processed meat products, poultry and cheeses. Envirodyne is also a leading
domestic producer of disposable plastic cutlery, drinking straws, custom dining
kits and related products. In addition, Envirodyne is a leading domestic
producer of thermo-formed and injection-molded plastic containers and
horticultural trays and inserts. The Company is continuing to evaluate the
acquisition of additional shares of Envirodyne common stock or proposing a
merger with, or acquisition of, Envirodyne in the future.
The Energy Industries Sale Proposal. In connection with the Energy Industries
Sale, Schroder Wertheim initiated contact with approximately 37 companies.
Those companies were selected on the basis of their potential strategic
interest in Energy Industries or their potential interest in adding natural gas
compression operations to their existing operations or energy investment
portfolios. As a result of such contacts, 21 of the prospective purchasers
signed confidentiality agreements and received confidential information
regarding Energy Industries. The information sent to the 21 prospective
purchasers included a confidential memorandum which provided a description of
Energy Industries' operations and a summary of its historical financial and
operating performance and management projections of future financial results.
In addition to the confidential memorandum, prospective purchasers received a
cover letter which set forth bidding procedures and which included a deadline
for submission of non-binding indications of interest to Schroder Wertheim.
Schroder Wertheim received six non-binding indications of interest ranging in
value from $87 million to $115 million. Five of such offers were for all cash
and one offer was for cash and securities. Of the six bidders, four were
invited to perform due diligence at Energy Industries' headquarters in Corpus
Christi, Texas where tours of the physical facilities were given by management
and a data room was set up to afford the invitees the ability to perform
detailed financial and operational due diligence. Such bidders were also
afforded access to Energy Industries' management during the course of their due
Prior to the established deadline for submission of binding acquisition
proposals, Weatherford Enterra approached Schroder Wertheim and expressed a
desire to make a pre-emptive bid for Energy Industries. The Weatherford Enterra
offer was for $130 million in cash and the assumption of certain current
liabilities of Energy Industries. Schroder Wertheim had been engaged in similar
discussions with other bidders but none of them expressed a desire to make a
bid which was comparable to the Weatherford Enterra offer. Because the
Weatherford Enterra proposal represented the highest offer in terms of total
value and form of consideration, possessed a high degree of certainty with
respect to the ultimate realization of the sales proceeds and contained fewer
conditions than the other indications of interest received which generally
contained financing and due diligence conditions, it was determined to be the
most attractive offer to the Company.
The Company entered into a letter agreement with Weatherford Enterra on June
29, 1995 (the "June 29 agreement") which set forth the purchase price of $130
million and certain additional material terms and conditions of the sale.
Subsequent to the execution of the June 29 agreement, a dispute arose between
the Company and Weatherford Enterra, principally regarding the issue of to what
extent the June 29 agreement provided that Weatherford Enterra would assume
certain liabilities of Energy Industries in connection with the sale.
Weatherford Enterra threatened to institute litigation against the Company,
through service of process on the Company of a complaint which Weatherford
Enterra had filed in a Texas state court, if the Company did not uphold what
Weatherford Enterra asserted to be terms of the June 29 agreement. However, as
a result of several subsequent meetings between representatives of the Company
and Weatherford Enterra, the parties resolved their dispute and agreed upon the
terms and conditions of the Energy Industries Sale which are set forth in the
Purchase Agreement. The Company believes that the terms and conditions in the
Purchase Agreement are no less favorable to the Company than the terms and
conditions in the June 29 agreement. In connection with the execution and
delivery of the Purchase Agreement, Weatherford Enterra and the Company also
executed and delivered a mutual release of any liability in connection with the
dispute. Weatherford Enterra also withdrew its filed complaint with prejudice.
A Company Board of Directors meeting was held on September 20, 1995 to review
the status of the sale of Energy Industries and the proposed terms and
conditions of the Purchase Agreement. At that meeting, Schroder Wertheim orally
delivered its opinion, which was subsequently confirmed in writing, to the