EMPIRE RESOURCES, INC. (NASDAQ:ERS) Files An 8-K Entry into a Material Definitive Agreement
Item1.01. Entry Into a Material Definitive Agreement.
On March 30, 2017, Empire Resources, Inc., a Delaware corporation
(the Company), Ta Chen Stainless Pipe Co., Ltd., a Taiwan
corporation (Parent), and Ta Chen Investment Corporation., a
Delaware corporation and wholly owned subsidiary of Parent
(Merger Sub), entered into an Agreement and Plan of Merger (the
Merger Agreement), to which Merger Sub will commence a tender
offer (the Offer) to purchase all outstanding shares of common
stock of the Company, par value $0.01 per share (the Common
Stock), at a price of $7.00 per share of Common Stock (the Offer
Price), subject to any required withholding of taxes, net to the
selling stockholder in cash without interest. As soon as
practicable following acceptance for payment of the shares of
Common Stock to the Offer, Merger Sub will be merged with and
into the Company, on the terms and subject to the conditions set
forth in the Merger Agreement (the Merger), with the Merger to be
effected to Section251(h) of the General Corporation Law of the
State of Delaware (the DGCL), with the Company surviving the
Merger as a wholly owned subsidiary of Parent. At the effective
time of the Merger (the Effective Time), each share of Common
Stock not purchased in the Offer (other than shares of Common
Stock for which the holder thereof has properly demanded the
appraisal of such shares in accordance with, and has complied in
all respects with, the DGCL) will be converted into the right to
receive an amount, in cash and without interest, equal to the
Offer Price and each option to acquire shares of Common Stock
will be converted into the right to receive the difference
between the Offer Price and the exercise price of the stock
option.
The board of directors of the Company (the Board) unanimously
approved the Merger Agreement and the transactions contemplated
therein, including the Offer and the Merger. The Board intends to
file a Solicitation/ Recommendation Statement on Schedule14D-9
with the U.S. Securities and Exchange Commission (SEC)
recommending that holders of Common Stock tender their shares of
Common Stock in the Offer.
Completion of the Offer is subject to various conditions,
including that a number of shares of Common Stock equal to at
least a majority of the outstanding shares of Common Stock on a
fully diluted basis are validly tendered and not withdrawn prior
to the expiration of the Offer. Nathan and Sandra Kahn, Chief
Executive Officer and Vice president and Chief Financial Officer,
respectively, who jointly own approximately 46.3% of the
outstanding shares of Common Stock, have agreed to tender their
shares (subject to the right to contribute up to approximately 1%
of the outstanding shares to charity). Parent and Merger Sub
currently own approximately 5% of the outstanding shares of
Common Stock. The Offer will expire on the twentieth business day
following the commencement of the Offer, unless extended in
accordance with the terms of the Offer, the Merger Agreement and
the applicable rules and regulations of the SEC. The consummation
of the Offer is subject to certain other customary conditions,
including the absence of any Company Material Adverse Effect (as
defined in the Merger Agreement). The Offer is not subject to a
financing condition.
Concurrent with the execution of the Merger Agreement, Merger Sub
deposited $15,000,000 (the Escrow Funds) with JPMorgan Chase
Bank, NA, as escrow agent. The Escrow Funds will be used for the
payment for shares in the Offer and the Merger or, in the event
that Parent or Merger Sub has any liabilities under the Merger
Agreement, including for breaches hereof, the Escrow Funds shall
be available for payment of those liabilities or to meet their
obligations under an order of specific performance.
The Merger Agreement includes various representations, warranties
and covenants of the parties customary for a transaction of this
nature. Until the earlier of the termination of the Merger
Agreement and the Effective Time, the Company has agreed, among
other things, to operate its business in the ordinary course and
has agreed to certain other operating covenants, as set forth
more fully in the Merger Agreement.
The Company is subject to a no-shop restriction on its ability to
solicit alternative acquisition proposals, and to provide
information to and engage in discussions with third parties,
subject to customary exceptions intended to allow the Board to
fulfill its fiduciary duties. Prior to the consummation of the
Offer, the Company may terminate the Merger Agreement to enter
into a definitive agreement with respect to a Superior Proposal
(as defined in the Merger Agreement), subject to compliance with
certain terms and conditions in the Merger Agreement, including
the payment of a termination fee of $1 million.
The foregoing summary of the material terms of the Merger
Agreement is not complete and is qualified in its entirety by
reference to the Merger Agreement, which is attached hereto as
Exhibit 2.1 and is incorporated herein by reference.
The representations, warranties and covenants of the parties
contained in the Merger Agreement have been made solely for the
benefit of such parties. In addition, such representations,
warranties and covenants (i)have been made only for purposes of
the Merger Agreement, (ii)have been qualified by confidential
disclosures made by the parties to each other in connection with
the Merger Agreement, (iii)are subject to materiality
qualifications contained in the Merger Agreement which may differ
from what may be viewed as material by investors, (iv)were made
only as of the date of the Merger Agreement or such other date as
is specified in the Merger Agreement and (v)have been included in
the Merger Agreement for the purpose of allocating risk between
the contracting parties rather than establishing matters as
facts. Accordingly, the Merger Agreement is included with this
filing only to provide investors with information regarding the
terms of the Merger Agreement, and not to provide investors with
any other factual information regarding the parties or their
respective businesses. Investors should not rely on the
representations, warranties or covenants, or any descriptions
thereof, as characterizations of the actual state of facts or
condition of the parties or any of their respective subsidiaries
or affiliates. Moreover, information concerning the subject
matter of the representations and warranties may change after the
date of the Merger Agreement, which subsequent information may or
may not be fully reflected in the parties public disclosures. The
Merger Agreement should not be read alone, but should instead be
read in conjunction with the other information regarding the
parties, the Offer and the Merger that is or will be contained
in, or incorporated by reference into, a tender offer statement
on Schedule TO, including an offer to purchase, a letter of
transmittal and related documents, that will be filed with the
SEC by Merger Sub and Parent and a Solicitation/Recommendation
Statement on Schedule 14D-9 that will be filed with the SEC by
the Company, and the other documents that the parties will file,
with the SEC.
Item5.01 Change in Control of Registrant.
If the Offer is consummated, the Company will experience a change
of control. See the disclosures regarding the Offer and the
Merger Agreement under Item1.01 above, which disclosures are
incorporated herein by reference.
Item5.02. Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
(e) In connection their entry into the Merger
Agreement, Parent, Sub and the Company entered into an agreement
(the Health Insurance Agreement) with Nathan Kahn, the Companys
Chief Executive Officer and a director of the Company, and Sandra
Kahn, a Vice President, Chief Financial Officer and a director of
the Company, providing that following consummation of the Merger
and regardless of whether they remain employees of the Company,
the Company shall continue to provide, at its cost, health
insurance to each of Nathan and Sandra Kahn until they are
eligible for Medicare. A copy of the Health Insurance Agreement
is attached hereto as an exhibit and this summary is qualified by
reference to Health Insurance Agreement.
Item5.03. Amendments to Articles of Incorporation or
Bylaws; Change in Fiscal Year.
Amendment to Bylaws
Also on March 30, 2017, the Board approved an amendment to the
Amended and Restated Bylaws of the Company, as previously
amended, by adding a new Section 5.5, to specify that certain
actions relating to the Company shall be brought in certain
courts in Delaware, which amendment reads as follows:
Section 5.5. Exclusive Forum. Unless the Corporation consents in
writing to the selection of an alternative forum, the sole and
exclusive forum for (i) any derivative action or proceeding
brought on behalf of the Corporation, (ii) any action asserting a
claim of breach of a fiduciary duty owed by any director or
officer or other employee of the Corporation to the Corporation
or the Corporations stockholders, (iii) any action asserting a
claim against the Corporation or any director or officer or other
employee of the Corporation arising to any provision of the
Delaware General Corporation Law or the Corporations Certificate
of Incorporation or Bylaws (as either may be amended from time to
time), or (iv) any action asserting a claim against the
Corporation or any director or officer or other employee of the
Corporation governed by the internal affairs doctrine shall be a
state court located within the State of Delaware (or, if no state
court located within the State of Delaware has jurisdiction, the
federal district court for the District of Delaware).
Item8.01. Other Events.
On March 31, 2017, the Company issued a press release relating to
the entry into the Merger Agreement. A copy of the Companys press
release is attached as Exhibit 99.1 to this Current Report on
Form 8-K and is incorporated herein by reference
Additional Information
The Offer has not yet commenced, and this document is neither an
offer to purchase nor a solicitation of an offer to sell any
shares of the common stock of the Company or any other
securities. On the commencement date of the Offer, Parent and
Merger Sub will file a Tender Offer Statement on Schedule TO,
including an offer to purchase, a letter of transmittal and
related documents, with the SEC and thereafter the Company will
file a Solicitation/Recommendation Statement on Schedule 14D-9
with the SEC. Investors and security holders are urged to read
both the Tender Offer Statement and the
Solicitation/Recommendation Statement regarding the Offer, as
they may be amended from time to time, when they become available
because they will contain important information. Investors and
security holders may obtain a free copy of these statements (when
available) and other documents filed with the SEC at the website
maintained by the SEC at www.sec.gov. Those materials and all
other documents filed by the Company, Parent or Merger Sub with
the SEC will be available both at no charge on the SECs web site
at www.sec.gov and may be obtained for free by directing requests
to the Company.
Forward-Looking Statements
Statements in this document may contain, in addition to
historical information, certain forward-looking statements. Some
of these forward-looking statements may contain words like
believe, may, could, would, might, possible, should, expect,
intend, plan, anticipate, or continue, the negative of these
words, other terms of similar meaning or they may use future
dates. Forward-looking statements in this document include
without limitation statements regarding the planned completion of
the transaction. These statements are subject to risks and
uncertainties that could cause actual results and events to
differ materially from the anticipated benefits of the
transaction; statements regarding the expected timing of the
completion of the transaction; the percentage of the Companys
stockholders tendering their shares in the Offer; the possibility
that competing offers will be made; the possibility that various
closing conditions for the transaction may not be satisfied or
waived; the effects of disruption caused by the transaction
making it more difficult to maintain relationships with
employees, vendors and other business partners; stockholder
litigation in connection with the transaction; and other risks
and uncertainties discussed in the Companys filings with the SEC,
including the Risk Factors sections of the Companys Annual Report
on Form10-K for the year ended December31, 2016, as well as the
tender offer documents to be filed by Parent and Merger Sub and
the Solicitation/Recommendation Statement to be filed by the
Company. The Company undertakes no obligation to update any
forward-looking statements as a result of new information, future
developments or otherwise, except as expressly required by law.
All forward-looking statements in this document are qualified in
their entirety by this cautionary statement.
Item9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
2.1 Agreement and Plan of Merger, dated as of March 30, 2017,
among Ta Chen Stainless Pipe Co., Ltd., Ta Chen Investment
Corporation and Empire Resources, Inc.*
10.1 Health Insurance Agreement dated as of March 30, 2017 among
Nathan Kahn, Sandra Kahn, Ta Chen Stainless Pipe Co., Ltd., Ta
Chen Investment Corporation, and Empire Resources, Inc.
99.1 Press Release dated March 31, 2017
| * |
Schedules omitted to Item601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request. |
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
| Empire Resources, Inc. | ||||
| Date:March 31, 2017 | By: | /s/ Sandra Kahn | ||
| Name: | Sandra Kahn | |||
| Title: | Vice President, Chief Financial Officer | |||
EXHIBIT INDEX
|
Exhibit Number |
Description |
|
| 2.1 |
Agreement and Plan of Merger, dated as of March 30, 2017, amongTa Chen Stainless Pipe Co., Ltd., Ta Chen Investment Corporation and Empire Resources, Inc.* |
|
| 10.1 |
Health Insurance Agreement dated as of March 30, 2017 among Nathan Kahn, Sandra Kahn, Ta Chen Stainless Pipe Co., Ltd., Ta Chen Investment Corporation, and Empire Resources, Inc.. |
|
| 99.1 | Press Release dated March 31, 2017 |
| * | Schedules omitted |
About EMPIRE RESOURCES, INC. (NASDAQ:ERS)
Empire Resources, Inc. is engaged in the purchase, sale and distribution of semi-finished aluminum and steel products to a range of customer base located in the Americas, Europe, Australia and New Zealand. The Company operates through the sale and distribution of non-ferrous and ferrous metals segment. It sells semi-finished aluminum and steel products, which are produced by processing aluminum or steel and/or aluminum or steel scrap. The semi-finished products include aluminum sheet, coil, plate and foil, rod, bar and wire, extruded and cast products. It offers various forms of these semi-finished products to its customers, for use, including aluminum sheet/coil, aluminum plate, aluminum treadplate, aluminum foil, stainless steel and carbon steel. It serves customers in various industries, such as distribution, transportation, automobile, housing, appliances and packaging. It sells products through marketing and sales personnel, and commission-based independent sales agents. EMPIRE RESOURCES, INC. (NASDAQ:ERS) Recent Trading Information
EMPIRE RESOURCES, INC. (NASDAQ:ERS) closed its last trading session up +0.68 at 6.94 with 13,070 shares trading hands.