Current Price – $46.2
Offer Price – $43.5 – $50
Upside – 6% or $375 (if the upper pricing limit is used)
Expiration date – 7 January 2016
We are conducting an offer by means of a procedure commonly called a “modified Dutch auction.” Upon the terms and subject to the conditions of the Offer, we are offering to purchase for cash shares of our common stock, par value $0.01 per share, pursuant to Auction Tenders at prices specified by the tendering stockholders of not less than $43.50 nor greater than $50.00 per share.
Assuming that the Offer is fully subscribed, if the Purchase Price is determined to be $43.50 per share, the minimum Purchase Price under the Offer, the approximate number of shares that would be purchased under the Offer is 2,873,563. Assuming that the Offer is fully subscribed, if the Purchase Price is determined to be $50.00 per share, the maximum Purchase Price under the Offer, the approximate number of shares that would be purchased under the Offer is 2,500,000. Assuming that the Offer is fully subscribed, the maximum of 2,873,563 shares that the Company is offering to purchase under the Offer would represent approximately 11.8% of the total number of shares issued and outstanding as of December 1, 2015. Assuming the Offer is fully subscribed, the minimum of 2,500,000 shares that the Company is offering to purchase under the Offer would represent approximately 10.3% of the total number of shares issued and outstanding as of December 1, 2015.
No proration for Odd Lot holders:
If you own, beneficially or of record, fewer than 100 shares in the aggregate, you validly tender all of these shares at or below the Purchase Price and all conditions to the Offer are satisfied or waived, we will purchase all of your shares without subjecting them to proration.
Source of Funds:
We intend to fund any purchase of shares pursuant to the Offer, including the related fees and expenses, with borrowings under our revolving credit facility and from cash on hand. The Offer is not subject to a financing contingency. Assuming the Offer is fully subscribed, we expect the aggregate purchase price for the shares, together with all related fees and expenses, to be approximately $126 million.
We have a $125 million revolving credit facility (the “Facility”) with Amegy Bank National Association, as agent, and a syndicate of financial institutions, which may be increased to $150 million based on the terms and subject to the conditions set forth in the agreement relating to the Facility (the “Credit Agreement”). The expiration date of the Facility is February 2020. The Facility is available for working capital and general corporate purposes, including acquisitions, and issuances of letters of credit. Our obligations under the Facility are secured by 65% of the stock of our captive insurance subsidiary and are guaranteed by all of our domestic subsidiaries. Borrowings under the Facility bear interest at an alternate base rate or LIBOR, at our option, plus an applicable margin. Depending on our leverage ratio, the applicable margin varies (i) in the case of LIBOR loans, from 2.00% to 2.75% and (ii) in the case of alternate base rate loans, from 0.00% to 0.75%. The alternate base rate is the highest of (i) the prime rate most recently published in The Wall Street Journal, (ii) the federal funds rate plus 0.50% and (iii) the 30-day LIBOR rate plus 2.00%. We also pay an unused commitment fee on the average daily unused portion of the Facility at a rate of 0.25%.