is defined as any director who was a director prior to
the Interested Shareholder becoming an Interested Shareholder; "Substantial
Part" means 10% or more of the Fair Market Value of Western Resources's total
consolidated assets as reflected in the most recent end of year balance sheet;
"Voting Stock" is defined as all of the outstanding shares of common stock and
preferred stock of Western Resources, with each reference to a proportion of
shares of Voting Stock referring to such proportion of the votes entitled to
be cast by such shares; and "Fair Market Value" is defined as: (i) in the case
of stock, the highest closing sale price during the 30-day period immediately
prior to the date in question of a
70
share of such stock on the NYSE or such other exchange or quotation system;
and (ii) in the case of property other than cash or stock, the fair market
value of such property on the date in question as determined by a majority of
the Continuing Directors.
The affirmative vote of 80% of the voting stock of Western Resources and the
affirmative vote of a majority of the voting stock other than the stock held
by an Interested Shareholder shall be required to amend, repeal or adopt any
provision inconsistent with Article XVII of the Western Resources Articles.
Neither Bermuda law nor ADT's Bye-Laws provide similar restrictions on
transactions with Interested Shareholders.
ADT Bye-Law 104. Pursuant to Bye-Law 104(1)(A) of the ADT Bye-Laws, where
any person is or becomes "interested" in Shares, whether as a result of one
transaction or a series of transactions, in circumstances in which such person
would be obligated to make an offer to shareholders of ADT or to the holders
of every class of securities convertible into, or of rights to subscribe for,
share capital of ADT under the Rules of the City Code, the ADT Board may
require such person to make such an offer under the City Code as if the City
Code applied to ADT, provided that references in the City Code to the "Panel"
will be construed as if they were references to the ADT Board. Rule 9 of the
City Code, as it is applied by the ADT Bye-Laws, provides that, except with
the consent of the ADT Board, when any person (and persons acting in concert
with such person) acquires shares which carry 30% or more of the voting rights
of a company, such person must make an offer for all shares of that class
(whether voting or non-voting). The offer must be for cash or offer a cash
alternative, in each case at not less than the highest price paid (in cash or
otherwise) for shares of the same class by the offeror, or anyone acting in
concert with the offeror, during the offer period and within the 12 months
prior to commencement of the offer.
Section 104(1)(B) of the ADT Bye-Laws provides that when any person has
acquired, is in the process of acquiring, or appears to the ADT Board likely
to acquire an interest in the capital stock of ADT in circumstances in which
such person would be subject to the SARs, the ADT Board may give notice
requiring such person to comply with the SARs, and if such person fails to
comply, give further notice requiring such person to dispose or to procure the
disposal by any person with whom such person has acted in concert of any
interest in shares acquired within 30 days of the expiration of such notice.
The SARs provide that a person may not, in any period of seven days, acquire
shares representing 10% or more of the voting rights in a company if such
shares, aggregated with shares already held by the purchaser, would carry 15%
or more but less than 30% of the voting rights of such company. The SARs do
not apply to an acquisition from a single shareholder if such acquisition is
the only acquisition within a seven-day period. The SARs also do not apply to
a person who acquires 30% or more of the voting rights in a company.
Pursuant to Bye-Law 104(3) of the ADT Bye-Laws, where any person is
interested, whether as a result of a series of transactions over a period of
time or not, in 30% or more of the outstanding Shares, the ADT Board may
demand that a cash offer for all of the outstanding voting or non-voting
securities of ADT be made if the ADT Board determines that an offer pursuant
to Bye-Law 104(1)(A) of the ADT Bye-Laws is not expedient or if a person
required to make such an offer fails to do so. Pursuant to Bye-Law 104(4) of
the ADT Bye-Laws, if the ADT Board serves a notice under Bye-Law 104(3) of the
ADT Bye-Laws, the ADT Board may also require that the offeror offer to
purchase securities of ADT convertible into voting or non-voting shares of ADT
on terms considered "fair and reasonable" by the ADT Board in its sole
discretion. Such offer must be made within 30 days of the demand.
Unless the ADT Board otherwise agrees, an offer for each class of ADT
capital stock under Bye-Laws 104(3) and 104(4) of the ADT Bye-Laws must be for
cash or must offer a cash alternative at not less than the highest price paid
by the offeror or any person acting in concert with it for shares of such
class within the preceding 12 months. Such offer must remain open for at least
14 days after the date on which it becomes unconditional as to acceptances
and, in the case of an offer under Bye-Law 104(3), must provide that all
shares will be purchased within 21 days of the offer becoming unconditional in
all respects.
71
Unless the ADT Board otherwise agrees, the offers under Bye-Laws 104(3)
through 104(5) of the ADT Bye-Laws must be for cash or a cash alternative at
not less than the highest price paid by the offeror or any person acting in
concert for shares or convertible securities of such class within the
preceding 12 months or, if unavailable or inappropriate, at a price fixed by
the directors. Such offer must remain open for at least 14 days after the date
on which it becomes unconditional as to acceptances and must provide that all
shares will be purchased within 21 days of the offer becoming unconditional in
all respects.
The foregoing does not purport to be a complete description of Bye-Law 104.
ADT Shareholders are urged to, and should, read Bye-Law 104, a copy of which
is included herein as Schedule C.
Neither the Western Resources Articles nor the Western Resources Bylaws
contain a similar provision.
Shareholder Rights Plan. As described above in "The Offer--Conditions of the
Offer--Rights Agreement," ADT has entered into the Rights Agreement pursuant
to which Shares in issue on or after November 15, 1996 entitle the holder
thereof to one Right, subject to certain exceptions.
Western Resources is not party to any similar agreement.
VOTING RIGHTS IN CONNECTION WITH BUSINESS COMBINATIONS
Generally. Pursuant to Section 106 of the Companies Act, a company's board
of directors must submit an amalgamation agreement for shareholder approval
and, unless the company's bye-laws provide otherwise, must obtain the approval
of the holders of at least three-fourths of those voting at a general meeting
of shareholders at which a requisite quorum is present. The ADT Bye-Laws do
not currently provide for any vote specific to amalgamations although, if
elected, the Western Resources Nominees intend to propose an amendment to the
ADT Bye-Laws providing that an amalgamation may be approved by the holders of
a simple majority of Shares voted at a general meeting of ADT. An amendment to
the ADT Bye-Laws may be accomplished by the affirmative vote of a simple
majority of Shares voted at a general meeting of ADT. Bye-Law 43 of the ADT
Bye-Laws provides that the quorum necessary for a general meeting of
shareholders to approve an amalgamation agreement is two persons holding
Shares and present in person or represented by proxy.
Section 17-6701 of the KGCC provides that an agreement of merger or
consolidation shall be approved by resolution adopted by the board of
directors of the corporation and approved by a majority of the outstanding
stock entitled to vote thereon, subject to certain exceptions.
Preferred Shares. Section 106(4) of the Companies Act provides that the
holders of a class of shares of an amalgamating company are entitled to vote
separately as a class in respect of an amalgamation if the amalgamation
agreement contains a provision which would constitute a variation of the
rights attaching to any such class of shares.
The Western Resources Articles provide that so long as Western Resources
Preferred Stock (as defined herein) is outstanding, Western Resources may not
merge or consolidate with any other corporation without the consent of the
holders of at least a majority of the outstanding shares of Western Resources
Preferred Stock voting separately as a class or, if more than one-third of
such holders of the Western Resources Preferred Stock shall vote negatively,
the vote of the percentage or number of shares of any and all classes required
by the law or the holders of Western Resources Articles; provided, however,
that no consent of the holders of Western Resources Preferred Stock shall be
required, except as otherwise required by law, with respect to (i) any merger
or consolidation approved by the Commission under the Public Utility Holding
Company Act of 1935 or (ii) if provision for redemption of the Western
Resources Preferred Stock is made prior to the effective time of the merger or
consolidation.
Appraisal Rights. Pursuant to Section 106(6) of the Companies Act, any
shareholder who did not vote in favor of an amalgamation and who is not
satisfied that he has been offered fair value for his shares may within one
month of the giving of the notice of a meeting of shareholders to consider
such amalgamation apply to the
72
Court to appraise the fair value of such shareholder's shares. Within one
month of the Court appraising the fair value of any shares, the company is
entitled either to pay to the dissenting shareholder an amount equal to the
value of his or her shares as appraised by the Court, or to terminate the
amalgamation.
Section 17-6712 of the KGCC provides that a shareholder has the right to
dissent from and receive payment of the value of such shares in the event of
the consummation of a plan of merger or consolidation in which the shareholder
objected to the plan in writing and held shares which were either not entitled
to vote or were not voted in favor of the merger or consolidation. The KGCC
further provides, however, that unless otherwise provided in the articles of
incorporation of a Kansas corporation, this section does not apply to the
holders of any class or series which, on the record date, were either
registered on a national securities exchange or were held of record by at
least 2,000 shareholders.
Bye-Law 46 of the ADT Bye-Laws. Subject to any rights or restrictions
attached to any class of shares of ADT, ADT shareholders present in person or
by proxy at any meeting of ADT shall be entitled on a poll to one vote for
each share held by such shareholders. However, a ADT shareholder is not
entitled (except as a proxy for another shareholder) to be present or vote at
any meeting if such shareholder (i) has been served with a notice under Bye-
Law 104 stating (a) that such shareholder must make an offer in accordance
with Bye-Law 104, and (b) upon failure to make such an offer before the
expiration of a specified period not exceeding twenty-eight days or, having
made such an offer, upon otherwise failing to comply with the provisions of
Bye-Law 104, such shareholder will lose the right to vote, and (ii) such
shareholder fails to make a timely offer or remedy the noncompliance.
A shareholder of ADT also loses the right to vote if such shareholder (i)
acquires three percent or more of the issued share capital of any class of
ADT, either alone or with others, and fails to notify ADT thereof within two
days or, already possessing three percent or more, the shareholder fails to
notify ADT of a change in the shareholder's interests amounting to one percent
or more of the share capital of any class and (ii) such person and the
registered holder of such Shares receives a notice from the ADT Board stating
that the registered holder of such Shares shall not be entitled to vote during
a period of one hundred and eighty days. Also pursuant to Bye-Law 46 of the
ADT Bye-Laws, any person who (i) is known or believed by ADT to be interested
in Shares of ADT, (ii) has been served a notice by ADT requesting specified
information regarding such person's interests in Shares in ADT and stating
that upon failure to provide the information within a specified period, the
shareholder will lose the right to vote, and (iii) such person fails to comply
with the notice within the specified period, shall also lose the right to vote
for the period during which such person fails to comply with the notice plus
an additional ninety days.
The foregoing does not purport to be a complete description of Bye-Law 46 of
the ADT Bye-Laws. ADT Shareholders are urged to, and should, read Bye-Law 46
of the ADT Bye-Laws, a copy of which is included herein as Schedule D.
Kansas Control Share Transaction Provision. Pursuant to Section 17-1286 of
the KGCC (the "Kansas Control Share Acquisition Provision"), control shares
are shares of an issuing public corporation that would, except for application
of the statute, entitle their holder to exercise or direct the exercise of
voting power in the election of directors within certain specified ranges
(one-fifth or more but less than one-third, one-third or more but less than a
majority, a majority or more). A control share acquisition is an acquisition,
directly or indirectly, by any person of ownership of, or power to direct the
voting of, control shares, either pursuant to a single transaction or various
transactions within a 120-day period, or pursuant to a plan to make a control
share acquisition.
This provision applies to shares of an issuing public corporation which has
100 or more shareholders, a principal place of business, principal office or
substantial assets in Kansas and either more than 10% of its shareholders
resident in Kansas, at least 10% of its shares owned by Kansas residents or at
least 2,500 shareholders resident in Kansas. Western Resources meets these
criteria and is thus an issuing public corporation in Kansas.
73
Control shares acquired in a control share acquisition have the same voting
rights as before the acquisition only to the extent approved by a majority of
all shares entitled to vote in the election of directors and a majority of all
shares entitled to vote in the election of directors, excluding all interested
shares. An acquiring person can request a special meeting of shareholders to
consider the voting rights that will attach to his or her control shares.
Interested shares are those over which (i) a person or member of a group
that makes or proposes to make a control share acquisition, (ii) an officer of
the issuing public corporation, or (iii) an employee of the issuing public
corporation who is also a director, exercises voting power in the election of
directors.
An issuing public corporation can opt out of the Kansas Control Share
Acquisition Provision with a provision in either its articles of incorporation
or its bylaws stating that it does not apply. The opt-out is effective only
with regard to control share acquisitions which occur after the opt-out has
been adopted. The Western Resources Articles and the Western Resources Bylaws
do not contain an opt-out at this time.
Unless otherwise provided in the corporation's bylaws or articles of
incorporation, control shares may be redeemed if an acquiring person statement
has not been delivered to the corporation by the tenth day after the control
share acquisition, or if a statement has been filed but the shareholders have
voted not to accord voting rights to the control shares. A call for redemption
must occur within 30 days after the event that gives the corporation the
option to call for redemption the shares and the shares must be redeemed
within 60 days of such call.
The definition of "control share acquisition" sets forth certain exceptions,
including, without limitation, the acquisition of shares in certain statutory
mergers or consolidations to which the issuing public corporation is a party.
Bermuda does not have a similar statute.
Kansas Business Combination Statute. The KGCC prohibits, subject to certain
exceptions set forth therein, various business combinations with "interested
stockholders" (as hereafter described) including mergers or consolidations of
the corporation, or of any direct or indirect majority-owned subsidiary of the
corporation, for a period of three years following the date such stockholder
became an interested stockholder unless (a) prior to such date the board of
directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder, (b) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced (determined in accordance with the KGCC), or
(c) on or subsequent to such date the business combination is approved by the
board of directors and authorized at an annual or special meeting of the
shareholders of the corporation (but not by written consent of the
shareholders), by the affirmative vote of at least 66 2/3% of the outstanding
voting shares of the corporation which are not owned by the interested
stockholder. "Interested stockholder" means, subject to certain exceptions,
any person, other than the corporation or any direct or indirect majority-
owned subsidiary of the corporation, that is (i) the owner of 15% or more of
the outstanding voting stock of the corporation, or (ii) an affiliate or
associate of the corporation and was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be determined
whether such person is an interested stockholder, and the affiliates and
associates of such person.
Bermuda does not have a similar statute.
Section 102 of the Companies Act. Section 102 of the Companies Act provides
that where a scheme or contract involving the transfer of shares in a company
(the "transferor company") to another company (the "transferee company") has,
within four months after the making of the offer, been approved by the holders
of not less than nine-tenths in value of the shares whose transfer is
involved, other than shares already held at the date of the offer by, or by a
nominee for, the transferee company or its subsidiary, the transferee company
may, within two months from the expiration of the four month period, give
notice to any dissenting shareholder that it
74
desires to acquire his shares, and then such transferee company shall be
entitled and bound, unless upon application by the dissenting shareholder the
Court orders otherwise, to acquire such shares on the terms on which
shareholders that approved such scheme or contract transferred their shares.
The transferor company must offer the same terms to all holders of shares of
the same class as the shares which are the subject of such offer.
Where shares in the transferor company of the same class as the shares whose
transfer is involved are already held by the transferee company to a value
greater than one-tenth of the aggregate of their value and that of the shares
whose transfer is involved, the holders who approve the scheme or contract,
besides holding not less than nine-tenths in value of the shares, must also be
not less than three-fourths in number of the holders of those shares. For the
purpose of Section 102 of the Companies Act, "dissenting shareholder" includes
a shareholder that has not assented to a scheme or contract and any
shareholder that has failed or refused to transfer shares to the transferee
company.
Within one month of the transfer of nine-tenths in value of the transferor
company's shares to the transferee company, or to its nominee or subsidiary,
the transferee company shall notify the holders of the remaining shares of
such transfer. Within three months of the giving of notice, any such remaining
holder of shares may require the transferee company to acquire his shares, and
the transferee company shall be required to acquire such shares on the same
terms as provided for in the scheme or contract or upon such terms as may be
agreed or upon such terms as the Court may determine upon application of the
transferee company or the shareholder.
Section 103 of the Companies Act. Pursuant to Section 103 of the Companies
Act, a holder or holders of not less than 95% of the shares of any class of
shares in a Bermuda company may give notice to the remaining shareholders or
class of shareholders of the intention to acquire their shares on the terms
set out in the notice. Section 103 provides that when such notice is given,
the acquiring holder or holders shall be entitled and bound to acquire the
shares of the remaining shareholders on the terms set out in the notice unless
a remaining shareholder applies to the Court for an appraisal under Section
103(2). A shareholder to whom a notice has been given pursuant to Section 103
may within one month of receiving the notice apply to the Court to appraise
the value of the shares to be purchased from him, and the acquiring holder or
holders is entitled to acquire the shares at the price fixed by the Court or
cancel the notice given pursuant to Section 103.
Merger of Parent Corporation and Subsidiary Corporation under Section 17-
6703 of the KGCC. Under Section 17-6703 of the KGCC, where 90% of the
outstanding shares of each class of stock of a corporation is owned by another
corporation, and one such corporation is a Kansas corporation and the other is
a Kansas corporation or a corporation of any other state or states or of the
District of Columbia, and the laws of such other state or states or the
District of Columbia permit a corporation of such jurisdiction to merge with a
corporation of another jurisdiction, the corporation that has such ownership
may merge such other corporation into itself, or may merge itself into such
other corporation by executing, acknowledging and filing a certificate of
ownership and merger. If the parent corporation is not the surviving
corporation, the certificate of ownership and merger must state the proposed
merger was adopted by a majority of the outstanding stock of the parent
corporation entitled to vote thereon. In the event that all of the stock of a
subsidiary Kansas corporation party to a merger under Section 17-6704 of the
KGCC is not owned by the parent corporation, the Shareholders of such
subsidiary Kansas corporation have appraisal rights under Kansas law.
Directors' Standard of Care and Indemnification. Bye-Law 102 of the ADT Bye-
Laws provides that every director, secretary and other officer of ADT shall be
indemnified by ADT against all costs, losses and expenses which any such
officer may incur or become liable for by reason of any contract entered into,
or any act or thing done by such officer or in any way in the discharge of
such officer's duties, provided that the indemnity contained in the ADT Bye-
Laws shall not extend to any matter which would render it void under the
Companies Act.
Section 98 of the Companies Act permits a company to indemnify its officers
and employees in respect of any loss arising or liability attaching to such
persons by virtue of any rule of law in respect of any negligence, default,
breach of duty or breach of trust of which the officer or employee may be
guilty in relation to the
75
company or any subsidiary thereof; provided, however, that the company shall
not indemnify an officer or employee against any liability arising out of any
fraud or dishonesty of which such person may be guilty.
Bye-Law 103 of the ADT Bye-Laws further provides that no director, secretary
or other officer of ADT shall be liable for (i) the acts, receipts, neglects
or defaults of any other director or officer of ADT, (ii) joining in any
receipt or other act for conformity, (iii) any loss or expense happening to
ADT through the insufficiency or deficiency of title to any property acquired
by order of the directors for or on behalf of ADT, (iv) the insufficiency or
deficiency of any security in or upon which any of the monies of ADT shall be
invested, (v) any loss or damage arising from the bankruptcy, insolvency or
tortious act of any person with whom any monies, securities or effects shall
be deposited, (vi) any loss occasioned by any error of judgment, omission,
default, or oversight on such person's part, or (vii) any other loss, damage
or misfortune that may happen in relation to the execution of the duties of
such person's office or in relation thereto, unless the same happens through
such person's own willful negligence, willful default, fraud or dishonesty.
Under Section 97(1) of the Companies Act, every officer of a Bermuda company
in exercising his powers and discharging his duties is required to act
honestly and in good faith with a view to the best interests of the company,
and to exercise the care, diligence and skills that a reasonably prudent
person would exercise in comparable circumstances.
The Western Resources Articles provide that each person who was or is or is
threatened to be made a party to, or is involved in, any action, whether
civil, criminal, administrative or investigative, by reason of the fact that
he or she, or a person of whom he or she is the legal representative, is or
was a director or officer, of Western Resources or is or was serving at the
request of Western Resources as a director, officer, employee or agent of
another corporation or other enterprise including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall
be indemnified and held harmless by Western Resources to the fullest extent
authorized by the KGCC.
The KGCC does not provide for a standard of care or affix fiduciary duties
to corporate directors but does permit indemnification of directors. Pursuant
to Section 17-6305 of the KGCC, a corporation shall have power to indemnify
any person who was or is, or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, other than an action by or in the
right of the corporation, by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation or other enterprise if such person acted in good faith and
in a manner such person reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. A corporation may indemnify any such person who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation (except in certain circumstances where such person has been
adjudged to be liable to the corporation). The indemnification described above
may cover expenses, judgments and amounts paid in settlement, and is not
exclusive of any other rights to which such person seeking indemnification may
be otherwise entitled.
Dividends; Declarations and Payments. Under Section 54 of the Companies Act,
a company shall not declare or pay a dividend, or make a distribution out of
contributed surplus, if there are reasonable grounds for believing that either
the company is, or would after the payment be, unable to pay its liabilities
as they became due, or that the realizable value of the company's assets would
thereby be less than the aggregate of its liabilities and its issued share
capital and share premium accounts.
Under Section 17-6420 of the KGCC, the directors of a corporation, subject
to any restrictions contained in its articles of incorporation, may declare
and pay dividends upon the shares of its capital stock either (1) out of
76
its surplus, as defined in and computed in accordance with Sections 17-6404
and 17-6604 of the KGCC, or (2) in case there shall be no such surplus, out of
its net profits for the fiscal year in which the dividend is declared or the
preceding fiscal year. If the capital of the corporation shall have been
diminished by depreciation in the value of its property, or by losses, or
otherwise, to an amount less than the aggregate amount of the capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets, the directors of such corporation
shall not declare and pay out of such net profits any dividends until the
deficiency in the amount of capital represented by the issued and outstanding
stock of all classes having a preference upon the distribution of assets shall
have been repaired.
77
MARKET PRICES AND DIVIDENDS
The Western Resources Common Stock is listed and principally traded on the
NYSE. The Shares are listed and traded principally on the NYSE, the LSE, the
FSE and the BSX. The following table sets forth the range of high and low
sales prices as reported on the NYSE Composite Tape, together with the per
share dividends paid by Western Resources during the periods indicated.
WESTERN RESOURCES ADT
------------------------- ---------------
PRICE RANGE PRICE RANGE
--------------- ---------------
QUARTER HIGH LOW DIVIDENDS HIGH LOW
- ------- ------- ------- --------- ------- -------
1994
First Quarter....................... $34.875 $28.250 $0.495 $11.000 $ 8.875
Second Quarter...................... 29.750 26.125 0.495 10.500 8.500
Third Quarter....................... 29.625 26.750 0.495 11.625 9.875
Fourth Quarter...................... 29.250 27.375 0.495 11.875 10.125
1995
First Quarter....................... $33.375 $28.625 $0.505 $12.250 $ 9.625
Second Quarter...................... 32.500 30.250 0.505 12.250 10.125
Third Quarter....................... 32.875 29.750 0.505 14.125 11.625
Fourth Quarter...................... 34.000 31.000 0.505 15.250 13.000
1996
First Quarter....................... $34.875 $29.250 $0.515 $18.000 $14.000
Second Quarter...................... 30.750 28.000 0.515 $19.500 $16.250
Third Quarter....................... 30.750 28.250 0.515 $24.750 $15.875
On December 17, 1996, the last trading day before public announcement of the
Offer and the date of this Preliminary Prospectus, the closing sales price per
share of Western Resources Common Stock was $31.250. Past price performance is
not necessarily indicative of likely future price performance. Holders of
Shares are urged to obtain current market quotations for shares of Western
Resources Common Stock.
On December 21, 1995, the last trading day prior to Westar Capital's public
announcement of its initial acquisition of Shares, the closing sales price per
Share was $13.50, and on December 17, 1996, the last trading day prior to the
public announcement of the Offer and the date of this Preliminary Prospectus,
the closing sales price per Share was $20.125.
Holders of Western Resources Common Stock are entitled to receive dividends
from funds legally available therefor when, as and if declared by the Western
Resources Board. The Western Resources Board presently intends to continue the
policy of paying quarterly cash dividends. Future dividends of Western
Resources will depend upon the earnings of Western Resources and its
subsidiaries, their financial condition and other factors including applicable
government regulations and policies. See "Description of Western Resources
Capital Stock."
According to the ADT Form 8-A, the Rights are listed on the NYSE and the
LSE, but are currently attached to all outstanding Shares and may not be
traded separately. Upon the occurrence of the ADT Distribution Date, the
Rights are to trade separately from the Shares.
78
VALIDITY OF WESTERN RESOURCES COMMON STOCK
The validity of the shares of Western Resources Common Stock offered hereby
will be passed upon for Western Resources by Sullivan & Cromwell, 125 Broad
Street, New York, New York 10004, in reliance on the opinion of John K.
Rosenberg, General Counsel to Western Resources, with respect to matters of
Kansas law. As of December 17, 1996, Mr. Rosenberg owned directly and/or
beneficially 3,050 shares of Western Resources Common Stock and, 550 stock
options, and had been granted pursuant to and subject to the terms of Western
Resources' Long Term Incentive Program, 999 performance shares.
EXPERTS
The audited consolidated financial statements of Western Resources
incorporated by reference in this Preliminary Prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said reports.
79
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF WESTERN RESOURCES
Directors and Executive Officers of Western Resources. The name, business
address, present principal occupation or employment and five-year employment
history of each of the directors and executive officers of Western Resources
are set forth below. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to employment with Western Resources.
Each director and executive officer listed below is a citizen of the United
States.
POSITION WITH WESTERN
RESOURCES; PRINCIPAL
OCCUPATION OR EMPLOYMENT; 5-
NAME AND BUSINESS ADDRESS YEAR EMPLOYMENT HISTORY
------------------------- ----------------------------
Frank J. Becker............................ Director of Western Resources.
Becker Investments, Inc. President, Becker Investments,
4840 W. 15th, Suite 1011 Inc., an investment company,
Lawrence, KS 66049-3862 Lawrence, Kansas, since January
1993. Prior to such time Mr. Becker
handled personal investments;
Director, Bank IV Butler County,
N.A.; Director, Great-West Life &
Annuity Insurance Co.; Director,
Douglas County Bank; Trustee, The
Kansas University Endowment
Association.
Gene A. Budig.............................. Director of Western Resources.
American League of President, The American League of
Professional Baseball Clubs Professional Baseball Clubs, New
350 Park Avenue York, New York, since July 1994;
New York, NY 10022 and prior to that chancellor,
University of Kansas; Director,
Harry S.Truman Library Institute;
Director, Ewing Marion Kauffman
Foundation; Director, Major League
Baseball Hall of Fame.
C.Q. Chandler.............................. Director of Western Resources.
INTRUST Bank Chairman of the Board, INTRUST
105 N. Main Street Financial Corporation, Wichita,
Wichita, KS 67202 Kansas; Director, Fidelity State
Bank & Trust Co.; Director, First
Newton Bankshares; Director, Kansas
Crippled Children's Society;
Trustee, The Kansas State
University Foundation.
Thomas R. Clevenger........................ Director of Western Resources.
Western Resources, Inc. Investments, Wichita, Kansas;
818 S. Kansas Avenue Director, Security Benefit Life
Topeka, KS 66612 Insurance Company; Trustee and Vice
Chairman, The Menninger Foundation;
Trustee, Midwest Research
Institute.
John C. Dicus.............................. Director of Western Resources.
Capitol Federal Savings Chairman of the Board and
700 S. Kansas Avenue President, Capitol Federal Savings
Topeka, KS 66603 and Loan Association, Topeka,
Kansas; Director, Security Benefit
Life Insurance Company; Director,
Columbian National Title Company;
Trustee, The Menninger Foundation;
Trustee, Stormont-Vail Regional
Medical Center; Trustee, The Kansas
University Endowment Association.
John E. Hayes, Jr. ........................ Chairman of the Board and Chief
Western Resources, Inc. Executive Officer, and previously
818 S. Kansas Avenue President, of Western Resources;
Topeka, KS 66612 Director, Boatmen's Bancshares,
Inc.; Director, Security Benefit
Life Insurance Company; Director,
CommNet Cellular Inc.; Director, T-
Netix, Inc.; Trustee, Rockhurst
College; Trustee, The Menninger
Foundation; Trustee, Midwest
Research Institute.
A-1
POSITION WITH WESTERN
RESOURCES; PRINCIPAL
OCCUPATION OR EMPLOYMENT; 5-
NAME AND BUSINESS ADDRESS YEAR EMPLOYMENT HISTORY
------------------------- ----------------------------
David H. Hughes............................ Director of Western Resources.
Western Resources, Inc. Retired Vice Chairman, Hallmark
818 S. Kansas Avenue Cards, Inc., Kansas City, Missouri;
Topeka, KS 66612 Director, Hall Family Foundations;
Director, Midwest Research
Institute; Director, Yellow
Corporation; Trustee, St. Luke's
Hospital Foundation; Trustee,
Children's Mercy Hospital; Trustee,
Princeton Theological Seminary;
Trustee, Linda Hall Library.
Russell W. Meyer, Jr. ..................... Director of Western Resources.
Cessna Aircraft Company Chairman and Chief Executive
One Cessna Blvd. Officer, Cessna Aircraft Company,
Wichita, KS 67215 Wichita, Kansas; Director,
Boatmen's Bancshares Inc.;
Director, Vanguard Airlines, Inc.;
Trustee, Wake Forest University.
John H. Robinson........................... Director of Western Resources.
Black & Veatch Chairman Emeritus, since December
8400 Ward Parkway 1992, and prior to that Chairman,
Kansas City, MO 64114 Black & Veatch, an architectural
engineering firm, Kansas City,
Missouri; Director, St. Luke's
Hospital; Director, Automobile Club
of Missouri; Director, CompuSpeak
Laboratories, Inc.; Director, The
Greater Kansas City Community
Foundation & Affiliated Trusts;
Trustee, Midwest Research
Institute; Trustee, University of
Missouri-Kansas City.
Louis W. Smith............................. Director of Western Resources.
Ewing Marion Kauffman Foundation President and Chief Operating
4900 Oak Street Officer, Ewing Marion Kauffman
Kansas City, MO 64112-2776 Foundation, a charitable
foundation, since July 1995; and
prior to that President, Allied
Signal Aerospace Company, Kansas
City Division, Kansas City,
Missouri; Director, Commerce Bank
of Kansas City; Director, Ewing
Marion Kauffman Foundation;
Director, Kansas City Royals
Baseball Club; Director, Payless
Cashways, Inc.; Trustee, University
of Missouri-Rolla; Trustee,
Rockhurst College.
Susan M. Stanton........................... Director of Western Resources.
Payless Cashways, Inc. President and Chief Operating
2300 Main Street Officer since November 1993; and
Kansas City, MO 64108 prior to that Senior Vice
President, Merchandising and
Marketing, Payless Cashways, Inc.,
a retail chain, Kansas City,
Missouri; Director, Commerce Bank
of Kansas City; Director, Greater
Kansas City Chamber of Commerce;
Trustee, Rockhurst College.
Kenneth J. Wagnon.......................... Director of Western Resources.
Capital Enterprises, Inc. President, Capital Enterprises,
300 N. Main, Suite 201 Inc., a franchise and investment
Wichita, KS 67202 company, Wichita, Kansas; Director,
Vanguard Airlines, Inc.; Director,
Cerebral Palsy Research Foundation;
Director, T-Netix, Inc.; Director,
University of Kansas School of
Business; Trustee, The Kansas
University Endowment Association.
A-2
POSITION WITH WESTERN
RESOURCES; PRINCIPAL
OCCUPATION OR EMPLOYMENT; 5-
NAME AND BUSINESS ADDRESS YEAR EMPLOYMENT HISTORY
------------------------- ----------------------------
David C. Wittig............................ Director of Western Resources.
Western Resources, Inc. President, since March 1996, and
818 S. Kansas Avenue previously, Executive Vice
Topeka, KS 66612 President, Corporate Development,
of Western Resources; and prior to
that, Managing Director and Co-Head
of Mergers and Acquisitions,
Salomon Brothers Inc.
Steven L. Kitchen.......................... Executive Vice President and Chief
Western Resources, Inc. Financial Officer of Western
818 S. Kansas Avenue Resources during the last 5 years.
Topeka, KS 66612
Carl M. Koupal, Jr. ....................... Executive Vice President and Chief
Western Resources, Inc. Administrative Officer of Western
818 S. Kansas Avenue Resources since July 1995 and
Topeka, KS 66612 Executive Vice President, Corporate
Communications, Marketing, and
Economic Development of Western
Resources since January 1994; Vice
President, Corporate Marketing, and
Economic Development of Western
Resources 1992 to 1994; Director,
Economic Development, Jefferson
City, Missouri, from 1985 to 1992.
John K. Rosenberg.......................... Executive Vice President and
Western Resources, Inc. General Counsel of Western
818 S. Kansas Avenue Resources during the last 5 years.
Topeka, KS 66612
Jerry D. Courington........................ Controller of Western Resources
Western Resources, Inc. during the last 5 years.
818 S. Kansas Avenue
Topeka, KS 66612
Norm Jackon................................ Executive Vice President of Western
Western Resources, Inc. Resources.
818 S. Kansas Avenue
Topeka, KS 66612
A-3
SCHEDULE B
OWNERSHIP OF SHARES BY CERTAIN BENEFICIAL OWNERS AND ADT MANAGEMENT
The following table and notes thereto, other than information regarding
Westar Capital, are reproduced from ADT's Proxy Statement for the 1996 Annual
Meeting of ADT Shareholders, set forth certain information with respect to
beneficial ownership of Shares (i) as of December 31, 1995 by any person known
by ADT to beneficially own more than five percent of the outstanding Shares,
other than Westar Capital, and (ii) as of February 29, 1996 by (a) all
directors and certain former directors of ADT, (b) the named directors and
officers of ADT, including one executive officer of a subsidiary of ADT and
(c) all directors and executive officers of ADT as a group. The following
table also sets forth certain information with respect to beneficial ownership
of Shares by Westar Capital as of December 17, 1996, the last trading day
prior to the date of this Preliminary Prospectus.
SHARES
------------------------------
NUMBER OF
NAME OF BENEFICIAL OWNER SHARES BENEFICIALLY PERCENT OF
OR IDENTITY OF GROUP OWNED (1)(2) CLASS (3)
------------------------ ------------------- ----------
The Capital Group Companies, Inc. (4).......... 9,444,800 7.3%
333 South Hope Street
Los Angeles, California 90071
FMR Corp. (5).................................. 19,871,135 15.2%
82 Devonshire Street
Boston, Massachusetts 02109
Trimark Financial Corporation Inc. (6)......... 6,925,600 5.4%
One First Canadian Place
Suite 5600, P.O. Box 487
Toronto, Ontario M5X 1E5
Westar Capital, Inc. (7)....................... 38,287,111 27.1%
818 S. Kansas Avenue
Topeka, Kansas 66612
M.A. Ashcroft (8).............................. 4,292,383 3.2%
U.J. Brualdi, Jr. (9).......................... 617,344 *
J.E. Danneberg................................. 102 *
D.B. Hammond (10).............................. 153,250 *
A.B. Henderson................................. 621 *
J.S. Pasman, Jr................................ 2,000 *
M.J. Richardson................................ 252,835 *
S.J. Ruzika (11)............................... 674,072 *
W.P. Slusser................................... 2,500 *
W.W. Stinson................................... 10 *
R.S. Troubh.................................... 2,500 *
P.N.T. Widdrington............................. 10 *
All directors and executive officers as a
group, 12 persons ((7), (8), (9) and (10)).... 5,997,458 4.5%
(1) Includes Shares which could be acquired upon exercise of the following
number of options to purchase Shares from ADT exercisable on or within 60
days of February 29, 1996 held by the following persons; M.A. Ashcroft,
3,741,665; U.J. Brualdi, Jr., 583,330; D.B. Hammond, 131,665; M.J.
Richardson, 239,998 and S.J. Ruzika, 670,330.
B-1
(2) For purposes of this table, a person or group of persons is deemed to
have "beneficial ownership" of any Shares which such person has the right
to acquire on or within 60 days after February 29, 1996 (December 31,
1995 with respect to CGI, FMR and TFC (each as defined below)). For
purposes of computing the percentage of outstanding Shares held by each
person or group of persons named above, any security which such person or
persons has or have the right to acquire on or within 60 days after
February 29, 1996 (December 31, 1995 with respect to CGI, FMR and TFC) is
deemed to be outstanding, but is not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person.
(3) Based upon Shares outstanding on February 29, 1996, but excluding
3,182,787 Shares owned by a subsidiary of ADT.
(4) ADT received an Amendment No. 4 to Schedule 13G dated February 9, 1996
filed with the Commission by Capital Research and Management Company and
The Capital Group Companies, Inc. ("CGI") in respect of ownership of
9,444,800 Shares at December 31, 1995 by accounts under the discretionary
investment management of subsidiaries of CGI which act as investment
managers or advisers. As of December 31, 1995, CGI exercised sole voting
power with respect to 1,783,500 Shares and exercised sole dispositive
power with respect to 9,444,800 Shares. As of the date of ADT's Proxy
Statement for the 1996 Annual Meeting of ADT shareholders, ADT had not
attempted to independently verify any of the information contained in the
Schedule 13G.
(5) ADT received an Amendment No. 2 to Schedule 13G, dated February 12, 1996
filed with the Commission by FMR Corp. ("FMR") in respect of ownership of
19,871,135 of ADT's Shares at December 31, 1995 by accounts under the
discretionary investment management of its wholly owned subsidiaries,
Fidelity Management Research Company and Fidelity Management Trust
Company. As of December 31, 1995, FMR exercised sole voting power with
respect to 158,609 Shares and sole dispositive power with respect to
19,871,135 Shares. As of the date of ADT's Proxy Statement for the 1996
Annual Meeting of ADT shareholders, ADT had not attempted to
independently verify any of the information contained in such Schedule
13G.
(6) ADT received a Schedule 13G, dated February 12, 1996, filed with the
Commission by Trimark Financial Corporation Inc. ("TFC") in respect of
ownership of 6,926,600 Shares at December 31, 1995 by accounts under the
discretionary investment management of subsidiaries of TFC which act as
investment managers or advisers. As of December 31, 1995, TFC exercised
sole voting power with respect to 6,925,600 Shares and exercised sole
dispositive power with respect to 6,925,600 Shares. As of the date of
ADT's Proxy Statement for the 1996 Annual Meeting of ADT shareholders,
ADT had not attempted to independently verify any of the information
contained in such Schedule 13G.
(7) Includes 500 LYONS, each of which is exchangeable for Shares at a rate of
28.23 Shares.
(8) The number of Shares beneficially owned by Mr. Ashcroft includes 718
Shares owned by Mr. Ashcroft's wife.
(9) The number of Shares includes 1,000 Shares owned by one of Mr. Brualdi's
children. Mr. Brualdi disclaims beneficial ownership of such Shares. The
number of Shares includes 23,031 Shares held in a profit-sharing plan
which are voted by the trustee of such plan. Mr. Brualdi has the power to
direct the disposition of such Shares.
(10) The number of Shares includes 13,830 Shares owned by a company owned by
Mr. Hammond and his family. The number of Shares also includes 186 Shares
owned by one of Mr. Hammond's children.
(11) The number of Shares beneficially owned by Mr. Ruzika includes 2,500
Shares owned by Mr. Ruzika's wife.
B-2
SCHEDULE C
ADT BYE-LAWS
BYE-LAW 104. TAKE-OVER OFFERS FOR THE COMPANY
(1) (A) Where any person is or becomes interested, whether as a result of
transactions over a period of time or not, in shares in the capital
of the Company in circumstances in which he would be obliged to make
or extend an offer or offers to shareholders or holders of other
securities or rights referred to in paragraph (4) below of the
Company under the Rules for the time being of the City Code on Take-
overs and Mergers of the United Kingdom of Great Britain and
Northern Ireland (the "City Code", which expression shall include
any revision or modification thereof) issued by the Panel on Take-
overs and Mergers ("the Panel", which expression shall include any
body which succeeds to the functions of the said Panel) if the
Company was a company incorporated in the United Kingdom of Great
Britain and Northern Ireland to which the City Code applied, the
Directors may serve upon that person a notice requiring him to make
or extend an offer or offers in writing in accordance with the
requirements of the City Code in all respects as if the City Code
did apply to the Company but so that references in the City Code to
the Panel shall be construed, for the purposes of this Bye-Law, as
if they were references to the Board of Directors of the Company.
(B) Where any person has acquired, is in the process of acquiring, or
appears to the Directors likely to acquire an interest in shares in
the capital of the Company in circumstances in which he would be
subject to the Rules Governing Substantial Acquisitions of Shares
(the "SARs"), which expression shall include any revision or
modification thereof issued by the Panel, if the Company was a
company incorporated in the United Kingdom of Great Britain and
Northern Ireland to which the SARs applied, the Directors may serve
upon that person a notice requiring him to comply with the provisions
of the SARs in relation to any acquisition made (after the date of
adoption of this paragraph (1)(B)) or proposed to be made by him and
if that person has made (after the date of adoption of this paragraph
(1)(B)) or subsequently makes any acquisition in contravention of the
provisions of the SARs such a notice or a further notice issued by
the Directors may require that person to dispose or to procure the
disposal by any person with whom he has acted in concert of any
interest in shares so acquired within twenty-eight days of the date
of such notice.
(C) If a notice served under paragraph (1)(B) requiring a disposal of
shares is not complied with in accordance with its terms and has not
been withdrawn, the Directors may, so far as they are able, dispose
of the shares to which such notice relates at the best price
reasonably obtainable in all the circumstances in which case they
shall give written notice of such disposal to the person or persons
on whom such notice was served. Except as hereinafter provided such a
disposal shall be completed as soon as reasonably practicable after
the giving of a notice under this paragraph (1)(C) as may in the
opinion of the Directors be consistent with obtaining the best price
reasonably obtainable and in any event within thirty days of expiry
of such notice provided that a disposal under this paragraph (1)(C)
shall be suspended during the period when dealings by the Directors
in the Company's shares are not permitted either by law or by the
regulations of any stock exchange upon which those shares of the
Company which are to be disposed of are listed, but any disposal
under this paragraph which is suspended as aforesaid shall be
completed within thirty days after expiry of the period of such
suspension and provided further that neither the Company nor the
Directors shall be liable to any holder or any person having an
interest in any share or other person for failing to obtain the best
price so long as the Directors act in good faith within the period
specified above.
(D) For the purpose of effecting any disposal under paragraph (1)(C)
above, the Directors may authorise in writing any officer or employee
of the Company to execute any necessary transfer on behalf of any
holder and may issue a new certificate to the purchaser. The net
proceeds of such disposal shall be received by the Company, whose
receipt shall be a good discharge for the purchase money, and shall
be paid (without any interest being payable thereon) to the former
holder upon surrender by him of the certificate in respect of the
shares sold and formerly held by him.
C-1
(E) The provisions of these Bye-Laws relating to the protection of
purchasers of shares sold under a lien or upon forfeiture shall apply
mutatis mutandis to disposals under this Bye-Law.
(2) Any notice served under paragraph (1) above may also require the person
on whom it is served to execute an undertaking under seal in favour of
the Directors (as trustees for all the holders of shares in the capital
of the Company) and in a form satisfactory to the Directors to observe
and perform the rules and requirements of the City Code or the SARs as
the case may be as if the same were applicable to the Company and in the
manner prescribed in paragraph (1) above.
(3) Where any person is interested, whether as a result of a series of
transactions over a period of time or not, in Common Shares which (taken
together with shares held or acquired by persons acting in concert with
him) represent 30 per cent. or more of all the Common Shares for the
time being in issue and the Directors determine that it is not expedient
to serve a notice under paragraph (1)(A) above or if any person upon
whom such a notice is served fails within thirty days to comply with the
same, the Directors may serve upon that person a notice requiring him to
make an offer in writing (the "Offer"), within 30 days of the date of
such notice on the basis set out in the following paragraphs, to the
holders of every class of share capital of the Company (whether voting
or non-voting) to purchase all such shares for cash on terms that
payment in full therefor will be made within 21 days of the Offer
becoming or being declared unconditional in all respects.
(4) Where the Directors serve a notice upon any person in accordance with
paragraph (3) above, they may also include in that notice a requirement
that such person shall make an appropriate offer or proposal in writing
to the holders of every class of securities convertible into, or of
rights to subscribe for, share capital of the Company (whether such share
capital is voting or non-voting). Such appropriate offer or proposal is
referred to in this Bye-Law as a "Convertible Offer". The Convertible
Offer shall be made at the same time as the Offer. The terms of the
Convertible Offer shall be such terms as the Directors, in their absolute
discretion, consider to be fair and reasonable having regard to the terms
of the Offer and the Directors shall notify such terms to the person
specified in paragraph (3) above (the "Offeror"). The Convertible Offer
shall be conditional only upon the Offer becoming or being declared
unconditional in all respects.
(5) In addition to the Offeror, the Directors may require, in their
absolute discretion, each of the principal members of a group of persons
acting in concert with him and who appear to be interested in any shares
in, or convertible securities of, the Company to make the Offer and/or
the Convertible Offer. For the purposes of this Bye-Law, persons shall be
deemed to be acting in concert if, pursuant to an agreement or
understanding (whether formal or informal) they actively co-operate in
acquiring or seeking to acquire shares in, or convertible securities of,
the Company.
(6) Unless the Directors otherwise agree, an offer made under paragraphs
(3), (4) or (5) of this Bye-Law must, in respect of each class of share
capital or convertible securities involved, be in cash or be accompanied
by a cash alternative offer at not less than the highest price paid by
the Offeror or any person acting in concert with it for shares or
convertible securities of that class within the preceding 12 months. If
such price cannot be ascertained by the Directors or if such shares or
convertible securities have been acquired other than for cash pursuant to
a bargain made on any recognised stock exchange or if the Directors
consider that such highest price is, for any reason, inappropriate,
unfair or unreasonable having regard to the size and timing of the
relevant purchases, the relationship (if any) between the seller and
purchaser of such shares or convertible securities or the number of
shares or convertible securities purchased in the preceding 12 months,
the Directors may, in any such case, fix the price at which the Offer,
the Convertible Offer or the cash alternative offer is to be made. The
cash Offer, the cash Convertible Offer or the cash alternative offer
must, in each case, remain open for not less than 14 days after the date
on which the Offer or the Convertible Offer, as the case may be, has
become or is declared to be unconditional as to acceptances.
C-2
(7) Any person who makes or is about to make or who is or can be required
to make an offer under this Bye-Law or who has made such an offer which
has lapsed, shall observe and shall procure that any persons acting in
concert with him shall observe the rules and requirements of the City
Code both in letter and in spirit prior to, during the pursuit of and, if
applicable, after the failure of such an offer.
(8) For the purposes of this Bye-Law, any questions or disputes arising out
of the grant of consent by the Directors, the comparability of offers,
the terms of offers, any question as to whether any person shall be
regarded as acting in concert with another, any question regarding the
interpretation or application of the City Code and the meaning of any
terms or phrases used in this Bye-Law or the City Code shall be
determined by the Directors in their absolute discretion.
C-3
SCHEDULE D
ADT BYE-LAWS
BYE-LAW 46. VOTING RIGHTS
(1) Subject to any rights or restrictions attached to any class of shares,
at any meeting of the Company, each Member present in person shall be
entitled to one vote on any question to be decided on a show of hands
and each Member present in person or by proxy shall be entitled on a
poll to one vote for each share held by him.
PROVIDED THAT no Member shall be entitled (save as proxy for another
Member) to be present or vote at any meeting, either personally or by
proxy, or to exercise any privilege in relation to meetings of the
Company conferred by membership, or be reckoned in a quorum:--
(A) in respect of any share held by him (whether alone or jointly with
any other person) on which there shall not have been paid all calls
for the time being due and payable, together with interest and
expenses (if any); or
(B) in respect of any shares held by him in relation to which he or any
person appearing to be interested in such shares has been duly served
with a notice under paragraph (2) of this Bye-Law which:--
(i) requires his or such other person to give information to the
Company in accordance with such paragraph; and
(ii) contains a statement to the effect that upon failure to supply
such information before the expiry of a period specified in
such notice (being such reasonable period as the Directors
shall determine from the date of service of such notice) the
registered holder of such shares shall not be entitled to vote
or otherwise exercise the rights referred to in this Bye-Law
and the person on whom such notice was served fails to supply
such information within the period so specified.
Provided that:--
(a) the Company shall be entitled to serve a notice under paragraph
(2) of this Bye-Law which fulfills sub-sub-paragraphs (i) and
(ii) above on a person who is not the registered holder of
shares in the Company only if the registered holder of the
shares in question has previously been, or is simultaneously
with the service of such a notice, served by the Company with a
notice under paragraph (2) of this Bye-Law; and
(b) the disqualification provisions of this sub-paragraph (B) shall
take effect only upon the service on the registered holder of
the shares in question of a notice to the effect that he has
thereby become subject to the said disqualification for so long
as the information requested pursuant to this sub-paragraph (B)
has not been supplied to the Company and for a period of ninety
days thereafter; and
(c) for the purpose of this sub-paragraph (B) a person shall be
treated as appearing to be interested in any shares if (after
taking into account any information supplied in response to any
notice under paragraph (2) of this Bye-Law and any other
information) the Company knows or has reasonable cause to
believe that the person in question is or may be interested in
the shares.
(C) in respect of any shares held by him in relation to which he or any
person appearing to be interested in such shares has been duly served
with a notice under Bye-Law 104 which:--
(i) requires him or such other person to make an offer in
accordance with, or otherwise comply with the terms of, such
Bye-Law; and
D-1
(ii) contains a statement to the effect that upon failure to make
such an offer before the expiry of a period specified in such
notice (being not less than twenty-eight days from the date of
service of such notice) or, having made such an offer or
acquired such shares in contravention of a notice served under
that Bye-Law, otherwise fails to comply with the provisions of
Bye-Law 104 the registered holder of such shares shall not be
entitled to vote or otherwise exercise the rights referred to
in this Bye-Law and the person on whom such notice was served
fails to make such an offer within the period so specified or
fails to remedy such non-compliance.
Provided that:-
(a) the Company shall be entitled to serve a notice under paragraph
(2) of this Bye-Law which fulfils sub-sub-paragraphs (i) and
(ii) above on a person who is not the registered holder of
shares in the Company only if the registered holder of the
shares in question has previously been, or is, simultaneously
with the service of such a notice, served by the Company with a
notice under Bye-Law 104; and
(b) the disqualification provisions of this sub-paragraph (C) shall
take effect only upon the service on the registered holder of
the shares in question of a notice to the effect that he has
thereby become subject to the said disqualification and shall
subsist until an offer is made in accordance with Bye-Law 104
and such offer becomes or is declared unconditional in all
respects in accordance with its terms.
(D) in respect of any shares in relation to which he and any person
specified in paragraph (3) of this Bye-Law has been duly served with
a notice under paragraph (3) which remains in effect.
(2) (A) The Company may by notice in writing require any person whom the
Company knows or has reasonable cause to believe to be interested in
shares in the Company to indicate whether or not it is the case and,
where that person holds any interest in any such shares, to give such
further information as may be required in accordance with sub-
paragraph (B) below.
(B) Any such notice may require the person to whom it is addressed to
give particulars of his own present interests in shares in the
Company.
(C)
The particulars referred to above include particulars of the identity
of persons interested in the shares in question and of whether
persons interested in the same shares are parties to any agreement or
arrangement relating to the exercise of any of the rights conferred
by the holding of the shares.
(D)
A notice under this Bye-Law shall require any information given in
response to the notice to be given in writing within such reasonable
time as the Directors may determine and is specified in the notice.
(E)
For the purposes of this Bye-Law, a person who is interested in a
right to subscribe for or convert into shares in the Company shall be
deemed to be interested in shares in the Company and references to
interests in shares shall include any interest whatsoever in such
shares including, without limitation, a right to control directly or
indirectly the exercise of any right conferred by the holding of
shares alone or in conjunction with a person deemed to be acting in
concert for the purposes of Bye-Law 104 and the interest of any
person shall be deemed to include the interest of any other person
deemed to be acting in concert as aforesaid.
(F)
A notice which has taken effect under this Bye-Law shall remain in
effect in accordance with its terms following a transfer of the
shares to which it relates unless and until the Directors determine
otherwise and notify the registered holder accordingly.
(G)
The right to receive payments of income or capital which become due
or payable in respect of any share during a period of
disqualification applicable to such share under this Bye-Law shall be
suspended during such period of disqualification without any
liability of the Company to the
D-2
Member for late payment or non-payment and the Company may retain
such sums for its own use and benefit during such period of
suspension and the holders of such shares may, in the discretion of
the Directors, be excluded from participation in any further issue of
shares by reference to an existing holding of shares at a point in
time during such period of suspension. No trust shall be created in
respect of any such debt, no interest shall be payable in respect of
the same and the Company shall not be required to account for any
money earned on such amount, which may be employed in the business of
the Company or invested in such investments as the Directors may from
time to time think fit.
(3) (A) Where any person whether alone or in circumstances where for the
purposes of Bye-Law 104 he is acting in concert with other persons
acquires or has acquired interests in shares which (including the
interests of persons with whom he is acting in concert as aforesaid)
amount to three per cent. or more of the issued share capital of any
class of the Company he shall within two days following the date on
which he became aware (or ought reasonably to have become aware) of
the acquisition of such an interest notify the Company of the
existence of such interest and shall in making such notification to
the Company also supply the particulars referred to in sub-paragraphs
(2)(B) and (2)(C) above and so long as his interest as aforesaid
amounts to three per cent. or more of the issued share capital of any
class of the Company he shall notify the Company of any change in his
interests (including the interests of persons with whom he is acting
in concert as aforesaid) amounting to one per cent. or more of the
issued share capital of any class of the Company within two days
following the date on which he became aware (or ought reasonably to
have become aware) of such change.
(B)
If any person has failed to make a notification in accordance with
sub-paragraph (3)(A) above (notwithstanding that such notification
has been made after the said period of two days) the Directors may
serve a notice on such person stating that the registered holder of
the shares in which that person is interested shall not be entitled
to vote or otherwise exercise the rights referred to in this Bye-Law
in respect of any shares or a number of shares specified in the
notice held by that registered holder during the one hundred and
eighty days following the service of such notice provided that the
registered holder of such shares has previously been, or is
simultaneously with the service of such a notice, served with a
notice under this sub-paragraph.
(C)
If the Directors resolve that they have reasonable cause to believe
that a person is or may be interested in shares of the Company or
that any such shares are or may be shares in which any person is
interested and that they have made reasonable enquiries to establish
whether a person is so interested, or whether they are such shares,
as the case may be, such person shall for the purposes of this Bye-
Law be deemed to be interested in shares or, as the case may be, such
shares shall be deemed to be shares in which such person is
interested, from the date of such resolution until any such time as
the Directors resolve otherwise.
(D)
Any belief, resolution or decision of the Directors which is held or
made in pursuance or purported pursuance of any of the provisions of
this Bye-Law shall be conclusive, final and binding on all persons
concerned, and the validity of any act or thing which is done or
caused to be done by the Directors in pursuance or purported
pursuance of any of such provisions shall not be capable of being
impeached by anyone on the ground that there was not any basis or
reasonable basis on which the Directors could have arrived at any
such belief or made any such resolution or decision, or on the ground
that any conclusion of fact on which the Directors relied or might
have relied for the purposes of arriving at any such belief or making
any such resolution or decision was incorrect, or on any other ground
whatsoever.
(E)
In calculating the number of days allowed for any notification to be
made under this Bye-Law 46(3), any day which is a Saturday or Sunday
shall be disregarded.
D-3
SCHEDULE E
THE COMPANIES ACT
SECTION 106. SHAREHOLDER APPROVAL
SHAREHOLDER APPROVAL
(1) The directors of each amalgamating company shall submit the amalgamation
for approval to a meeting of the holders of shares of the amalgamating company
of which they are directors and, subject to subsection (4), to the holders of
each class of such shares.
(2) A notice of a meeting of shareholders complying with section 75 shall be
sent in accordance with that section to each shareholder of each amalgamating
company, and shall--
(a) include or be accompanied by a copy or summary of the amalgamation
agreement; and
(b) subject to subsection 2A, state--
(i) the fair value of the shares as determined by each amalgamating
company; and
(ii) that a dissenting shareholder is entitled to be paid the fair
value of his shares.
(2A) Notwithstanding subsection 2(b)(ii), failure to state the matter
referred to in that subsection does not invalidate an amalgamation.
(3) Each share of an amalgamating company carries the right to vote in
respect of an amalgamation whether or not it otherwise carries the right to
vote.
(4) The holders of shares of a class of shares of an amalgamating company
are entitled to vote separately as a class in respect of an amalgamation if
the amalgamation agreement contains a provision which would constitute a
variation of the rights attaching to any such class of shares for the purposes
of section 47.
(4A) The provisions of the bye-laws of the company relating to the holding
of general meetings shall apply to general meetings and class meetings
required by this section provided that, unless the bye-laws otherwise provide,
the resolution of the shareholders or class must be approved by a majority
vote of three-fourths of those voting at such meeting and the quorum necessary
for such meeting shall be two persons at least holding or representing by
proxy more than one-third of the issued shares of the company or the class, as
the case may be, and that any holder of shares present in person or by proxy
may demand a poll.
(5) An amalgamation agreement shall be deemed to have been adopted when it
has been approved by the shareholders as provided in this section.
(6) Any shareholder who did not vote in favour of the amalgamation and who
is not satisfied that he has been offered fair value for his shares may within
one month of the giving of the notice referred to in subsection (2) apply to
the Court to appraise the fair value of his shares.
(6A) Subject to subsection (6B), within one month of the Court appraising
the fair value of any shares under subsection (6) the company shall be
entitled either--
(a) to pay to the dissenting shareholder an amount equal to the value of
his shares as appraised by the Court; or
(b) to terminate the amalgamation in accordance with subsection (7).
(6B) Where the Court has appraised any shares under subsection (6) and the
amalgamation has proceeded prior to the appraisal then, within one month of
the Court appraising the value of the shares, if the amount paid to the
dissenting shareholder for his shares is less than that appraised by the Court
the amalgamated company shall pay to such shareholder the difference between
the amount paid to him and the value appraised by the Court.
(6C) No appeal shall lie from an appraisal by the Court under this section.
(6D) The costs of any application to the Court under this section shall be
in the discretion of the Court.
(7) An amalgamation agreement may provide that at any time before the issue
of a certificate of amalgamation the agreement may be terminated by the
directors of an amalgamating company, notwithstanding approval of the
agreement by the shareholders of all or any of the amalgamating companies.
E-1
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each ADT Shareholder or his
or her broker, dealer, commercial bank, trust company or other nominee to the
Exchange Agent at one of its addresses set forth below.
THE EXCHANGE AGENT:
By Hand By Overnight Courier By Mail
By Facsimile Transmission Telephone Number
(for Eligible Institutions only)
Any questions or requests for assistance or additional copies of the
Prospectus, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Managers at their
respective telephone numbers and locations listed below. You may also contact
your local broker, commercial bank, trust company or nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
The Dealer Managers for the Offer are:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(888) 221-3671 (toll-free)
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3582 (call collect)
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-5827 (call collect)
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article XVIII of the Western Resources Articles (Exhibit 3.1 hereto),
provides that a director of Western Resources shall not be personally liable
to Western Resources or its stockholders for monetary damages for breach of
fiduciary duty as a director except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) for paying a dividend or approving a stock
repurchase in violation of the KGCC, or (iv) for any transaction from which
the director derived an improper personal benefit. This provision is
specifically authorized by Section 17-6002(b)(8) of the KGCC.
Section 17-6305 of the KGCC (the "Indemnification Statute") provides for
indemnification by a corporation of its corporate officers, directors,
employees and agents. The Indemnification Statute provides that a corporation
may indemnify such persons who have been, are, or may become parties to an
action, suit or proceeding due to their status as directors, officers,
employees or agents of the corporation. Further, the Indemnification Statute
grants authority to a corporation to implement its own broader indemnification
policy. Article XVIII of the Western Resources Articles (Exhibit 3.1 hereto)
requires Western Resources to indemnify its directors and officers to the
fullest extent provided by Kansas law, as the same may be amended. Further, as
is provided for in Article XVIII, Western Resources has entered into
indemnification agreements with its directors, which provide indemnification
broader than that available under Article XVIII and the Indemnification
Statute.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT NO. DESCRIPTION
----------- -----------
3.1 Restated Articles of Incorporation of Western Resources, as
amended May 25, 1988 (filed as Exhibit 4 to Western Resources
Registration Statement No. 33-23022).*
3.2 Certificate of Correction to Restated Articles of Incorporation
(filed as Exhibit 3(b) to the December 1991 Form 10-K of Western
Resources).*
3.3 Amendment to Restated Articles of Incorporation, as amended May 8,
1992 (filed electronically with Western Resources Annual Report on
Form 10-K for the year ended December 31, 1995).*
3.4 Amendments to the Restated Articles of Incorporation of Western
Resources dated May 26, 1994 (filed as Exhibit 3 to Western
Resources Form 10-Q for the quarter ended June 30, 1994).*
3.5 Certificate of Designation of Preference Stock, 8.50% Series,
without par value, of Western Resources (filed as Exhibit 3(d) to
Western Resources Annual Report on Form 10-K for the year ended
December 31, 1993).*
3.6 Certificate of Designation of Preference Stock, 7.58% Series,
without par value, of Western Resources (filed as Exhibit 3(c) to
Western Resources Annual Report on Form 10-K for the year ended
December 31, 1993).*
3.7 Bylaws of Western Resources, as amended May 5, 1992 (filed
electronically with Western Resources Annual Report on Form 10-K
for the year ended December 31, 1995).*
5.1 Opinion of Sullivan & Cromwell.***
21.1 Subsidiaries of Western Resources (filed as Exhibit 21 to Western
Resources Annual Report on Form 10-K for the year ended December
31, 1995).*
23.1 Consent of Arthur Andersen LLP.
23.2 Consents of Sullivan & Cromwell (included in Exhibit 5.1).***
II-1
24.1 Powers of Attorney.**
99.1 Form of Letter of Transmittal and instructions thereto.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Western Resources Nominees.
99.4 Form of Letter to Clients for use by Broker, Dealers, Commercial Banks,
Trust Companies and Other Western Resources Nominees.
99.5 Form of Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
99.6 Form of Summary Advertisement.
- --------
*Incorporated by reference.
**Previously filed.
***To be filed by amendment.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that
II-2
a claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, WESTERN
RESOURCES, INC., THE REGISTRANT, CERTIFIES THAT IT HAS REASONABLE GROUNDS TO
BELIEVE THAT IT MEETS ALL THE REQUIREMENTS FOR FILING ON FORM S-4 AND HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNDER DULY AUTHORIZED, IN THE CITY OF TOPEKA, STATE OF
KANSAS, ON THE 18TH DAY OF DECEMBER, 1996.
Western Resources, Inc.
(Registrant)
/s/ John E. Hayes, Jr.
By:__________________________________
JOHN E. HAYES, JR.
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
Each person whose signature appears below appoints John E. Hayes, Jr.,
Steven L. Kitchen, John K. Rosenberg and Richard D. Terrill and each of them,
any of whom may act without the joinder of the other, as his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities to sign any and all amendments (including post-effective
amendments) to this Registration Statement on Form S-4 and to file the same,
with all exhibits thereto and all other documents in connection therewith,
with the Securities and Exchange Commission, granting upon said attorneys-in-
fact and agents full power and authority to do and perform each and every act
and thing requisite and necessary to be done, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ John E. Hayes, Jr. Chairman of the December 18,
- ------------------------------------- Board and Chief 1996
JOHN E. HAYES, JR. Executive Officer
(Principal
Executive Officer)
/s/ Steven L. Kitchen Executive Vice December 18,
- ------------------------------------- President and Chief 1996
STEVEN L. KITCHEN Financial Officer
(Principal
Financial and
Accounting Officer)
/s/ Frank J. Becker Director December 18,
- ------------------------------------- 1996
FRANK J. BECKER
II-4
SIGNATURE TITLE DATE
/s/ Gene A. Budig Director December 18,
- ------------------------------------- 1996
GENE A. BUDIG
/s/ C.Q. Chandler Director December 18,
- ------------------------------------- 1996
C.Q. CHANDLER
/s/ Thomas R. Clevenger Director December 18,
- ------------------------------------- 1996
THOMAS R. CLEVENGER
/s/ John C. Dicus Director December 18,
- ------------------------------------- 1996
JOHN C. DICUS
/s/ David H. Hughes Director December 18,
- ------------------------------------- 1996
DAVID H. HUGHES
/s/ Russell W. Meyer, Jr. Director December 18,
- ------------------------------------- 1996
RUSSELL W. MEYER, JR.
/s/ John H. Robinson Director December 18,
- ------------------------------------- 1996
JOHN H. ROBINSON
/s/ Louis W. Smith Director December 18,
- ------------------------------------- 1996
LOUIS W. SMITH
/s/ Susan M. Stanton Director December 18,
- ------------------------------------- 1996
SUSAN M. STANTON
/s/ Kenneth J. Wagnon Director December 18,
- ------------------------------------- 1996
KENNETH J. WAGNON
/s/ David C. Wittig Director December 18,
- ------------------------------------- 1996
DAVID C. WITTIG
II-5
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
----------- ----------- --------
3.1 Restated Articles of Incorporation of Western
Resources, as amended May 25, 1988 (filed as Exhibit 4
to Western Resources Registration Statement No. 33-
23022).*
3.2 Certificate of Correction to Restated Articles of
Incorporation (filed as Exhibit 3(b) to the December
1991 Form 10-K of Western Resources).*
3.3 Amendment to the Restated Articles of Incorporation, as
amended May 5, 1992 (filed electronically with Western
Resources Annual Report on Form 10-K for the year ended
December 31, 1995).*
3.4 Amendments to the Restated Articles of Incorporation of
Western Resources, dated May 26, 1994 (filed as Exhibit
3 to Western Resources Form 10-Q for the quarter ended
June 30, 1994).*
3.5 Certificate of Designation of Preference Stock, 8.50%
Series, without par value, of Western Resources (filed
as Exhibit 3(d) to Western Resources Annual Report on
Form 10-K for the year ended December 31, 1993).*
3.6 Certificate of Designation of Preference Stock, 7.58%
Series, without par value, of Western Resources (filed
as Exhibit 3(c) to Western Resources Annual Report on
Form 10-K for the year ended December 31, 1993).*
3.7 Bylaws of Western Resources, as amended May 5, 1992
(filed electronically with Western Resources Annual
Report on Form 10-K for the year ended December 31,
1995).*
5.1 Opinion of Sullivan & Cromwell.***
21.1 Subsidiaries of Western Resources (filed as Exhibit 21
to Western Resources Annual Report on Form 10-K for the
year ended December 31, 1995).*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Sullivan & Cromwell (included in Exhibit
5.1).***
24.1 Powers of Attorney.**
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Western Resources Nominees.
99.4 Form of Letter to Clients for use by Broker, Dealers,
Commercial Banks, Trust Companies and Other Western
Resources Nominees.
99.5 Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
99.6 Form of Summary Advertisement.
- --------
*Incorporated by reference.
**Previously filed.
***To be filed by amendment.
II-6
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-4 Registration Statement of Western Resources, Inc.
regarding an offer to exchange each outstanding common share of ADT Limited,
of our reports dated January 26, 1996, incorporated by reference and included
in Western Resources, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1995, and to all references to our Firm included in this
Registration Statement and related Prospectus.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Kansas City, Missouri
December 17, 1996
EXHIBIT 99.1
LETTER OF TRANSMITTAL
[LOGO]
[LETTERHEAD]
Dear ADT Limited Shareowner:
This Letter of Transmittal enables you to exchange
each of your Common Shares of ADT for $7.50 net in cash
and $15.00 of Common Stock of Western Resources, Inc.*
Please follow the instructions in this letter in order
to exchange your shares and receive the benefits of our
Offer. Simply complete and sign pages 2 and 3 and return
your certificate(s) in the enclosed envelope.
Our Offer will expire at 5:00 p.m., Eastern Time, on
, 1997 (the "Expiration Date") unless extended.
Shares which are tendered may be withdrawn at any time
prior to the Expiration Date.
For further information or assistance regarding our
Offer please call our representatives listed on the
back.
Thank you for your time and support.
Sincerely,
/s/ John E. Hayes, Jr.
John E. Hayes, Jr.
* Assumes that Western Resources' average share price is greater than $29.75 at
the time of closing.
IN ORDER TO TENDER YOUR SHARES, SIMPLY:
1. SIGN BY THE "X" IN THE BOX BELOW 2. COMPLETE THE
SUBSTITUTE FORM W-9 ON PAGE 3.
PLEASE SIGN HERE.
Signature(s) of Shareholder(s) X
----------------------------------------------------
____________________________________________________
Dated: , 1996
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificate(s) and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 5.)
I CERTIFY THAT I HAVE READ THE INSTRUCTIONS ENCLOSED WITH AND CONSTITUTING A
PART OF THIS LETTER OF TRANSMITTAL AND THAT I COMPLY WITH THE SHAREHOLDER
REPRESENTATION INCLUDED WITH SUCH INSTRUCTIONS.
Name(s) ____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title) ______________________________________________________
Address ____________________________________________________________________
City/State/Zip Code ________________________________________________________
____________________________________
(AREA CODE AND TELEPHONE NUMBER)
COMPLETE THE BOX BELOW ONLY IF YOU WISH TO TENDER LESS THAN ALL THE SHARES
EVIDENCED BY YOUR CERTIFICATE(S)
CERTIFICATES AND SHARES TENDERED (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------------
Certificate Total Number of Shares Number of
Number(s)* Evidenced by Certificate(s)* Shares Tendered**
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Shares
- --------------------------------------------------------------------------------
* Do not complete if delivering shares by book-entry transfer.
** You must indicate if you are tendering less than all Shares evidenced by
any certificate(s) delivered to the Exchange Agent. See Instruction 4.
2
THIS PAGE MUST BE COMPLETED BY ALL TENDERING SHAREHOLDERS.
PLEASE FILL IN YOUR SOCIAL SECURITY NUMBER AND SIGN BELOW.
Please see Instruction 9 for additional information.
PAYER'S NAME: [EXCHANGE AGENT]
PART 1--PLEASE PROVIDE YOUR Social Security Number
TIN IN THE BOX AT RIGHT AND or Employer
CERTIFY BY SIGNING AND Identification Number
DATING BELOW.
SUBSTITUTE
FORM W-9
X
DEPARTMENT OF ---------------------
THE TREASURY --------------------------------------------------------
INTERNAL PART 2--Certificates--Under penalties of perjury, I
REVENUE certify that:
SERVICE (1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me); and
PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN)
(2) I am not subject to backup withholding because
(i) I am exempt from backup withholding, (ii) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup
withholding.
--------------------------------------------------------
Certification Instructions--You must PART 3 --
cross out item (2) in Part 2 above if Awaiting
you have been notified by the IRS TIN [_]
that you are subject to backup with-
holding because of under-reporting
interest or dividends on your tax re-
turn. However, if after being noti-
fied by the IRS that you were subject
to backup withholding you received
another notification from the IRS
stating that you are no longer sub-
ject to backup withholding, do not
cross out item (2).
--------------------------------------------------------
SIGNATURE X ________________________ DATE __________
NAME (Please Print) _________________________________
NOTE: Failure to complete and return this form may result in backup
withholding of 31% of any cash payments made to you pursuant to the
Offer. Please review the enclosed guidelines for certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
details.
Complete the following certification ONLY if you checked the box in Part 3 of
Substitute Form W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification
Number has not been issued to me, and either (i) I have mailed or delivered
an application to receive a Taxpayer Identification Number to the
appropriate Internal Revenue Service Center or Social Security
Administration Office or (ii) I intend to mail or deliver an application in
the near future. I understand that if I do not provide a Taxpayer
Identification Number within 60 days, 31% of all reportable payments made
to me thereafter will be withheld until I provide a number.
------------------------------------ ------------------------------------
SIGNATURE DATE
------------------------------------
NAME (PLEASE PRINT)
IMPORTANT TAX INFORMATION
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to backup withholding. In order for a
foreign individual to qualify as an exempt recipient, that shareholder must
submit a Form W-8, signed under penalties of perjury, attesting to that
individual's exempt status. A Form W-8 can be obtained from the Exchange
Agent. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
3
OPTIONAL
If you would like shares of Western Resources Common Stock and the check to
be issued for cash in an amount of $7.50 net per Share and for cash in lieu of
fractional shares, if any, of Western Resources Common Stock to be delivered to
a different address, complete the top box below.
If you would like shares of Western Resources Common Stock and the check to
be issued for cash in an amount of $7.50 net per Share and for cash in lieu of
fractional shares, if any, of Western Resources Common Stock to be issued in a
different name, complete the bottom box below. You must include a signature
guarantee if you complete the box at the bottom of the page. The signature
guarantee process is more fully described in Instructions 1 and 5.
SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 6 and 7)
To be completed ONLY if certificate(s) for the Western Resources Common
Stock and the check to be issued for cash in an amount of $7.00 net per
Share and for cash in lieu of fractional shares, if any, of Western Re-
sources Common Stock are to be sent to someone other than the undersigned,
or to the undersigned at an address other than that shown on the address
label.
Mail Western Resources Common Stock and the check to be issued for cash in
an amount of $7.50 net per Share and for cash in lieu of fractional shares,
if any, of Western Resources Common Stock to:
Name _______________________________________________________________________
(PLEASE TYPE OR PRINT)
Address ____________________________________________________________________
City/State/Zip Code ________________________________________________________
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if certificate(s) for the Western Resources Common
Stock and the check to be issued for cash in an amount of $7.50 net per
Share and for cash in lieu of fractional shares, if any, of Western Re-
sources Common Stock are to be issued in the name of someone other than
those shown on your certificate(s).
Issue Western Resources Common Stock and the check to be issued for cash in
an amount of $7.50 net per Share and for cash in lieu of fractional shares,
if any, of Western Resources Common Stock to:
Name _______________________________________________________________________
(PLEASE TYPE OR PRINT)
Address ____________________________________________________________________
City/State/Zip Code ________________________________________________________
____________________________________________________________________________
(SOCIAL SECURITY NUMBER OR TAX IDENTIFICATION NUMBER)
GUARANTEE OF SIGNATURE(S)
Authorized Signature _______________________________________________________
Name _______________________________________________________________________
(PLEASE TYPE OR PRINT)
Address ____________________________________________________________________
City/State/Zip Code ________________________________________________________
Name of Firm ________________________________ Dated: , 1996
4
The Information Agent for the Offer is:
The Exchange Agent for the Offer is:
By Overnight Courier:
By Facsimile Transmission
By Mail: (for Eligible Institutions only): By Hand:
Confirm Facsimile Transmission by telephone:
The Dealer Managers for the Offer are:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-5827 (call collect)
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(888) 221-3671 (toll-free)
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3582 (call collect)
LOGO
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on the Letter
of Transmittal in cases where:
(a) the Letter of Transmittal is signed by the registered holder(s) of the
Shares (which term, for purposes of this document, shall include any
participant in one of the Book-Entry Transfer Facilities whose name
appears on a security position listing as the owner of Shares) tendered
with the Letter of Transmittal and such holder(s) have not completed the
instruction entitled "Special Issuance Instructions" on the Letter of
Transmittal, or
(b) such Shares are tendered for the account of an Eligible Institution (as
defined below).
Otherwise, all signatures on the Letter of Transmittal must be guaranteed by
a financial institution (including most banks, savings and loan associations,
brokerage houses and credit unions) which is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (an
"Eligible Institution"). See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES OR BOOK-ENTRY
CONFIRMATIONS. The Letter of Transmittal is to be used either:
(a) if certificates are to be forwarded with the Letter of Transmittal, or
(b) if tenders are to be made pursuant to the procedures for tender by
book-entry transfer set forth in "The Offer--Procedure for Tendering" in
the Prospectus (as defined herein), unless an Agent's Message is
utilized.
Certificates for all physically tendered Shares ("Share Certificates"), or
confirmation of any book-entry transfer into the Exchange Agent's account at
one of the Book-Entry Transfer Facilities of Shares tendered by book-entry
transfer, as well as the Letter of Transmittal or facsimile thereof, properly
completed and duly executed with any required signature guarantees, and any
other documents required by the Letter of Transmittal, must be received by the
Exchange Agent at one of its addresses set forth herein on or prior to the
Expiration Date (as defined in the Prospectus).
Shareholders whose certificates are not immediately available or who cannot
deliver their certificates and all other required documents to the Exchange
Agent on or prior to the Expiration Date or who cannot complete the procedures
for book-entry transfer on a timely basis may nevertheless tender their Shares
by properly completing and duly executing a Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure set forth in "The Offer--
Procedure for Tendering" in the Prospectus.
In order to utilize the guaranteed delivery procedure: (i) your tender must
be made by or through an Eligible Institution; (ii) a properly completed and
duly executed Notice of Guaranteed Delivery substantially in the form made
available by Western Resources must be received by the Exchange Agent on or
prior to the Expiration Date; and (iii) the Share Certificates for all
tendered Shares (or a confirmation of a book-entry transfer of such securities
into the Exchange Agent's account at a Book-Entry Transfer Facility of Shares
tendered by book-entry transfer), in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees (or, in the case of a book-
entry delivery, an Agent's Message) and all other documents required by the
Letter of Transmittal, must be received by the Exchange Agent within three New
York Stock Exchange, Inc. trading days after the date of execution of such
Notice of Guaranteed Delivery.
IF SHARE CERTIFICATES ARE FORWARDED SEPARATELY TO THE EXCHANGE AGENT, A
PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL MUST ACCOMPANY EACH
SUCH DELIVERY.
1
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. THE REPLACEMENT COST OF CERTIFICATES FOR SECURITIES IS GENERALLY
2% OF MARKET VALUE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE
TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be accepted. All tendering shareholders, by execution
of the Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for exchange.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
piece of paper and returned with the Letter of Transmittal.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares which are to be tendered in
the box on page 2 of the Letter of Transmittal. In such cases, new
certificate(s) for the remainder of the Shares that were evidenced by your old
certificate(s) will be sent to you, unless otherwise indicated in the box
marked "Special Delivery Instructions" on page 4 of the Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares represented by
certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
the Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered, the signature must correspond with the name(s) as written on the
face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered are owned of record by two or more joint
owners, all such owners must sign the Letter of Transmittal.
If you wish to tender Shares and have more than one certificate and those
certificates are registered in more than one name, it will be necessary to
complete, sign and submit as many separate Letters of Transmittal as there are
different registrations of certificates.
If the Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to
Western Resources of their authority so to act must be submitted.
If the Letter of Transmittal is signed by the registered holder(s) of the
Shares transmitted with the Letter of Transmittal, no endorsements of
certificates or separate stock powers are required unless Western Resources
Common Stock or certificates for Shares not tendered or accepted are to be
issued in the name of a person other than the registered holder(s). Signatures
on such certificates or stock powers must be guaranteed by an Eligible
Institution.
If the Letter of Transmittal is signed by a person other than the registered
holder of the certificate(s) listed, the certificate(s) must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holder or holders appear on the
certificates(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Western Resources will pay or cause to be paid any
stock transfer taxes with respect to the transfer and sale of Shares to it or
its order pursuant to the Offer. Western Resources will not pay or cause to be
paid any stock transfer taxes to the extent such taxes are the obligation
solely of the transferor. If, however, delivery of the consideration in
respect of the Offer is to be made to, or (in the circumstances permitted
hereby) if certificates for Shares not tendered or accepted are to be
registered in the name of any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing the Letter of Transmittal, the tendering holder must provide
satisfactory evidence of the payment of any applicable transfer taxes (whether
imposed on the registered holder or such person) payable on account of the
transfer to such person prior to the delivery of the consideration pursuant to
the Offer.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THE LETTER OF
TRANSMITTAL.
2
7. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If certificates for Western
Resources Common Stock and the check to be issued for cash in an amount of
$7.50 net per Share and for cash in lieu of fractional shares, if any, of
Western Resources Common Stock are to be issued in the name of a person other
than the signer of the Letter of Transmittal or if certificates for Western
Resources Common Stock and the check to be issued for cash in an amount of
$7.50 net per Share and cash in lieu of fractional shares, if any, of Western
Resources Common Stock are to be mailed to someone other than the signer of
the Letter of Transmittal or to an address other than that shown on the
address label, the boxes marked "Special Issuance Instructions" or "Special
Delivery Instructions" on page 4 of the Letter of Transmittal should be
completed.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for
assistance may be directed to, or additional copies of the Prospectus, the
Letter of Transmittal, the Notice of Guaranteed Delivery and other tender
offer materials may be obtained from, the Information Agent or the Dealer
Managers at their respective telephone numbers and/or addresses set forth on
the back of the Letter of Transmittal or from your broker, dealer, commercial
bank or trust company.
9. SUBSTITUTE FORM W-9. Each tendering shareholder is required to provide
the Exchange Agent with a correct Taxpayer Identification Number ("TIN"),
generally the shareholder's social security or federal employer identification
number, on Substitute Form W-9 on page 3 of the Letter of Transmittal. If a
shareholder fails to provide a TIN to the Exchange Agent, such shareholder may
be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments of cash in lieu of fractional shares of Western Resources
Common Stock that are made to such shareholder with respect to Shares accepted
pursuant to the Offer may be subject to backup withholding of 31%. The box in
Part 3 of the Substitute Form W-9 may be checked if the tendering shareholder
has not been issued a TIN and has applied for a number or intends to apply for
a number in the near future. If the box in Part 3 is checked and the Exchange
Agent is not provided with a TIN within 60 days, the Exchange Agent will
withhold 31% of all payments of cash thereafter until a TIN is provided to the
Exchange Agent. The shareholder is required to give the Exchange Agent the
social security number or employer identification number of the record owner
of the Shares or of the last transferee appearing on the stock powers attached
to, or endorsed on, the Shares. If the Shares are in more than one name or are
not in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
IMPORTANT: THE LETTER OF TRANSMITTAL OR A FACSIMILE COPY THEREOF (TOGETHER
WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY
THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
SHAREHOLDER REPRESENTATION
The shareholder executing the Letter of Transmittal, or on whose behalf the
Letter of Transmittal is executed (the "Tendering Shareholder"), delivers to
Western Resources, Inc., a Kansas corporation ("Western Resources"), the
above-described common shares, par value $0.10 per share (the "Shares"), of
ADT Limited, a company incorporated under the laws of Bermuda ("ADT"),
pursuant to Western Resources' offer to exchange $7.50 net in cash and a
number of shares of common stock, par value $5.00 per share, of Western
Resources (the "Western Resources Common Stock") equal to the Exchange Ratio
(as such term is defined in the Prospectus (as defined below)) for each
outstanding Share, upon the terms and subject to the conditions set forth in
the Prospectus dated [ ] (the "Prospectus"), receipt of which is
acknowledged, and in the Letter of Transmittal, including the Instructions and
Shareholder Representation (which, together with the Prospectus and any
amendments thereto constitute the "Offer").
Upon the terms and subject to the conditions of the Offer, subject to, and
effective upon, acceptance of the Shares tendered with the Letter of
Transmittal in accordance with the terms of the Offer, the Tendering
Shareholder sells, assigns and transfers to, or upon the order of, Western
Resources, all right, title and interest in and to all of the Shares that are
being tendered and any and all Shares and other securities issued or issuable
in respect thereof on or after [commencement date] (collectively,
"Distributions"), and irrevocably constitutes and appoints the Exchange Agent
the true and lawful agent and attorney-in-fact of the Tendering Shareholder
with respect to such Shares (and any Distributions), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to the full extent of the Tendering Shareholder's
rights with respect to such Shares (and any Distributions), to (a) deliver
such Share Certificates (as defined herein) (and any Distributions) or
transfer ownership of such Shares (and any Distributions) on the account books
maintained by a Book-Entry Transfer Facility, together in either such case
with all accompanying evidences of transfer and
3
authenticity, to or upon the order of Western Resources, (b) present such
Shares (and any Distributions) for transfer on the books of ADT and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares (and any Distributions), all in accordance with the
terms and the conditions of the Offer.
The Tendering Shareholder irrevocably appoints the designees of Western
Resources, and each of them, the attorneys-in-fact and proxies of the
Tendering Shareholder, each with full power of substitution, to vote in such
manner as each such attorney and proxy or any substitute thereof shall deem
proper in the sole discretion of such attorney-in-fact and proxy or such
substitute, and otherwise act (including pursuant to written consent) with
respect to all the Shares tendered (and any Distributions) which have been
accepted by Western Resources prior to the time of such vote or action, which
the Tendering Shareholder is entitled to vote at any meeting of shareholders
(whether annual or special and whether or not an adjourned meeting), of ADT or
otherwise. This proxy and power of attorney is coupled with an interest in the
Shares and is irrevocable and is granted in consideration of, and is effective
upon, the acceptance of such Shares (and any Distributions) by Western
Resources in accordance with the terms of the Offer. Such acceptance for
exchange shall revoke any other proxy granted by the Tendering Shareholder at
any time with respect to such Shares (and any Distributions) and no subsequent
proxies will be given (or, if given, will not be deemed effective) with
respect thereto by the Tendering Shareholder. The Tendering Shareholder
understands that in order for Shares to be deemed validly tendered,
immediately upon Western Resources' acceptance of such Shares (and any
Distributions) for exchange Western Resources or its designee must be able to
exercise full voting rights with respect to such Shares (and any
Distributions).
The Tendering Shareholder represents and warrants that the Tendering
Shareholder has full power and authority to tender, sell, assign and transfer
the Shares (and any Distributions) tendered and that when the same are
accepted for exchange by Western Resources, Western Resources will acquire
good, marketable and unencumbered title thereto, free and clear of all liens,
restrictions, claims, charges and encumbrances, and the same will not be
subject to any adverse claim. The Tendering Shareholder will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or
Western Resources to be necessary or desirable to complete the sale,
assignment, and transfer of the Shares (and any Distributions) tendered.
All authority conferred or agreed to be conferred pursuant to the Letter of
Transmittal shall not be affected by and shall survive the death or incapacity
of the Tendering Shareholder and any obligation of the Tendering Shareholder
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the Tendering Shareholder. Subject to the withdrawal
rights set forth under "The Offer--Withdrawal Rights" in the Prospectus, the
tender of Shares made is irrevocable.
The Tendering Shareholder understands that tenders of Shares pursuant to any
one of the procedures described under "The Offer--Procedure for Tendering" in
the Prospectus and in the instructions to the Letter of Transmittal and
acceptance of such Shares will constitute a binding agreement between the
Tendering Shareholder and Western Resources upon the terms and subject to the
conditions set forth in the Offer.
Unless otherwise indicated on page 4 of the Letter of Transmittal under
"Special Issuance Instructions," please issue the shares of Western Resources
Common Stock and the check to be issued for cash in an amount of $7.50 net per
Share and for cash in lieu of fractional shares, if any, of Western Resources
Common Stock in the name(s) of the registered holder(s). Similarly, unless
otherwise indicated on page 4 of the Letter of Transmittal under "Special
Delivery Instructions," please mail the Western Resources Common Stock and the
check to be issued for cash in an amount of $7.50 net per Share and for cash
in lieu of fractional shares, if any, of Western Resources Common Stock to the
address of the registered holder(s). The Tendering Shareholder recognizes that
Western Resources has no obligation, pursuant to the Special Issuance
Instructions, to transfer any Shares from the name of the registered holder
thereof if Western Resources does not accept any of the Shares so tendered.
4
The Information Agent for the Offer is:
[Name]
[Address]
[Phone]
The Exchange Agent for the Offer is:
By Overnight Courier:
By Facsimile Transmission
By Mail: (for Eligible Institutions only): By Hand:
Confirm by telephone:
The Dealer Managers for the Offer are:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-5827 (call collect)
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(888) 221-3671 (toll-free)
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3582 (call collect)
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
OFFER TO EXCHANGE EACH OUTSTANDING COMMON SHARE (INCLUDING THE ASSOCIATED
PREFERENCE SHARE PURCHASE RIGHTS)
OF
ADT LIMITED
FOR
$7.50 NET PER SHARE IN CASH
AND
$15.00 OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
OF
WESTERN RESOURCES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
As set forth in "The Offer--Procedure for Tendering" in the Prospectus,
dated , 1997 (the "Prospectus"), this form or one substantially equivalent
hereto must be used to accept the Offer (as defined below) if certificates for
common shares, par value $0.10 per share (the "Shares"), of ADT Limited, a
company incorporated under the laws of Bermuda ("ADT"), including the
associated preference share purchase rights (the "Rights") issued pursuant to
the Rights Agreement, dated as of November 6, 1996, between ADT and Citibank,
N.A., New York branch, as Rights Agent, are not immediately available, if the
certificates and all other required documents cannot be delivered to the
Exchange Agent prior to the Expiration Date (as defined in the Prospectus), or
if the procedure for book-entry transfer cannot be completed on a timely
basis. Such form may be delivered by hand or transmitted by telegram,
facsimile transmission or mail to the Exchange Agent, and must include a
guarantee by an Eligible Institution (as defined in the Prospectus). See "The
Offer--Procedure for Tendering" in the Prospectus.
The Exchange Agent for the Offer is:
By Overnight Courier:
By Mail: By Facsimile Transmission By Hand:
(for Eligible Institutions only):
Receive Window
Confirm Facsimile
Transmission by Telephone:
----------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
UNDER THE INSTRUCTIONS THERETO, SUCH GUARANTEE SIGNATURE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
The undersigned hereby tenders to Western Resources, Inc., a Kansas
corporation, upon the terms and subject to the conditions set forth in the
Prospectus, dated , and in the related Letter of Transmittal (which
together constitute the "Offer"), receipt of which is hereby acknowledged, the
number of Shares shown in the Box below pursuant to the guaranteed delivery
procedures set forth under "The Offer--Procedure for Tendering" in the
Prospectus.
Shares
CERTIFICATE NOS. FOR SHARES (IF NAME(S) OF RECORD HOLDER(S)
AVAILABLE) __________________________ ___________________________________
_____________________________________ ___________________________________
(PLEASE TYPE OR PRINT)
ADDRESS(ES) _______________________
___________________________________
(ZIP CODE)
CHECK ONE BOX IF SHARES WILL BE AREA CODE AND TEL. NO(S). _________
TENDERED BY BOOK-ENTRY TRANSFER:
___________________________________
[_] THE DEPOSITORY TRUST COMPANY
SIGNATURE(S) ______________________
[_] PHILADELPHIA DEPOSITORY TRUST
COMPANY
___________________________________
ACCOUNT NUMBER ______________________ DATED ______________________ , 1996
THE GUARANTEE BELOW MUST BE COMPLETED.
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution which is a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program,
guarantees (a) that the above named person(s) has (have) a "net long position"
in the Shares tendered hereby within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended, and (b) to deliver to the
Exchange Agent, at one of its addresses set forth above, certificates
representing the Shares tendered hereby, in proper form for transfer, or
confirmation of book-entry transfer of such Shares into the Exchange Agent's
accounts at The Depository Trust Company or the Philadelphia Depository Trust
Company, in each case with delivery of a properly completed and duly executed
Letter of Transmittal (or a facsimile copy thereof), or an Agent's Message (as
defined in the Prospectus) in the case of book-entry transfer, and any other
documents required by the Letter of Transmittal, within three (3) New York
Stock Exchange, Inc. trading days of the date hereof.
NAME OF FIRM ________________________ ___________________________________
(AUTHORIZED SIGNATURE)
ADDRESS _____________________________
TITLE _____________________________
_____________________________________
(ZIP CODE) NAME ______________________________
(PLEASE TYPE OR PRINT)
AREA CODE AND TEL. NO. ______________
DATED , 1996
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
EXHIBIT 99.3
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10005
(212) 783-5827 (call collect)
CHASE SECURITIES INC.
BEAR, STEARNS & CO. INC.
270 Park Avenue
245 Park Avenue New York, New York 10017
New York, New York 10167 (212) 270-3582 (call collect)
(888) 221-3671 (toll-free)
OFFER TO EXCHANGE EACH OUTSTANDING COMMON SHARE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
OF
ADT LIMITED
FOR
$7.50 NET PER SHARE IN CASH
AND
$15.00 OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
OF
WESTERN RESOURCES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON
, 1997, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). SHARES
WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR
TO THE EXPIRATION DATE.
To Brokers, Dealers, Commercial Bank Trust Companies and Other Western
Resources Nominees:
We have been appointed by Western Resources, Inc., a Kansas corporation
("Western Resources"), to act as Dealer Managers in connection with Western
Resources' offer to exchange $7.50 net in cash and a number of shares of
common stock, par value $5.00 per share, of Western Resources (the "Western
Resources Common Stock") equal to the Exchange Ratio (as such term is defined
in the Prospectus (as defined below)) for each outstanding common share, par
value $0.10 per Share (each, a "Share" and collectively, the "Shares"), of ADT
Limited, a company organized under the laws of Bermuda ("ADT"), including the
associated preference share purchase rights (the "Rights") issued pursuant to
the Rights Agreement, dated as of November 6, 1996, between ADT and Citibank,
N.A., New York branch, as Rights Agent, upon the terms and subject to the
conditions set forth in the Prospectus, dated , 1997 (the "Prospectus"),
and in the related Letter of Transmittal (which together constitute the
"Offer"), enclosed herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE MINIMUM TENDER
CONDITION, THE WESTERN RESOURCES SHAREHOLDER APPROVAL CONDITION, THE ADT
SHAREHOLDER APPROVAL CONDITION, THE RIGHTS PLAN CONDITION, THE ADT BYE-LAW
CONDITION AND THE REGULATORY APPROVAL CONDITION (IN EACH CASE AS DEFINED IN
THE PROSPECTUS). SEE "THE OFFER--CONDITIONS OF THE OFFER--MINIMUM TENDER
CONDITION," "--WESTERN RESOURCES SHAREHOLDER APPROVAL CONDITION," "--ADT
SHAREHOLDER APPROVAL CONDITION," "--RIGHTS PLAN CONDITION," "--ADT BYE-LAW
CONDITION," "--REPUBLIC WARRANT CONDITION," "--REGULATORY APPROVAL CONDITION,"
AND "--CERTAIN OTHER CONDITIONS OF THE OFFER" IN THE PROSPECTUS.
Shareholders will be required to tender one Right for each Share tendered in
order to effect a valid tender of Shares, unless the Rights Plan Condition has
been satisfied or waived. Unless the ADT Distribution Date (as defined in the
Prospectus) occurs, a tender of Shares will constitute a tender of the
associated Rights. See "The Offer--Procedure for Tendering" in the Prospectus.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominees, or who hold
Shares registered in their own names, we are enclosing the following
documents:
1. Prospectus, dated ;
2. Letter of Transmittal (together with accompanying Substitute Form W-9)
to be used by holders of Shares in accepting the Offer and tendering
Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available, if time will not
permit all required documents to reach the Exchange Agent prior to the
Expiration Date (as defined in the Prospectus) or if the procedure for
book-entry transfer cannot be completed on a timely basis;
4. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominees, with space
provided for obtaining such clients' instructions with regard to the Offer;
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. A return envelope addressed to the Exchange Agent.
Western Resources will not pay any fees or commissions to any broker or
dealer or any other person (other than the fees of the Dealer Managers and the
Information Agent as described in the Prospectus) in connection with the
solicitation of tenders of Shares and Rights pursuant to the Offer. Western
Resources will, however, upon request, reimburse you for customary mailing and
handling expenses incurred by you in forwarding the enclosed materials to your
clients. Western Resources will pay or cause to be paid any stock transfer
taxes with respect to the transfer and sale of Shares to it or its order
pursuant to the Offer, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00
P.M., EASTERN TIME, ON , 1997, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other required documents, should be sent to the Exchange
Agent, and certificates evidencing the tendered Shares should be delivered or
such Shares should be tendered by book-entry transfer, all in accordance with
the instructions set forth in the Letter of Transmittal and the Prospectus.
If holders of Shares wish to tender Shares, but it is impracticable for them
to forward their certificates or other required documents prior to the
Expiration Date, a tender may be effected by following the guaranteed delivery
procedures specified under "The Offer--Procedure for Tendering" in the
Prospectus.
Any inquiries you may have with respect to the Offer should be addressed to
the Dealer Managers or the Information Agent at their respective addresses and
telephone numbers set forth on the back cover page of the Prospectus.
2
Additional copies of the enclosed materials may be obtained from the
undersigned or by calling the Information Agent, [ ], at (800) [ ] (toll
free), or from brokers, dealers, commercial banks or trust companies.
Very truly yours,
Salomon Brothers Inc
Bear, Stearns & Co. Inc.
Chase Securities Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF WESTERN RESOURCES, THE DEALER MANAGERS,
THE EXCHANGE AGENT OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR
USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE
STATEMENTS CONTAINED THEREIN.
3
EXHIBIT 99.4
OFFER TO EXCHANGE EACH OUTSTANDING COMMON SHARE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
OF
ADT LIMITED
FOR
$7.50 NET PER SHARE IN CASH
AND
$15.00 OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
OF
WESTERN RESOURCES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON
, 1997 UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). SHARES
WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR
TO THE EXPIRATION DATE.
To Our Clients:
Enclosed for your consideration are the Prospectus dated , 1997 (the
"Prospectus") and the related Letter of Transmittal (which together constitute
the "Offer") in connection with the offer by Western Resources, Inc., a Kansas
corporation ("Western Resources"), to exchange $7.50 net in cash and a number
of shares of common stock, par value $5.00 per share, of Western Resources
(the "Western Resources Common Stock") equal to the Exchange Ratio (as defined
in the Prospectus) for each outstanding common share, par value $0.10 per
share (each, a "Share" and collectively, the "Shares"), of ADT Limited, a
company organized under the laws of Bermuda ("ADT"), including the associated
preference share purchase rights (each, a "Right" and collectively, the
"Rights") issued pursuant to the Rights Agreement, dated as of November 6,
1996, between ADT and Citibank, N.A., New York branch, as Rights Agent, upon
the terms and subject to the conditions set forth in the Offer.
Shareholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and
all other documents required by the Letter of Transmittal to the Exchange
Agent prior to the Expiration Date or who cannot complete the procedure for
delivery by book-entry transfer to the Exchange Agent's account at a Book-
Entry Transfer Facility (as defined in "The Offer--Exchange of Shares;
Delivery of Western Resources Common Stock and Cash Consideration" in the
Prospectus) on a timely basis and who wish to tender their Shares must do so
pursuant to the guaranteed delivery procedure described in "The Offer--
Procedure for Tendering" in the Prospectus. See Instruction 2 of the Letter of
Transmittal. Delivery of documents to a Book-Entry Transfer Facility in
accordance with the Book-Entry Transfer Facility's procedures does not
constitute delivery to the Exchange Agent.
THIS MATERIAL IS BEING FORWARDED TO YOU AS THE BENEFICIAL OWNER OF SHARES
HELD BY US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER
OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN
BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS.
THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND
CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares held by us for your account,
upon the terms and subject to the conditions set forth in the Offer.
Please note the following:
1. Western Resources is offering to acquire each outstanding Share in
exchange for a number of shares of Western Resources Common Stock equal to
the Exchange Ratio and the Cash Consideration (each as defined in the
Prospectus).
2. The Offer is being made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 5:00 p.m., Eastern
time, on , 1997, unless the Offer is extended.
4. The Offer is conditioned upon, among other things, the Minimum Tender
Condition, the Western Resources Shareholder Approval Condition, the ADT
Shareholder Approval Condition, the Rights Plan Condition, the ADT Bye-Law
Condition and the Regulatory Approval Condition (in each case as defined in
the Prospectus). See "The Offer--Conditions of the Offer--Minimum Tender
Condition," "--Western Resources Shareholder Approval Condition," "--ADT
Shareholder Approval Condition," "--The Rights Plan Condition," "--The ADT
Bye-Law Condition," "--Regulatory Approval Condition" and "--Certain Other
Conditions of the Offer" in the Prospectus.
5. Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the transfer of Shares pursuant to the
Offer.
The Offer is made solely by the Prospectus, dated , 1997, and the
related Letter of Transmittal and any amendments thereto and is being made to
all holders of Shares. The Offer is not being made to, nor will tenders be
accepted from or on behalf of, holders of Shares in any jurisdiction in which
the making or acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, Western Resources may, in its sole discretion,
take such action as it may deem necessary to make the Offer in any such
jurisdiction and extend the Offer to holders of Shares in such jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to
be made on behalf of Western Resources by Salomon Brothers Inc, Bear, Stearns
& Co. Inc. and Chase Securities Inc., as Dealer Managers, or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction
form contained in this letter. An envelope in which to return your
instructions to us is enclosed. If you authorize the tender of your Shares,
all such Shares will be tendered unless otherwise indicated in such
instruction form. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS SOON AS POSSIBLE
TO ALLOW US AMPLE TIME TO TENDER SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION
OF THE OFFER.
EXHIBIT 99.5
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- ----------------------------------- -----------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------
1. An individual's The individual
account
2. Two or more The actual owner
individuals (joint of the account
account) or, if combined
funds, the first
individual on
the account(1)
3. Custodian account of a The minor(2)
minor
(Uniform Gift to
Minors Act)
4.a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The owner (3)
that is not a legal or
valid trust under State
law
5. Sole proprietorship The owner
account
- --------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
6. A valid trust, The legal entity
estate, or pension (Do not furnish
trust the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(4)
7. Corporate account The corporation
8. Partnership account The partnership
held in the name of
the business
9. Association, club, The organization
religious,
charitable, or
other tax-exempt
organization
10. A broker or The broker or
registered nominee nominee
11. Account with the The public
Department of entity
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or
prison) that
receives an
agricultural
program payment
-----------------------------------
(1) List and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner. The name of the business or the "doing business
as" name may also be entered. Either the social security number or the
employer identification number may be used.
(4) List and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL dividend and
interest payments and on broker transactions include the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file the Substitute Form W-9 to avoid
possible erroneous backup withholding. Complete the Substitute Form W-9 as
follows:
ENTER YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE
FORM, SIGN, DATE, AND RETURN THE FORM TO THE PAYER.
Certain payments other than interest dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6042, 6044, 6045, 6049, 6050A and 6050N and the regulations thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1984, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TAXPAYER IDENTIFICATION NUMBERS.--If the payer discloses or uses
taxpayer identification numbers in violation of Federal law, the payer may be
subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
EXHIBIT 99.6
This announcement is neither an offer to exchange nor a solicitation of an
offer to exchange Shares. The Offer is made solely by the Prospectus, dated
, 1997, and the related Letter of Transmittal, and is not being made to,
nor will tenders be accepted from or on behalf of, holders of Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any jurisdiction
where securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Western Resources, Inc. by Salomon Brothers Inc, Bear, Stearns & Co. Inc. and
Chase Securities Inc. or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
NOTICE OF OFFER TO EXCHANGE
EACH OUTSTANDING COMMON SHARE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
OF
ADT LIMITED
FOR
$7.50 NET PER SHARE IN CASH
AND
$15.00 OF COMMON STOCK
(SUBJECT TO ADJUSTMENT AS DESCRIBED BELOW)
OF
WESTERN RESOURCES, INC.
Western Resources, Inc., a Kansas corporation ("Western Resources"), and
Westar Capital, Inc. a Kansas corporation and a wholly owned subsidiary of
Western Resources ("Westar Capital"), hereby offer, upon the terms and subject
to the conditions set forth in the Prospectus dated , 1997 (the
"Prospectus"), and in the related Letter of Transmittal (collectively, the
"Offer"), to exchange $7.50 net in cash and $15.00 in shares of common stock,
par value $5.00 per share, of Western Resources ("Western Resources Common
Stock"), subject to adjustment as described below, for each outstanding common
share, par value $0.10 per share (each a "Share" and collectively, the
"Shares"), of ADT, a company organized under the laws of Bermuda ("ADT"),
including the associated preference share purchase rights (each, a "Right" and
collectively, the "Rights") issued pursuant to the Rights Agreement, dated as
of November 6, 1996, between ADT and Citibank, N.A., New York branch, as
Rights Agent (the "Rights Agreement"), validly tendered on or prior to the
Expiration Date and not properly withdrawn. Unless the context otherwise
requires and unless and until the Rights are redeemed, all references to
Shares shall include the associated Rights. All references herein to Rights
shall include all benefits that may inure to holders of the Rights pursuant to
the Rights Agreement. Each Share validly tendered on or prior to the
Expiration Date and not properly withdrawn will be entitled to receive $7.00
net in cash (the "Cash Consideration") and that number of shares of Western
Resources Common Stock equal to the Exchange Ratio (as defined below) (the
"Stock Consideration" and, together with the Cash Consideration, the "Offer
Consideration"). The term "Exchange Ratio" means the quotient (rounded to the
nearest 1/100,000) determined by dividing $15.00 by the average of the high
and low sales prices of Western Resources Common Stock (as reported on the New
York Stock Exchange (the "NYSE") Composite Transactions reporting system as
published in The Wall Street Journal or, if not published therein, in another
authoritative source) (the "Western Resources Average Price") on each of the
twenty consecutive trading days ending with the third trading day immediately
preceding the Expiration Date; provided that the Exchange Ratio shall not be
greater than 0.50420. Pursuant to the Exchange Ratio, each Share will be
exchanged for $7.50 net in cash and $15.00 of Western Resources Common Stock
if the Western Resources Average Price is $29.75 or higher. If the Western
Resources Average Price is less than $29.75, each Share will be exchanged for
$7.50 net in cash and less than
$15.50 of Western Resources Common Stock. Western Resources Common Stock is
listed for trading under the symbol "[ ]" on the NYSE. On , 1996, the
closing price of the Western Resources Common Stock on the NYSE was $ .
Based on such closing price, the Exchange Ratio would be and each Share
would be converted into $7.50 net in cash and $ of Western Resources Common
Stock. The Exchange Ratio will change as the market price of the Western
Resources Common Stock changes. ADT Shareholders may call (800) any time
on or after the date hereof through the Expiration Date for the current
Exchange Ratio calculated based on the then-current Western Resources Average
Price for the twenty consecutive trading days ending with the third trading
day immediately preceding the date the call is placed. The actual Western
Resources Average Price and Exchange Ratio will be calculated as of the third
trading day immediately prior to the Expiration Date, as described above, and
a press release will be issued announcing the actual Exchange Ratio prior to
the opening of the second trading day prior to the Expiration Date (as it may
be extended from time to time).
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN TIME, ON
, 1997 , UNLESS THE OFFER IS EXTENDED.
The purpose of the Offer is to enable Western Resources to obtain control of
ADT. Western Resources presently intends, following consummation of the Offer,
to propose and seek to have ADT effect an amalgamation of a newly created
subsidiary of Western Resources organized under the laws of Bermuda with and
into ADT, with ADT being the surviving corporation (the "Amalgamation"). In
the Amalgamation, each then outstanding Share (other than Shares owned by
Western Resources or any of its affiliates, Shares held in the treasury of ADT
(if ADT is so authorized) or by any subsidiary of ADT and Shares owned by ADT
Shareholders who perfect appraisal rights under Bermuda law) would be
cancelled in exchange for the right to receive the Offer Consideration.
Western Resources' obligation to exchange the Offer Consideration for Shares
pursuant to the Offer is conditioned upon, among other things, the
satisfaction or, where applicable, waiver of the following conditions: (i)
there being validly tendered and not withdrawn prior to the Expiration Date a
number of Shares which will constitute at least a majority of the total number
of outstanding Shares on a fully diluted basis (as though all options or other
securities convertible into or exercisable or exchangeable for Shares had been
so converted, exercised or exchanged) as of the date the Shares are accepted
for exchange by Western Resources pursuant to the Offer, (ii) approval of the
issuance of shares of Western Resources Common Stock in connection with the
Offer and approval of an amendment to the Amended and Restated Articles of
Incorporation of Western Resources to increase the number of shares of Western
Resources Common Stock authorized for issuance, by the holders (voting as a
single class) of a majority of the shares of Western Resources Common Stock
and Western Resources Preferred Stock outstanding on the applicable record
date, (iii) the approval by a majority of those Shares voted at a special
meeting of ADT Shareholders, which has been requisitioned by Westar Capital
pursuant to Section 74 of the Companies Act 1981 of Bermuda, as amended and
Bye-Law 42 of the ADT Bye-Laws, of the following actions: (A) the removal,
pursuant to Section 93 of the Companies Act and Bye-Law 71 of the ADT Bye-
Laws, of all of the present members of the ADT Board of Directors and any
person or persons elected or designated by any of such directors to fill any
vacancy or newly created directorship, (B) a proposal to reduce the number of
seats on the ADT Board to two and (C) the election of Steven L. Kitchen and
Steven A. Millstein, the "Western Resources Nominees") as the directors of ADT
(or, if any such Western Resources Nominee is unable to serve as a director of
ADT due to death, disability or otherwise, any other person designated as a
Western Resources Nominee by Western Resources), (iv) the ADT Board having
redeemed the Rights or amended the Rights Agreement so that the Rights are
inapplicable to the acquisition of Shares pursuant to the Offer, or Western
Resources being otherwise satisfied in its sole discretion that the Rights are
invalid or are not applicable to the acquisition of Shares pursuant to the
Offer, (v) Western Resources and Westar Capital being satisfied, in their sole
discretion, that the provisions of Bye-Law 104 and Bye-Law 46 of the ADT Bye-
Laws do not and will not apply to Western Resources, Westar Capital or the
acquisition of Shares pursuant to the Offer so as to (A) require Western
Resources or Westar Capital to comply with the provisions of Bye-Law 104 of
the ADT Bye-Laws or (B) prevent Western Resources, Westar Capital or any of
their affiliates from voting Shares owned by any of them at any time, (vi) the
receipt by Westar Capital of a final judgment from a court of competent
jurisdiction declaring the Republic Warrant (as defined herein) invalid or the
expiration of the Republic Warrant prior to the Expiration Date without having
been exercised, and (vii) all regulatory approvals required to consummate the
Offer having been obtained and remaining in full force and effect, all
2
statutory waiting periods in respect thereof having expired and no such
approval containing any conditions or restrictions which the Western Resources
Board of Directors determines will or could be expected materially to impair
the strategic and financial benefits expected to result from the Offer and the
Amalgamation.
The term "Expiration Date" means 5:00 P.M., Eastern time, on , 1997,
unless and until Western Resources, in its sole discretion, shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Western Resources, will expire.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Western Resources will accept for exchange, and will exchange,
Shares (and Rights, if applicable) validly tendered and not properly withdrawn
as promptly as practicable following the Expiration Date. In addition, subject
to applicable rules of the Commission, Western Resources expressly reserves the
right to delay acceptance of or the exchange of Shares (and Rights, if
applicable) in order to comply with any applicable law. In all cases, the
exchange of Shares (and Rights, if applicable) tendered and accepted for
exchange pursuant to the Offer will be made only after receipt by [ ]
(the "Exchange Agent") of certificates for such Shares (or a confirmation of a
book-entry transfer of such Shares into the Exchange Agent's account at The
Depository Trust Company or the Philadelphia Depository Trust Company
(collectively, the "Book-Entry Transfer Facilities")), a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees (or, in the case of a book-entry transfer) an Agent's
Message (as defined in the Prospectus) and any other documents required by the
Letter of Transmittal.
For purposes of the Offer, Western Resources will be deemed to have accepted
for exchange Shares (and Rights, if applicable) validly tendered and not
withdrawn, as if and when Western Resources gives oral or written notice to the
Exchange Agent of its acceptance of the tenders of such Shares (and Rights, if
applicable) pursuant to the Offer. Delivery of Western Resources Common Stock
and Cash Consideration in exchange for Shares (and Rights, if applicable)
pursuant to the Offer and cash in lieu of fractional shares of Western
Resources Common Stock will be made by the Exchange Agent as soon as
practicable after receipt of such notice. The Exchange Agent will act as agent
for tendering ADT Shareholders for the purpose of receiving Western Resources
Common Stock, the Cash Consideration and cash to be paid in lieu of fractional
shares of Western Resources Common Stock from Western Resources and
transmitting such Western Resources Common Stock and cash to tendering ADT
Shareholders. Under no circumstances will interest with respect to fractional
shares be paid by Western Resources by reason of any delay in making such
exchange.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn pursuant to the
procedures set forth in the Prospectus at any time prior to the Expiration Date
and, unless theretofore accepted for exchange and exchanged by Western
Resources for the Offer Consideration pursuant to the Offer, may also be
withdrawn at any time after , 1997.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Exchange Agent
at one of its addresses set forth on the back cover of the Prospectus, and must
specify the name of the person having tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of the
Shares to be withdrawn, if different from that of the person who tendered such
Shares. The signature(s) on the notice of withdrawal must be guaranteed by a
financial institution (including most banks, savings and loan associations and
brokerage houses) which is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program (an "Eligible Institution") unless such
Shares have been tendered for the account of any Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry tender as
set forth in the Prospectus, any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares and must otherwise comply with such Book-Entry Transfer
Facility's procedures. If certificates have been delivered or otherwise
identified to the Exchange Agent, the name of the registered holder and the
serial numbers of the particular certificates evidencing the Shares withdrawn
must also be furnished to the Exchange Agent as aforesaid prior to the physical
release of such certificates.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Western Resources, in its sole
discretion, which determination shall be final and binding. Neither
3
Western Resources, the Exchange Agent, the Information Agent, the Dealer
Managers nor any other person will be under any duty to give notification of
any defects or irregularities in any notice of withdrawal or will incur any
liability for failure to give any such notification. Any Shares (and Rights,
if applicable) properly withdrawn will be deemed not to have been validly
tendered for purposes of the Offer. However, withdrawn Shares (and Rights, if
applicable) may be retendered by following one of the procedures described
under the caption "The Offer--Procedure for Tendering" in the Prospectus at
any time prior to the Expiration Date. A withdrawal of Shares shall also
constitute a withdrawal of the associated Rights. Rights may not be withdrawn
unless the associated Shares are also withdrawn.
Subject to the applicable rules and regulations of the Commission, Western
Resources reserves the right, in its sole discretion, at any time or from time
to time, (i) to delay acceptance for, or, regardless of whether such Shares
(and Rights, if applicable) were theretofore accepted for exchange, exchange
of, any Shares pursuant to the Offer or to terminate the Offer and not accept
for exchange or exchange any Shares (and Rights, if applicable) not
theretofore accepted for exchange, or exchanged, upon the failure of any of
the conditions of the Offer to be satisfied and (ii) to waive any condition
(other than the Western Resources Shareholder Approval Condition, the
Regulatory Approval Condition and the condition relating to the effectiveness
of the Registration Statement (each as defined in the Prospectus)) or
otherwise amend the Offer in any respect, by giving oral or written notice of
such delay, termination or amendment to the Exchange Agent and by making a
public announcement thereof.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), is incorporated herein by reference.
Requests have been made to ADT pursuant to Rule 14d-5 under the Exchange Act
and Section 66 of the Companies Act for the use of ADT's shareholder lists and
security position listings for the purpose of disseminating the Offer to
holders of Shares. The Prospectus, the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares, and will be
furnished to brokers, dealers, banks, trust companies and similar persons
whose names, or the names of whose nominees, appear on the shareholder lists,
or if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares, by Western Resources following receipt of such lists or listings from
ADT or by ADT, if ADT so elects.
The Prospectus and the Letter of Transmittal contain important information
that should be read before any decision is made with respect to the Offer.
Questions and requests for assistance may be directed to or additional
copies of the Prospectus, the Letter of Transmittal, the Notice of Guaranteed
Delivery or other Offer documents may be obtained from the Information Agent
or the Dealer Managers at their respective telephone numbers and addresses set
forth below or from your broker, dealer, commercial bank or trust company.
Copies of the foregoing will be furnished at Western Resources' expense. No
fees or commissions will be payable to brokers, dealers or other persons other
than the Dealer Managers and the Information Agent for soliciting tenders of
Shares pursuant to the Offer.
The Information Agent for the Offer is:
The Dealer Managers for the Offer are:
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
(212) 783-5827 (call collect)
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(888) 221-3671 (toll-free)
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3582 (call collect)
4
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO EXCHANGE EACH OUTSTANDING COMMON SHARE
(INCLUDING THE ASSOCIATED PREFERENCE SHARE PURCHASE RIGHTS)
OF
ADT LIMITED
FOR
$7.50 NET PER SHARE IN CASH
AND
$15.00 OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
OF
WESTERN RESOURCES, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Prospectus, dated , 1997 (the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Offer") relating to the Offer by
Western Resources, Inc., a Kansas corporation ("Western Resources"), to
exchange $7.50 net in cash and a number of shares of common stock, par value
$5.00 per share, of Western Resources equal to the Exchange Ratio (as defined
in the Prospectus) for each outstanding common share, par value $0.10 per
share (collectively, the "Shares"), of ADT Limited, a company organized under
the laws of Bermuda, including the associated preference share purchase rights
(each, a "Right" and collectively, the "Rights") issued pursuant to the Rights
Agreement, dated as of November 6, 1996, between ADT and Citibank, N.A., New
York branch, as Rights Agent.
You are instructed to tender to Western Resources the number of Shares, and
associated Rights, indicated below (or, if no number is indicated below, all
Shares, and associated Rights) that are held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares, and associated SIGN HERE
Rights, to be tendered*
_____________________________________
Shares
_____________________________________
Signature(s)
Account Number: _____________________
_____________________________________
Dated: _______________________ , 1997
_____________________________________
Please Print Name(s) and Address(es)
Here
_____________________________________
_____________________________________
Area Code and Telephone Number(s)
_____________________________________
Tax Identification or Social
Security Number(s)
- --------
* Unless otherwise indicated, it will be assumed that all of your Shares (and
associated Rights) held by us for your account are to be tendered.
5
