UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 7, 2007 (September 4, 2007)
L. B. Foster Company
(Exact name of registrant as specified in its charter)
| |
|
|
|
|
| Pennsylvania
|
|
000-10436
|
|
25-1324733 |
|
|
|
|
|
|
(State or other jurisdiction
of incorporation)
|
|
(Commission
File Number)
|
|
(I.R.S. Employer
Identification No.) |
| |
|
|
| 415 Holiday Drive, Pittsburgh, Pennsylvania
|
|
15220 |
|
|
|
|
| (Address of principal executive offices)
|
|
(Zip Code) |
Registrant’s telephone number, including area code (412) 928-3417
None
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry Into a Material Definitive Agreement
On September 4, 2007 the Dakota, Minnesota and Eastern Railroad (“DM&E”) entered into
an Agreement and Plan of Merger (the “Agreement”) under which an indirect, wholly owned
subsidiary of the Canadian Pacific Railway Company will be merged into the DM&E, with the
DM&E being the surviving corporation. The Agreement is attached hereto and incorporated
herein by reference.
Under the terms of the Agreement, the DM&E’s current preferred stock, common stock and
warrants to purchase common stock will be redeemed or cancelled in exchange for: (a) cash
on the closing date; and (b) with respect to the common stock and warrants, future
contingent payments based on (i) construction commencing on the Powder River Basin Expansion
Project (“PRB”); and (ii) certain PRB tonnage thresholds being surpassed. The Canadian
Pacific Railway Company has guaranteed the payment obligations of its subsidiaries engaged
in the merger transaction and, for convenience, the Canadian Pacific Railway Company and
these subsidiaries are hereafter collectively referred to as “CP”.
The closing should occur within 30 — 60 days. The closing is subject to a variety of
closing conditions.
Registrant, through its wholly owned subsidiary (collectively “Registrant”), owns
certain DM&E preferred stock, common stock and warrants. Immediately prior to the closing,
all of the preferred stock (including accrued dividends) will be redeemed. Registrant
estimates that it will receive approximately $25,650,000 from these redemptions and that
approximately $8,250,000 of this amount will constitute pre-tax income.
At closing, Registrant should receive approximately $125,900,000, prior to deduction of
Registrant’s share of the $10,000,000 escrow amount, for both its DM&E common stock and its
warrants to purchase DM&E common stock: substantially all of these proceeds should
constitute pre-tax income. These figures are estimates since, among other matters, the
purchase price is subject to adjustment based on a number of factors, including adjustments
based on the DM&E’s working capital, debt and capital expenditures.
In addition, CP is obliged to pay the DM&E’s former equity holders an aggregate of
$350,000,000 (plus interest on such amount from the closing date to the earlier of the
payment date and December 31, 2012 at a rate of 5% compounded annually and less any
applicable withholding taxes), less, any amounts subject to setoff rights under the
Agreement (after adjustment, the “Construction Milestone Payment”) upon the earlier of
either (a) the issuance of a “notice(s) to proceed”, duly authorized, directly or
indirectly, by CP’s board of directors in its sole discretion, under contracts for
construction of any portion of the “New Construction”, as defined in the Agreement, line for
which the maximum aggregate amount committed to be paid exceeds $500 million, or (b) CP or
its affiliates, to the extent authorized by the CP’s board of directors in its sole
discretion, causing the movement of more than 10,000 cubic yards of earth in connection with
then “New Construction” line (collectively, the “Construction Conditions”). CP has agreed
that, for either the issuance of the “notice(s) to proceed” or the movement of more than
10,000 cubic yards of earth in connection with the New Construction to take place, its board
of directors must take formal action authorizing such activity. Notwithstanding the
foregoing, if neither of the Construction Conditions has been satisfied prior to December
31, 2025, no such payment shall be payable. Registrant estimates that, prior to expenses
and any offsets, it should receive approximately 12 1/4 % of the Milestone Payment.
CP also shall cause the equity holders to receive certain payments (the “Coal Milestone
Payments”) not to exceed $707,000,000 in the aggregate (plus an inflation adjustment
accruing on each such amount from the Closing Date to the payment date at a rate of 2%
compounded annually and less any applicable withholding taxes, and subject to various rights
of setoff) if, prior to December 31, 2025, shipments of Powder River Basin coal over any
portion of the New Construction line exceed certain tonnage targets (without rounding) for
any calendar year as set forth below (the “Tonnage Condition”):
| |
|
|
|
|
|
| |
| |
Tonnage Condition |
|
|
Coal Milestone Payment |
|
| |
|
|
|
|
|
| |
At least 40 million tons in any calendar year
|
|
|
$58,000,000 plus an
inflation adjustment from
the Closing Date at a rate
of 2%, compounded annually
(the “First Milestone
Payment”) |
|
| |
At least 50 million tons in any calendar year
|
|
|
$60,000,000 plus an
inflation adjustment from
the Closing Date at a rate
of 2% compounded annually
(the “Second Milestone
Payment”) |
|
| |
| |
|
|
|
|
|
| |
| |
Tonnage Condition |
|
|
Coal Milestone Payment |
|
| |
|
|
|
|
|
| |
At least 60 million tons in any calendar year
|
|
|
$100,000,000 plus an
inflation adjustment from
the Closing Date at a rate
of 2% compounded annually
(the “Third Milestone
Payment”) |
|
| |
At least 75 million tons in any calendar year
|
|
|
$164,000,000 plus an
inflation adjustment from
the Closing Date at a rate
of 2% compounded annually
(the “Fourth Milestone
Payment”) |
|
| |
At least 100 million tons in any calendar year
|
|
|
$175,000,000 plus an
inflation adjustment from
the Closing Date at a rate
of 2% compounded annually
(the “Fifth Milestone
Payment”) |
|
| |
At least l25 million tons in any calendar year
|
|
|
$150,000,000 plus an
inflation adjustment from
the Closing Date at a rate
of 2% compounded annually
(the “Sixth Milestone
Payment”) |
|
| |
Upon satisfaction of any Tonnage Condition (and payment of the corresponding
Coal Milestone Payment), the equityholders will no longer be eligible to receive the
Coal Milestone Payment corresponding to said Tonnage Condition. For purposes of
illustration, in no event will CP be obligated to pay more than one of each of the
First Milestone Payment, Second Milestone Payment, Third Milestone Payment, Fourth
Milestone Payment, Fifth Milestone Payment and the Sixth Milestone Payment upon
satisfaction of any Tonnage Condition. If during any calendar year the DM&E
satisfies more than one Tonnage Condition that has not previously been satisfied,
then CP shall make the corresponding Coal Milestone Payments for each such Tonnage
Condition which has been satisfied through such time. Any tonnage that is under
contract with either railroad (i.e., BNSF or Union Pacific Railroad, or their
successors) serving the PRB (the “Incumbent Carriers”) and moves on an emergency
basis via any portion of the lines that may be constructed or improved pursuant to
the PRB Expansion (“Emergency Tonnage”) shall not be included in measuring whether a
Tonnage Condition has been met. Any tonnage under contract with Incumbent
Carrier(s) that is moved over any portion of the PRB Expansion for less than six
months shall be assumed to be Emergency Tonnage, unless there is a preponderance of
the evidence to the contrary. The terms and conditions of any agreement entered
into after the closing date and related to the shipment of coal shall be determined
by CP in its sole discretion.
Registrant should receive, prior to expenses and any offsets, approximately 12 1/4% of
any Coal Milestone Payment.
Registrant sells to CP, from time to time, railroad related materials in the
ordinary course of business.
Item 9.01 Exhibits
| |
|
|
10.25
|
|
Agreement and Plan of Merger dated as of September 4, 2007
among Soo Line Holding Company, Soo Line Properties Company, Canadian Pacific
Railway Company, Stockholder Representative and Dakota, Minnesota & Eastern
Railroad Corporation. |