As filed with the Securities and Exchange Commission on May 6, 2005.March 16, 2007
Registration No. 333-
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
FormFORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Hayes Lemmerz International, Inc.HAYES LEMMERZ INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)charter)
| | | | |
Delaware
| | 32-0072578 |
(State or other jurisdiction of
| | (I.R.S. Employer |
| incorporation or organization) | | 3714
(Primary Standard Industrial Code
Number) | | 32-0072578
(I.R.S. Employer Identification No.) |
15300 Centennial Drive
Northville, Michigan 4816748168
(734) 737-5000(Address, including
zip code,Zip Code, and
telephone number,Telephone Number, including
area code,Area Code, of
registrant’s principal executive offices)
Registrant’s Principal Executive Offices)
Patrick C. Cauley, Esq.
Vice President, General Counsel and Secretary
Hayes Lemmerz International, Inc.
15300 Centennial Drive
Northville, Michigan 4816748168
(734) 737-5000(Name,
address, including zip code,Address, Including Zip Code, and
telephone number, including area code,Telephone Number,Including Area Code, of
agentAgent for
service)
Copies of all communicationsService)
Robert B. Pincus, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square,
P.O. Box 636
Wilmington, Delaware 1989919899-0636
(302) 651-3000 Approximate date of commencement of proposed sale to the public: From time to timeAs soon as practicable after the effective date of this registration statement.Registration Statement becomes effective.
If the only securities being registered on this formForm are being offered pursuant to dividend or interest reinvestment plans, please check the following box.o
If any of the securities being registered on this formForm are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following
box.þo
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.o
If delivery ofthis form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the prospectus is expected to be madeCommission pursuant to Rule 434, please462(e) under the Securities Act, check the following box.o
If this form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box.o
CALCULATION OF REGISTRATION FEE
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| | Title of Each Class | | | | | | Proposed Maximum | | | Proposed Maximum | | | | |
| | of Securities to be | | | Amount to be | | | Offering Price Per | | | Aggregate Offering | | | Amount of | |
| | Registered | | | Registered (1) | | | Share (2) | | | Price (2) | | | Registration Fee | |
| | Common Stock, par value $.01 per share, to be offered by the Selling Stockholder named herein | | | 3,470,374 shares | | | $ | 5.275 | | | | $ | 18,306,222.85 | | | | $ | 2,155 | | |
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| | | | | | | | | | Proposed | | | Proposed | | | | |
| | | | | | | | | | Maximum | | | Maximum | | | | |
| | | | | Amount to be | | | Offering Price | | | Aggregate | | | Amount of | |
| | Title of Each Class of Securities to be Registered | | | Registered | | | Per Share | | | Offering Price | | | Registration Fee | |
| | Common Stock, par value $0.01 per share | | | 55,384,615 shares | | | $ | 3.25 | | | | $ | 180,000,000 | (1) | | | $ | 5,526 | | |
| | Rights to purchase Common Stock, par value $0.01 per share | | | | (2 | ) | | | | N/A | | | | | N/A | | | | $ | 0.00 | (3) | |
| | Total | | | | — | | | | | — | | | | | — | | | | | | | |
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| | |
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| (1) | The total | Represents the aggregate gross proceeds from the exercise of the maximum number of shares being registered includes 30,492rights that may be issued. |
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| (2) | | Evidencing the rights to subscribe for 55,384,615 shares of common stock, issuable upon the exercise, if any, of warrants held by the Selling Stockholder and 92,899 shares of common stock that are or may become issuable during the period we agreed to keep this registration statement effective upon exchange of shares of convertible preferred stock of our subsidiary, HLI Operating Company, Inc., held by the Selling Stockholder.par value $0.01 per share. |
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| (3) | (2) | Estimated pursuantThe rights are being issued for no consideration. Pursuant to Rule 457(c) solely for457(g) under the purposeSecurities Act of calculating the amount of the1933, as amended, no separate registration fee based on the average of the high and low sales prices of the common stock, as reported by the Nasdaq National Market on May 2, 2005.is payable. |
WeThe Registrant hereby amendamends this registration statementRegistration Statement on such date or dates as may be necessary to delay its effective date until wethe Registrant shall file a further amendment which specifically states that this registration statementRegistration Statement shall thereafter become effective in accordance withSection 8(a) of the Securities Act of 1933 or until the registration statementRegistration Statement shall become effective on such date as the Commission, acting pursuant to said Section8(a), may determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY THESE SECURITIES BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH 16, 2007
PROSPECTUS
HAYES LEMMERZ INTERNATIONAL, INC.
Rights to Purchase up to 55,384,615 Shares of Common Stock at $3.25 per Share
We are distributing at no charge to holders of our common stock non-transferable subscription rights to purchase shares of our common stock. You will receive subscription rights for each share of common stock owned at the close of business on , subject to adjustments to eliminate fractional rights and subject to further adjustment as described below. We are distributing subscription rights exercisable for up to an aggregate of 55,384,615 shares of our common stock. The proceeds from this rights offering will be used to repurchase our outstanding 101/2% Senior Notes due 2010 (our Senior Notes) and to pay the fees and expenses related to this rights offering.
Each whole subscription right will entitle you, as a holder of our common stock, to purchase one share of our common stock at a subscription price of $3.25 per share, which represents a 31.8% discount to the average closing price of our common stock for the ten trading days preceding March 16, 2007, the date on which we entered into the Equity Agreement described below. Subscribers who exercise their rights in full may over-subscribe for additional shares, subject to certain limitations, to the extent shares are available. The subscription rights will expire if they are not exercised by 5:00 p.m., Eastern Daylight Time, on , 2007, unless we extend this offering period; provided that the period between the distribution of the rights and the expiration date may not exceed thirty business days without the prior written consent of the Investor described below.
You should carefully consider whether to exercise your subscription rights before the expiration of the rights offering. Unless we give you a right of cancellation as a result of a fundamental (as determined by us) change to the terms of the rights offering, all exercises of subscription rights are irrevocable. Our board of directors is making no recommendation regarding your exercise of the subscription rights. The subscription rights may not be sold or transferred.
If any rights remain unsubscribed after the closing of the rights offering, Deutsche Bank Securities Inc., which we refer to as the Investor, has agreed, subject to certain conditions and limitations, to purchase all of the shares of our common stock not subscribed for in the rights offering at a price per share equal to the rights offering subscription price pursuant to an Equity Purchase and Commitment Agreement, which we refer to as the Equity Agreement. SPCP Group, LLC, an affiliate of Silver Point Capital, L.P., which we refer to as the Principal Additional Investor, has agreed with the Investor to acquire 50% of the shares that the Investor is obligated to acquire pursuant to the Equity Agreement. The Investor may also elect to assign some or all of its rights to purchase shares of our common stock to such additional investors as are reasonably acceptable to us. We refer to these additional investors as the Additional Investors.
The issuance of shares of common stock pursuant to the rights offering is subject to, among other things, the approval of our stockholders at a special meeting to be held on , 2007. If the issuance and sale of our common stock pursuant to the rights offering and the transactions contemplated by the Equity Agreement are not approved at the special meeting, then the rights offering will be cancelled.
We have also granted the Investor an option to purchase up to 5,538,462 shares of our common stock in a private placement. The Investor may exercise this option, which we refer to as the Direct Investment Option, at any
The information containedtime before the close of business on the second business day after the expiration of the rights offering. If the Investor exercises all or any portion of the Direct Investment Option, the gross proceeds to be raised from our stockholders in the rights offering will be reduced by the aggregate purchase price of the shares purchased by the Investor, and the subscription rights for each share of our common stock granted to our stockholders will be proportionately reduced to reflect such purchase. If the Investor exercises the Direct Investment Option in full, the number of subscription rights distributed to our stockholders will be reduced to rights for each share of common stock owned at the close of business on the record date.
We may cancel or terminate the rights offering at any time prior to its expiration. If we cancel or terminate this prospectus is not complete andoffering, we will return your subscription price, but without any payment of interest. We may be changed. A registration statement relatingrequired to these securities has been filed withpay the SEC. These securities may not be sold nor may offers to buy these securities be accepted prior toInvestor a termination fee in the timeevent of such cancellation or termination.
The shares are being offered directly by us without the registration statement becomes effective. This prospectus is notservices of an offer to sell these securities and it is not soliciting an offer to buy these securities in any state whereunderwriter or selling agent.
Shares of our common stock are traded on the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MAY 6, 2005.
PRELIMINARY PROSPECTUS
HAYES LEMMERZ INTERNATIONAL, INC.
3,470,374 SHARES OF COMMON STOCK
This prospectus relates toNasdaq Global Market under the sale from time to time bysymbol “HAYZ.” On March 15, 2007, the selling stockholder, AP Wheels, LLC, a Delaware limited liability company (“AP Wheels” or the “Selling Stockholder”), ofclosing sales price for our common stock was $4.80 per share. The shares of common stock par value $0.01 per share, of Hayes Lemmerz International, Inc., a Delaware corporation. Of the total 3,470,374 shares (the “Shares”) of common stock being registered by the registration statement of which this prospectus forms a part, 30,492 Shares are issuable upon the exercise, if any, of our outstanding series A warrants (the “Series A Warrants”) held by the Selling Stockholder and 92,899 Shares are or may become issuable during the period we agreed to keep this registration statement effective upon exchange of shares of Series A Cumulative Exchangeable Preferred Stock, par value $1.00 per share (the “Preferred Stock”), of our subsidiary HLI Operating Company, Inc. (“HLI”) held by the Selling Stockholder.
The Shares are being registered to permit the Selling Stockholder to sell the Shares from time to timeissued in the public market. The Selling Stockholder may sell any or all of the Shares available to it for sale, subject to federal and state securities laws, but is under no obligation to do so. Werights offering will not receive any proceeds from the offering of any such Shares.
The Selling Stockholder may sell the Shares through ordinary brokerage transactions or through any other means described in this prospectus. The price at which the Selling Stockholder may sell the Shares willalso be determined by the prevailing market for the Shares or in negotiated transactions. See “Plan of Distribution.” The registration of the Shares offered hereby is subject to the provisions of a Registration Rights Agreement dated July 1, 2004, by and between Hayes and the Selling Stockholder (the “Registration Rights Agreement”). For more information regarding the Registration Rights Agreement see the “Selling Stockholder” section of this prospectus.
Our common stock is tradedlisted on the Nasdaq NationalGlobal Market under the symbol “HAYZ”. On May 5, 2005,same symbol.
Exercising the last reported sale price of our common stock on the Nasdaq National Market was $5.91 per share. Investingrights and investing in our common stock involves risks.a high degree of risk. We urge you to carefully read the section entitled “Risk Factors” beginbeginning on page 2.
___of this prospectus and the section entitled “Risk Factors” in our Annual Report onForm 10-K for the year ended January 31, 2006, and all other information included or incorporated herein by reference in this prospectus in its entirety before you decide whether to exercise your rights.
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| | Per Share | | Aggregate |
| Subscription Price | | $ | | | | $ | | |
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| Estimated Expenses | | $ | | | | $ | | |
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| Net Proceeds to Us | | $ | | | | $ | | |
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacydetermined if this prospectus is truthful or accuracy of this prospectus.complete. Any representation to the contrary is a criminal offense. The date of this prospectus is , 2005.2007
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
Unless otherwise stated or the context otherwise requires, the terms “Hayes,” “we,” “us,” “our,” and the “Company” refer to Hayes Lemmerz International, Inc. and its subsidiaries.
You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with additional or different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information in this prospectus is accurate only as of the date on the front cover of this prospectus, and any information we have incorporated by reference is accurate only as of the date of the document incorporated by reference, in each case, regardless of the time of delivery of this prospectus or any exercise of the rights. Our business, financial condition, results of operations, and prospects may have changed since that date.
1
QUESTIONS AND ANSWERS RELATING TO THE RIGHTS OFFERING
The following are examples of what we anticipate will be common questions about the rights offering. The answers are based on selected information from this prospectus and the documents incorporated by reference herein. The following questions and answers do not contain all of the information that may be important to you and may not address all of the questions that you may have about the rights offering. This prospectus and the documents incorporated by reference herein contain more detailed descriptions of the terms and conditions of the rights offering and provide additional information about us and our business, including potential risks related to the rights offering, the common stock of the Company, and our business.
Exercising the rights and investing in our common stock involves risks. We urge you to carefully read the section entitled “Risk Factors” beginning on page 13 of this prospectus and the section entitled “Risk Factors” in our Annual Report onForm 10-K for the year ended January 31, 2006, and all other information included or incorporated herein by reference in this prospectus in its entirety before you decide whether to exercise your rights.
What is a rights offering?
We are distributing to holders of our common stock as of 5:00 p.m. Eastern Daylight Time on , 2007, the “record date,” at no charge, subscription rights to purchase shares of our common stock. You will receive subscription rights for each share of common stock you owned at the close of business on the record date, subject to adjustments to eliminate fractional rights. If, however, the Investor chooses to exercise all or any portion of the Direct Investment Option, the number of shares that each holder will be entitled to purchase pursuant to the rights offering will be proportionately reduced to reflect the Investor’s purchase of such shares. If the Investor exercises the Direct Investment Option in full, the number of subscription rights distributed to our stockholders will be reduced to rights for each share of common stock owned at the close of business on the record date. The subscription rights will be evidenced by rights certificates.
What is a right?
Each whole right gives our stockholders the opportunity to purchase one share of our common stock for $3.25 per share and carries with it a basic subscription privilege and an over-subscription privilege.
How many shares may I purchase if I exercise my rights?
We are granting to you, as a stockholder of record on the record date, subscription rights for each share of our common stock you owned at that time, subject to adjustment as described above. Each right contains the basic subscription privilege and the over-subscription privilege. We determined the ratio of rights you will receive per share by dividing $180.0 million by the subscription price of $3.25. For example, if you owned 100 shares of our common stock on the record date and you were granted rights for each share of our common stock you owned at that time, then you have the right to purchase shares of common stock for $3.25 per share, subject to adjustment. You may exercise any number of your subscription rights, or you may choose not to exercise any subscription rights.
If you hold your shares in the name of a broker, dealer, or other nominee who uses the services of the Depository Trust Company, or “DTC,” then DTC will issue rights, subject to adjustment as described above, to the nominee for each share of our common stock you own at the record date, subject to adjustments to eliminate fractional rights. Each whole right can then be used to purchase one share of common stock for $3.25 per share. As in the example above, if you owned 100 shares of our common stock on the record date, you have the right to purchase shares of common stock for $3.25 per share.
We will not issue fractional subscription rights or cash in lieu of fractional rights. Fractional subscription rights will be rounded to the nearest whole number, with such adjustments as may be necessary to ensure that we offer 55,384,615 shares of common stock in the rights offering. In the unlikely event that, because of the rounding of fractional subscription rights, the rights offering would have been subscribed in an amount in excess of 55,384,615 shares of common stock, all holders’ subscription rights will be reduced in an equitable manner. Any excess subscription funds will be promptly returned without interest.
2
What is the basic subscription privilege?
The basic subscription privilege of each whole right entitles you to purchase one share of our common stock at the subscription price of $3.25 per share.
What is the over-subscription privilege?
The over-subscription privilege of each right entitles you, if you have fully exercised your basic subscription privilege, to subscribe for additional shares of our common stock (up to the number of shares for which you subscribed under your basic subscription privilege) at the same subscription price per share on apro ratabasis if any shares are not purchased by other holders of subscription rights under their basic subscription privileges as of the expiration date. “Pro rata” means in proportion to the number of shares of our common stock that you and the other subscription rights holders have purchased by fully exercising your basic subscription privileges on your common stock holdings.
What if there are an insufficient number of shares to satisfy the over-subscription requests?
If there are an insufficient number of shares of our common stock available to fully satisfy the over-subscription requests of rights holders, subscription rights holders who exercised their over-subscription privilege will receive the available sharespro ratabased on the number of shares each subscription rights holder subscribed for under the basic subscription privilege. Any excess subscription payments will be returned, without interest or deduction, promptly after the expiration of the rights offering.
Why are we conducting the rights offering?
We are making the rights offering and we are selling shares of common stock to the Investor in order to de-leverage the Company by using the proceeds of this offering to repurchase our outstanding Senior Notes. We believe that the rights offering and sale of shares of common stock to the Investor will strengthen our financial condition by allowing us to repurchase our Senior Notes, thereby increasing our financial flexibility and cash flow. A rights offering provides our stockholders the opportunity to participate in this transaction and minimizes the dilution of their ownership interest in the Company. If we are unable to complete the rights offering, we may be required to seek alternative means to de-leverage the Company, which may not be available on commercially reasonable terms, if at all. If we are unable to de-leverage the Company, our financial condition will be adversely affected.
How was the subscription price of $3.25 per share determined?
Our board of directors determined the subscription price after negotiations with the Investor, considering the likely cost of capital from other sources, the price at which our stockholders might be willing to participate in the rights offering, historical and current trading prices for our common stock, our need to de-leverage the Company, and the need to provide an incentive to our stockholders to participate in the rights offering on apro ratabasis. The subscription price for a subscription right is $3.25 per share, which represents a 31.8% discount to the average closing price of our common stock for the ten trading days preceding the execution of the Equity Agreement. The subscription price does not necessarily bear any relationship to the book value of our assets or our past operations, cash flows, losses, financial condition, net worth, or any other established criteria used to value securities. You should not consider the subscription price to be an indication of the fair value of the common stock to be offered in the rights offering.
Am I required to exercise all of the rights I receive in the rights offering?
No. You may exercise any number of your rights, or you may choose not to exercise any rights. If you do not exercise any rights, the number of shares of our common stock you own will not change. However, because shares are expected to be purchased by other stockholders in the rights offering and, subject to certain conditions and limitations, the Investor and the Principal Additional Investor will be required to purchase shares pursuant to their agreement to purchase any shares not subscribed for in the rights offering, your percentage ownership after the exercise of the rights will be diluted.
Am I required to exercise my rights if I vote to approve the rights offering at the special meeting?
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No. How you vote at the special meeting of stockholders does not affect your decision about whether to exercise your rights. However, if our stockholders do not approve the rights offering and the transactions contemplated by the Equity Agreement at the special meeting, the rights offering will be cancelled.
How soon must I act to exercise my rights?
The rights may be exercised beginning on the date of this prospectus through the expiration date, which is , 2007, at 5:00 p.m., Eastern Daylight Time, unless extended by us at our sole discretion. If you elect to exercise any rights, the subscription agent must actually receive all required documents and payments from you or your broker or nominee at or before the expiration date; provided that the period between the distribution of the rights and the expiration of the rights offering may not exceed thirty business days without the prior written consent of the Investor. Although we have the option of extending the expiration date of the subscription period, we currently do not intend to do so.
When will I receive my subscription rights certificate?
Promptly after the date of this prospectus, the subscription agent will send a subscription rights certificate to each registered holder of our common stock as of 5:00 p.m., Eastern Daylight Time, on the record date, based on our stockholder registry maintained at the transfer agent for our common stock. If you hold your shares of common stock through a brokerage account, bank, or other nominee, you will not receive an actual subscription rights certificate. Instead, as described in this prospectus, you must instruct your broker, bank, or nominee whether or not to exercise rights on your behalf. If you wish to obtain a separate subscription rights certificate, you should promptly contact your broker, bank, or other nominee and request a separate subscription rights certificate. It is not necessary to have a physical subscription rights certificate to elect to exercise your rights.
May I transfer my rights?
No. Should you choose not to exercise your subscription rights, you may not sell, give away, or otherwise transfer your subscription rights. Subscription rights will, however, be transferable by operation of law (for example, upon the death of the recipient).
Are we requiring a minimum subscription to complete the rights offering?
No.
Can the board of directors cancel, amend, or extend the rights offering?
Yes. Our board of directors may decide to cancel or terminate the rights offering at any time before the expiration of the rights offering and for any reason. If our board of directors cancels or terminates the rights offering, we will issue a press release notifying stockholders of the cancellation or termination, and any money received from subscribing stockholders will be returned, without interest or deduction, as soon as practicable. Pursuant to the Equity Agreement, we are obligated to pay the Investor up to $3.6 million in the event that we cancel or terminate the rights offering in certain circumstances. See the section of this prospectus entitled “The Rights Offering — Standby Commitment.”
The issuance of shares of common stock pursuant to the rights offering is subject to, among other things, the approval of our stockholders at a special meeting to be held on , 2007. If the issuance and sale of our common stock pursuant to the rights offering and the transactions contemplated by the Equity Agreement are not approved at the special meeting, then the rights offering will be cancelled.
We may amend or extend the subscription period of the rights offering. The period for exercising your subscription rights may be extended by our board of directors, although we do not presently intend to do so. The period between the distribution of the rights and the expiration date may not exceed thirty business days without the prior written consent of the Investor.
Has our board of directors made a recommendation to our stockholders regarding the rights offering?
Our board of directors will not make any recommendation to stockholders regarding the exercise of rights under the rights offering. You should make an independent investment decision about whether or not to exercise your rights.
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Stockholders who exercise rights risk investment loss on new money invested. We cannot assure you that the market price for our common stock will remain above the subscription price or that anyone purchasing shares at the subscription price will be able to sell those shares in the future at the same price or a higher price. If you do not exercise your rights, you will lose any value represented by your rights and your percentage ownership interest in us will be diluted. For more information on the risks of participating in the rights offering, see the section of this prospectus entitled “Risk Factors.”
How do I exercise my rights? What forms and payment are required to purchase the shares of common stock?
If you wish to participate in the rights offering, you must take the following steps, unless your shares are held by a broker, dealer, or other nominee:
| • | | deliver payment to the subscription agent using the methods outlined in this prospectus; and |
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| • | | deliver a properly completed rights certificate to the subscription agent before 5:00 p.m., Eastern Daylight Time, on , 2007. |
If you send a payment that is insufficient to purchase the number of shares you requested, or if the number of shares you requested is not specified in the forms, the payment received will be applied to exercise your basic subscription privilege and over-subscription privilege to the extent of the payment. If the payment exceeds the subscription price for the full exercise of the basic and over-subscription privileges, the excess will be returned to you as soon as practicable. You will not receive interest on any payments refunded to you under the rights offering.
When will I receive my new shares?
If you purchase shares of common stock through the rights offering, you will receive your new shares as soon as practicable after the closing of the rights offering.
After I send in my payment and rights certificate, may I change or cancel my exercise of rights?
No. Unless we give you a right of cancellation as a result of a fundamental (as determined by us) change to the terms of the rights offering, all exercises of rights are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your rights. You should not exercise your rights unless you are certain that you wish to purchase additional shares of our common stock at a price of $3.25 per share.
What should I do if I want to participate in the rights offering, but my shares are held in the name of my broker, dealer, or other nominee?
If you hold your shares of our common stock in the name of a broker, dealer, or other nominee, then your broker, dealer, or other nominee is the record holder of the shares you own. The record holder must exercise the rights on your behalf for the shares of common stock you wish to purchase.
If you wish to participate in the rights offering and purchase shares of common stock, please promptly contact the record holder of your shares. We will ask your broker, dealer, or other nominee to notify you of the rights offering. You should complete and return to your record holder the form entitled “Beneficial Owner Election Form.” You should receive this form from your record holder with the other rights offering materials.
How much money will the Company receive from the rights offering?
If we sell all the shares being offered, we will receive proceeds of $180.0 million, before deducting estimated offering expenses. While we are offering shares in the rights offering with no minimum purchase requirement, the Investor and the Principal Additional Investor have, subject to certain conditions and limitations, agreed to purchase all of the shares of our common stock not subscribed for in the rights offering at a price per share equal to the rights offering subscription price. If the Investor exercises the Direct Investment Option, the gross proceeds to be raised from our stockholders in the rights offering will be reduced by the aggregate purchase price of the shares purchased by the Investor, but the total gross proceeds received by the Company will remain the same. See the sections of this prospectus entitled “Use of Proceeds” and “The Rights Offering — Standby Commitment.”
5
Are there risks in exercising my subscription rights?
Yes. The exercise of your subscription rights involves risks. Exercising your subscription rights means buying additional shares of our common stock and should be considered as carefully as you would consider any other equity investment. You should carefully read the section entitled “Risk Factors” beginning on page 13 of this prospectus and the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended January 31, 2006, and all other information included or incorporated herein by reference in this prospectus in its entirety before you decide whether to exercise your rights.
What is the role of the Investor and the Additional Investors in this offering?
In connection with the rights offering, we have entered into the Equity Agreement with the Investor. Subject to the terms and conditions of the Equity Agreement, we are obligated to sell, and the Investor is obligated to purchase from us, any and all shares of our common stock issuable upon the exercise of any rights that remain unsubscribed at the closing of the rights offering subscription period. The price per share paid by the Investor for such common stock will be equal to the subscription price offered in the rights offering. The Principal Additional Investor has agreed with the Investor to acquire 50% of the shares that the Investor is obligated to acquire pursuant to the Equity Agreement.
We also agreed to grant to the Investor the Direct Investment Option to purchase, concurrently with the rights offering, up to 5,538,462 shares of our common stock at the same subscription price applied to the rights for gross proceeds of up to $18.0 million. If the Investor exercises the Direct Investment Option in full, the number of subscription rights distributed to our stockholders will be reduced from to rights for each share of common stock owned at the close of business on the record date. In addition, the Investor may elect to assign some or all of its rights to purchase shares of common stock to Additional Investors. For a more complete description of the role of the Investor in the rights offering, see the sections of this prospectus entitled “The Rights Offering — Standby Commitment” and “Plan of Distribution.”
Are the Investor and the Principal Additional Investor receiving any compensation for the standby commitment?
Yes. As compensation to the Investor for the standby commitment, we agreed to pay the Investor a standby commitment fee equal to 3.00% of the maximum dollar value of the rights offering, of which $3.15 million was paid upon execution of the Equity Agreement and $2.25 million will be paid upon the closing of the rights offering. The Investor has agreed to pay 50% of its commitment fee to the Principal Additional Investor.
How many shares will the Investor and the Principal Additional Investor own after the offering?
Pursuant to the Equity Agreement, the Investor is obligated to purchase all of the shares of our common stock issuable upon the exercise of any rights that remain unsubscribed at the closing of the rights offering subscription period. In addition, the Investor may purchase up to 5,538,462 shares of our common stock upon exercise of the Direct Investment Option. The Principal Additional Investor has agreed with the Investor to acquire 50% of the shares that the Investor is obligated to acquire pursuant to the Equity Agreement. Should no stockholders exercise their rights in the rights offering, the ownership interest of the remaining stockholders would decrease to approximately 39.4%. See the section of this prospectus entitled “The Rights Offering — Effects of Rights Offering on the Investor’s Stock.”
How many shares of common stock will be outstanding after the rights offering and sale of shares of common stock to the Investor?
As of , 2007, we had shares of common stock issued and outstanding. Based upon the maximum of 55,384,615 shares that may be issued pursuant to the rights offering and the Direct Investment Option, we would have shares of common stock outstanding after the closing of the rights offering and the transactions contemplated by the Equity Agreement.
Are there any conditions to the standby commitment?
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Yes. The obligation of the Investor to fulfill the standby commitment will be subject to a number of conditions. Pursuant to the Equity Agreement, we may be obligated to pay the Investor a termination fee of either $1.8 million or $3.6 million in the event that the rights offering is terminated as a result of our failure to satisfy certain conditions. For a more detailed description of the conditions to the Investor’s standby commitment, see the section of this prospectus entitled “The Rights Offering —Standby Commitment.”
If the rights offering is not completed, will my subscription payment be refunded to me?
Yes. The subscription agent will hold all funds it receives in a segregated bank account until completion of the rights offering. If the rights offering is not completed, we will immediately instruct the subscription agent to return your payment in full. If you own shares in “street name,” it may take longer for you to receive payment because the subscription agent will send payments through the record holder of your shares. You will not be credited interest on your payment.
Will the rights be listed on a stock exchange or national market?
The rights themselves will not be listed on the Nasdaq Global Market or any other stock exchange or national market. Our common stock will continue to trade on the Nasdaq Global Market under the symbol “HAYZ,” and the shares to be issued to you in connection with the rights offering will be eligible for trading on the Nasdaq Global Market.
How do I exercise my rights if I live outside the United States?
The subscription agent will hold rights certificates for stockholders having addresses outside the United States. In order to exercise rights, holders with addresses outside the United States must notify the subscription agent and timely follow other procedures described in the section of this prospectus entitled “Rights Offering — Foreign Stockholders.”
What fees or charges apply if I purchase shares of common stock?
We are not charging any fee or sales commission to issue rights to you or to issue shares to you if you exercise your rights. If you exercise your rights through the record holder of your shares, you are responsible for paying any fees your record holder may charge you.
What are the U.S. federal income tax consequences of exercising rights?
A holder should not recognize income or loss for United States federal income tax purposes in connection with the receipt or exercise of subscription rights in the rights offering. You should consult your tax advisor as to the particular consequences to you of the rights offering. For a detailed discussion, see “Material United States Federal Income Tax Consequences.”
To whom should I send my forms and payment?
If your shares are held in the name of a broker, dealer, or other nominee, then you should send your subscription documents, rights certificate, and payment to that record holder in accordance with the instructions you receive from that record holder. If you are the record holder, then you should send your subscription documents, rights certificate, and payment by hand delivery, first class mail, or courier service to:
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By Mail or Overnight Courier: | | By Hand: |
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| Attn: | | Attn: |
You are solely responsible for completing delivery to the subscription agent of your subscription documents, rights certificate, and payment. We urge you to allow sufficient time for delivery of your subscription materials to the subscription agent.
Whom should I contact if I have other questions?
If you have other questions or need assistance, please contact the information agent, Innisfree M & A Incorporated at (888) 750-5834.
For a more complete description of the rights offering, see “The Rights Offering” beginning on page 28.
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SUMMARY
PROSPECTUS SUMMARY
This summary highlights some information contained elsewhere in this prospectus.prospectus or incorporated by reference therein. This summary is not complete and may not contain all of the information that you should consider before deciding whether or not you should exercise your rights. You should read the entire prospectus carefully, including the section entitled “Risk Factors” beginning on page 13 of this prospectus and the section entitled “Risk Factors” in our financial statementsAnnual Report on Form 10-K for the year ended January 31, 2006, and related notesall other information included or incorporated herein by reference in this prospectus in its entirety before decidingyou decide whether to invest in our common stock.exercise your rights. Hayes Lemmerz International, Inc.
Originally founded in 1908, we are the largestHayes Lemmerz International, Inc. is a leading worldwide producer of aluminum and steel wheels for thepassenger cars and light vehicle market.trucks and of steel wheels for commercial trucks and trailers. We are also a leading providersupplier of steel wheels for the commercial highway market and a leading supplier in the market for suspension,automotive brake and powertrain components. We have a global footprintoperations with 4230 facilities, including business and sales offices, manufacturing facilities, and one joint venturetechnical centers, located in 14 countries around the world. We sell our products to every major North American, Japanese, and European manufacturer of passenger cars and light trucks as well asand to commercial highway vehicle customers throughout the world. Our products
We are
presently on four of the top five selling platforms for passenger cars in the United States. This prospectus relates to an aggregate of 3,470,374 Shares of common stock, par value $.01 per share, which are registered under this prospectus that may be sold from time to time by the Selling Stockholder. The Selling Stockholder may sell any or all of the Shares, subject to federal and state securities laws, but is under no obligation do so. The price at which the Selling Stockholder may sell the Shares will be determined by the prevailing market for the Shares or in negotiated transactions. See “Plan of Distribution” beginning on page 17 of this prospectus.
Each time the Selling Stockholder sells Shares, a prospectus supplement will be provided, to the extent required, that will contain specific information about the terms of that offering. You should read this prospectus and any accompanying prospectus supplement together with the additional information contained under the headings “Incorporation of Certain Documents by Reference” and “Where You Can Find More Information.” All references to “we,” “us,” “our,” or “Hayes” in this prospectus are to Hayes Lemmerz International, Inc.
Hayes was incorporated under the laws of the State of Delaware. Our principal executive offices are located at 15300 Centennial Drive, Northville, Michigan 48167,48168, and our telephone number is (734) 737-5000. Our website is www.hayes-lemmerz.com. The information on our website does not constitute part of this prospectus.prospectus and should not be relied upon in connection with making any investment in our securities.
The Rights Offering
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| Securities offered | | We are distributing to you, at no charge, non-transferable subscription rights for every one share of our common stock that you owned on the record date, either as a holder of record or, in the case of shares held of record by brokers, banks, or other nominees, on your behalf, as a beneficial owner of such shares, subject to adjustments to eliminate fractional rights. We expect the gross proceeds from the rights offering to be $180.0 million. We have granted the Investor a Direct Investment Option to purchase shares of common stock at the rights offering subscription price for gross proceeds of up to $18.0 million. Should the Investor exercise the Direct Investment Option, the gross proceeds to be raised from our stockholders in the rights offering will be reduced by the aggregate purchase price of the shares purchased by the Investor, and the subscription rights for each share of our common stock granted to each of our stockholders will be proportionately reduced to reflect such purchase. |
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| Basic subscription privilege | | Each whole right gives you the opportunity to purchase one share of our common stock for $3.25 per share, subject to adjustment in the event that the Investor exercises the Direct Investment Option. |
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| Over-subscription privilege | | If you elect to exercise your basic subscription privilege in full, you may also subscribe for additional shares (up to the number of shares for which you subscribed under your basic subscription privilege) at the same subscription |
Recent Developments8
On April
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| | price per share. If an insufficient number of shares are available to satisfy fully the over-subscription privilege requests, the available shares will be distributed proportionately among rights holders who exercised their over-subscription privilege based on the number of shares each rights holder subscribed for under the basic subscription privilege. The subscription agent will return any excess payments by mail without interest or deduction promptly after the expiration of the rights offering. |
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| Record date | | 5:00 p.m. Eastern Daylight Time on , 2007. |
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| Expiration date | | 5:00 p.m. Eastern Daylight Time on , 2007, unless extended by us, in our sole discretion, provided that the offering period between the distribution of the rights and the expiration date may not exceed thirty business days without the prior written consent of the Investor. Any rights not exercised at or before that time will expire without any payment to the holders of those unexercised rights. |
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| Subscription price | | $3.25 per share, payable in cash, which is a 31.8% discount to the average closing price of our common stock for the ten trading days preceding March 16, 2007, the date we executed the Equity Agreement. All payments must be cleared on or before the expiration date. |
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| Use of proceeds | | The proceeds from the rights offering (including proceeds of any shares of common stock purchased by the Investor pursuant to its standby commitment) is expected to be $180.0 million, before deducting expenses relating to the rights offering. The proceeds from the rights offering will be used to repurchase our outstanding Senior Notes and to pay the fees and expenses related to this rights offering. As of March 14, 2007, 22.1% and 14.8% of our Senior Notes were held by the Investor and the Principal Additional Investor, respectively, and, as a result, approximately $64.0 million of the proceeds of the rights offering will be paid to the Investor and the Principal Additional Investor in order to repurchase our Senior Notes. Our use of the proceeds of this offering in this manner is subject to the amendment or refinancing of our credit facility. |
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| Non-transferability of rights | | The subscription rights may not be sold, transferred, or assigned and will not be listed for trading on the Nasdaq Global Market or on any stock exchange or market or on the OTC Bulletin Board. |
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| No board recommendation | | Our board of directors makes no recommendation to you about whether you should exercise any rights. You are urged to make an independent investment decision about whether to exercise your rights based on your own assessment of our business and the rights offering. Please see the section of this prospectus entitled “Risk Factors” for a discussion of some of the risks involved in |
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| | investing in our common stock. |
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| Conditions | | The rights offering and the transactions contemplated by the Equity Agreement are subject to approval of our stockholders at a Special Meeting to be held on , 2007. If our stockholders do not approve these transactions, the rights offering will be cancelled. In addition, the rights offering and the transactions contemplated by the Equity Agreement are subject to, among other things, our amending or refinancing our Credit Facility to permit the repurchase of the Senior Notes. |
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| Standby commitment | | Subject to certain conditions and limitations, the Equity Agreement requires the Investor to purchase all of the shares not subscribed for in the rights offering at a price per share equal to the rights offering subscription price. The Principal Additional Investor has agreed with the Investor to acquire 50% of the shares that the Investor is obligated to acquire pursuant to the Equity Agreement. Pursuant to the Equity Agreement, we have also granted the Investor a Direct Investment Option to purchase up to 5,538,462 shares of our common stock at a price per share equal to the rights offering subscription price. Any shares purchased through exercise of the Direct Investment Option will proportionately reduce the number of shares that may be purchased pursuant to the rights offering. The Investor may elect to assign some or all of its rights to purchase shares of our common stock to Additional Investors. See the section of this prospectus entitled “The Rights Offering — Standby Commitment.” |
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| No revocation | | If you exercise any of your rights, you will not be permitted to revoke or change the exercise or request a refund of monies paid. |
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| U.S. federal income tax considerations | | A holder should not recognize income or loss for United States federal income tax purposes in connection with the receipt or exercise of subscription rights in the rights offering. You should consult your tax advisor as to the particular consequences to you of the rights offering. For a detailed discussion, see “Material United States Federal Income Tax Consequences.” |
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| Extension, cancellation, and amendment | | The period for exercising your subscription rights may be extended by our board of directors, although we do not presently intend to do so. The period may not exceed thirty business days without the prior written consent of the Investor. Our board of directors may cancel or terminate the rights offering in its sole discretion at any time on or before the expiration of the rights offering for any reason (including, without limitation, a change in the market price of our common stock). We also reserve the right to cancel or terminate the rights offering at any time for any reason. The issuance of shares of common stock pursuant to the rights offering is subject to, among other |
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| | things, the approval of our stockholders at a special meeting to be held on , 2007. If the issuance and sale of our common stock pursuant to the rights offering and the transactions contemplated by the Equity Agreement are not approved at the special meeting, then the rights offering will be cancelled. In the event that the rights offering is cancelled or terminated, all funds received from subscriptions by stockholders will be returned. Interest will not be payable on any returned funds. We also reserve the right to amend the terms of the rights offering. |
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| Procedure for exercising rights | | If you are the record holder of shares of our common stock, to exercise your rights you must complete the rights certificate and deliver it to the subscription agent, , together with full payment for all the subscription rights you elect to exercise. The subscription agent must receive the proper forms and payments on or before the expiration of the rights offering. You may deliver the documents and payments by mail or commercial courier. If regular mail is used for this purpose, we recommend using registered mail, properly insured, with return receipt requested. If you are a beneficial owner of shares of our common stock, you should instruct your broker, custodian bank, or nominee in accordance with the procedures described in the section of this prospectus entitled “The Rights Offering—Beneficial Owners.” |
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| Subscription agent | | |
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| Information agent | | Innisfree M&A Incorporated |
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| Questions | | Questions regarding the rights offering should be directed to Innisfree M&A Incorporated, at (888) 750-5834. |
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| Shares outstanding before the rights offering and the Direct Investment Option | | shares as of 2007. |
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| Shares outstanding after completion of the rights offering and the Direct Investment Option | | shares of our common stock will be outstanding immediately after completion of the rights offering and the Direct Investment Option. |
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| Issuance of our common stock | | If you purchase shares of common stock through the rights offering, we will issue certificates representing those shares to you or DTC on your behalf, as the case may be, as soon as practicable after the completion of the rights offering. |
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| Risk factors | | Stockholders considering making an investment in the rights offering should consider the risk factors described in the section this prospectus entitled “Risk Factors.” |
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| Fees and expenses | | We will bear the fees and expenses relating to the rights offering. |
11 2005,
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| Nasdaq Global Market trading symbol | | Shares of our common stock are currently listed for quotation on the Nasdaq Global Market under the symbol “HAYZ,” and the shares to be issued to you in connection with the rights offering will be eligible for trading on the Nasdaq Global Market. |
Risk Factors
Exercising your rights and investing in our common stock involves various risks associated with your investment, including the risks described in the section of this prospectus entitled “Risk Factors” beginning on page 13 and the risks that we amendedhave highlighted in other sections of this prospectus and restatedin our senior secured credit agreement dated as of June 3, 2003 (as amendedAnnual Report on Form 10-K for the year ended January 31, 2006, and restated, the “Credit Agreement”). The restated Credit Agreement, which governs our existing senior secured term loan (the “Term B Loan”)all other information included or incorporated by reference in this prospectus. You should carefully read and senior secured revolving credit facility (the “Revolving Credit Facility”), establishes a new non-amortizing secured term loan in an aggregate principal amount of $150 million (the “Term C Facility”), the full amount of which was drawn on April 11, 2005. Approximately 50%consider these risk factors together with all of the aggregate proceedsother information included and incorporated by reference in this prospectus before you decide whether to exercise your rights to purchase shares of the Term C Facility were used to prepay a portion of the principal amount outstanding under the Term B Loan, with the remainder to be used to pay fees, for working capital and for other general corporate purposes.our common stock.
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Investing in our securities involves a high degree of risk. You should carefully consider eachthe specific risks described below, the risks described in our Annual Report onForm 10-K for the fiscal year ended January 31, 2006, which are incorporated herein by reference and any risk factors set forth in our other filings with the SEC, pursuant to Sections 13(a),13(c), 14, or15(d) of the risk factors describedExchange Act of 1934, as amended, before making an investment decision. See the section of this prospectus entitled “Where You Can Find More Information.” Any of the risks we describe below as well as all otheror in the information contained and incorporated herein by reference into this offering memorandum before decidingcould cause our business, financial condition, or operating results to invest insuffer. The market price of our common stock. Thestock could decline if one or more of these risks and uncertainties described below are not the only ones facing us.develop into actual events. You could lose all or part of your investment. Additional risks and uncertainties not presentlycurrently known to us or that we currently deem to be immaterial also may also materially and adversely affect our business operations. If any of the following risks actually occur, our business, financial condition, or resultsoperating results. Some of operations could be materially adversely affected.the statements in this section of the prospectus are forward-looking statements. For more information about forward-looking statements, please see “Forward-Looking Statements.”Risks Relating To Our Company
Automotive industry trends — decreasedIndustry Risks
Cyclical demand in the automotive industry may adversely affect our business. A significant portion
Most of our sales are to automotive
OEMs, and thereforeoriginal equipment manufacturers (OEMs) or direct (Tier 1) suppliers. Therefore, our financial performance
depends, in large part, onis subject to conditions in the automotive industry, which
in turn, are
dependent uponcyclical and depend on conditions in the U.S. and global economies generally.
As a result, economic and other factors adversely affecting automotive production and consumer spending could adversely impact our business. A weakening of the U.S. and global economies
or an increase in interest rates could
adversely affectreduce consumer spending and
result in decreased demand for automobiles and light
trucks. If OEMs weretrucks, leading to
decreasedecreased production
due to such reduced demand,by our
customers, which could hurt our sales and financial
performance could be adversely affected. In addition, relatively modest declines inperformance. Our sales are also impacted by our customers’
inventory levels and production
levels could have a significant adverse impact on our profitability because we have substantial fixed production costs.schedules. Due to the present uncertainty in the economy, some of our
OEM customers have been reducing their forecasts for new vehicle production.
If actual production volume is reduced accordingly, our business would be adversely affected. Our sales are also impacted by inventory levels and our customers’ production schedules. If our OEM customers significantly reduce their inventory levels and reduce their orders from us, our performance would be adversely impacted. In this environment, we cannot predict future production rates or inventory levels or the underlyingContinued economic
factors. Continued uncertainty and
unexpected fluctuations
in demand may have a significant negative impact on our business.
Because we have high fixed production costs, relatively small declines in our customers’ production could significantly reduce our profitability.
Changing natureWe depend on a small number of the automotive industry — consolidationsignificant customers.
We derived approximately 44% of our fiscal 2006 sales from direct sales to Ford, DaimlerChrysler, and General Motors and their subsidiaries. In addition, some of our other sales are to Tier 1 suppliers who incorporate our components into products which they sell to these three OEMs. Neither we nor our Tier 1 customers may be able to maintain our current relationships with these customers or continue to supply them at current levels. Furthermore, these customers have had declining market share in North America in recent years, resulting in reduced demand. In addition, our sales are dependent on particular vehicle platforms that include our products. If production of those platforms were to be decreased or discontinued, our sales would be reduced. The loss of a significant portion of sales to Ford, DaimlerChrysler, or General Motors or their Tier 1 suppliers could have a material adverse effect on our business. In addition, certain of our customers have filed for bankruptcy protection in the automotive industrypast year and additional customers may file for bankruptcy protection in the future. This could result in adverse changes in these customers’ production levels, pricing, and payment terms and could limit our ability to collect receivables, which could harm our business or results of operations.
Our customers’ cost cutting efforts and purchasing practices may adversely impact our business. In the automotive industry, there has been a trend toward consolidation. Continued consolidation
Our customers are continually seeking to lower their costs of the automotive industry could adversely affect our business. Such consolidation could result in a loss of somemanufacturing. These cost reductions may include relocation of our present customerscustomers’ operations to our competitors. This consolidation could thereby leadcountries with lower production costs. Customers might find it less costly to reduced demandmanufacture themselves at relocated facilities or to rely on foreign suppliers with lower production costs, whether or not the customers’ production is relocated, either of which may have a significant negative impact on our business.
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Changing nature of the automotive industry — cost reduction initiatives
Changes in
the automotive industry may adversely impact our
business. OEMs have been seeking ways to lower their own costs of manufacturing which could adversely affect our business. These cost reductions may be effected through an increased use of internal manufacturing or through relocation of production to countries with lower production costs. As production is relocated, OEMs might find it more cost-efficient to rely on either internal manufacturing capabilities at such relocated facilities or local or other foreign suppliers with lower production costs. This internal manufacturing or reliance on local or other foreign suppliers may have a significant negative impact on our business.
Pricing pressure — we are subject to pricing pressure from our OEM customers.
Cost-cutting initiatives adopted by our customers generally result in increased downward pressure on pricing. OEMs historically have had significant leverage over their outside suppliers because the automotive component supply industry is fragmented and serves a limited number of automotive OEMs, and, as such, Tier 1 suppliers are subject to substantial continuing pressure from OEMs to reduce the price of their products. If we are unable to generate sufficient production cost savings in the future to offset price reductions, our gross margin and profitability would be adversely affected. In addition, changes in OEMs’customers’ purchasing policies or payment practices could also have an adverse effect on our business. For example, during the third quarter of fiscal 2004, two of our OEMmajor customers notified us of the discontinuance of accelerated paymentsdiscontinued early payment programs in which we participated.
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These trends in the automotive industry, including, but not limited to, increased consolidation, decreased demand and the rising costs of raw materials, including steel and iron, have caused a downward trend inparticipated, which negatively impacted our recent operating results. liquidity.
We cannot assure you that these trends will not continue. For additional information regarding the impact that certain of these trends have had on our recent operating results, see the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for our fiscal year ended January 31, 2005, which is incorporated herein by reference.Cyclical nature of industry — the industry in which we operate is cyclical and dependent upon the economy and other important factors.
Our principal operations are directly related to domestic and foreign automotive and commercial highway vehicle production. Industry sales and production are cyclical and therefore can be affected by the strength of the economy generally, by consumer spending, or, in specific regions such as North America or Europe, by prevailing interest rates and by other factors which may have an effect on the level of sales of new automobiles. Any decline in the demand for new automobiles could have a material adverse impact on our financial condition and results of operations.
Competition — we operate in the highly competitive automotive supply industry.
The automotive component supply industry is highly competitive, both domestically and internationally.internationally, with a large number of suppliers competing to provide products to a relatively small number of OEMs. Competition is based primarily on price, technology, quality, timely delivery, and overall customer service. SomeMany of our competitors are companies, or divisions or subsidiaries of companies, that are larger and have greater financial and other resources than we do. Further consolidation in the industry may result in fewer, larger suppliers who benefit from purchasing and distribution economies of scale. In addition, with respect to certain of our products, some of our competitors are former divisions or former subsidiaries of our OEM customers. We cannot assure you that our products willmay not be able to compete successfully with the products of these or other companies. In addition, there is a trend toward OEMs expanding their business relationships with a smaller number of “preferred” suppliers. If we are not designated a preferred supplier, we could lose sales to competitors that are preferred suppliers.
Furthermore, the rapidly evolving nature of the
markets in which we competeautomotive industry may attract new entrants, particularly in low cost
countries. As a result, our sales levels and margins could be adversely affected by pricing pressures caused by such new entrants, especially in low-cost foreign marketscountries such as China.
We may not be able to offer our products at prices competitive with those of competitors in low-cost countries and pricing pressure created by such competitors could reduce our sales and margins. These factors
have led to
selective resourcinga re-sourcing of
certain future business to foreign competitors in the past and may continue to do so in the future. In addition, any of our competitors may
foresee the course of market development more accurately than us, develop
products that are superior
to our products,
have the ability to produce similar products at a lower cost than us, or adapt more quickly
than us to new technologies or evolving customer requirements. As a result, our products may not be able to compete
successfully with their products. As a result of highly competitive market conditions in our industry, asuccessfully. A number of our competitors have been forced to seek bankruptcy
protection.protection partially as a result of highly competitive market conditions in our industry.
Dependence on major customers —Financial Risks
We have substantial levels of debt and debt service that will divert a significant amount of cash from our business operations.
We have substantial levels of debt, including debt under our Amended and Restated Credit Agreement dated as of April 11, 2005 and related documents (Credit Facility), our Senior Notes, and other debt instruments. As of January 31, 2007, we had approximately $693.5 million of total indebtedness and approximately $37.9 million of cash and cash equivalents. Although we must either amend or refinance our Credit Facility in order to complete the
loss of any of our major customers could affect our financial health. We derived approximately 44% of our fiscal 2004 net sales on a worldwide basis from Ford, DaimlerChryslerrights offering and General Motors and their subsidiaries. In addition, these three OEMs account for an even greater percentage of our net sales of particular products. We do not have long-term agreements with these customers and cannot guarantee that we will maintainuse the proceeds of the rights offering to repurchase our current relationships with these customers or thatSenior Notes, following the rights offering and the transactions contemplated by the Equity Agreement, we will continue to supply themhave substantial levels of debt outstanding, and we may incur significant additional debt in the future. The degree to which we will be leveraged could have important consequences, including:
| • | | requiring a substantial portion of our cash flow from operations to be dedicated to debt service and therefore not available for our operations, capital expenditures, and future business opportunities; |
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| • | | increasing our vulnerability to a downturn in general economic conditions or in our business; |
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| • | | limiting our ability to adjust to changing market conditions, placing us at a competitive disadvantage compared to our competitors that have relatively less debt; and |
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| • | | limiting our ability to obtain additional financing or access additional funds under our Credit Facility for capital expenditures, working capital, or general corporate purposes. |
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Restrictions and covenants in the indenture governing the Senior Notes and the Credit Facility limit our ability to take certain actions and may limit access to our revolving credit facility.
Our Credit Facility and the indenture governing the Senior Notes and our other debt agreements contain a number of significant covenants that, among other things, will restrict our ability, and the ability of our subsidiaries, to:
| • | | declare dividends or redeem or repurchase capital stock; |
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| • | | prepay, redeem, or purchase debt, including the Senior Notes; |
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| • | | incur liens and engage in sale-leaseback transactions; |
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| • | | make loans and investments; |
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| • | | incur additional debt, including borrowings under our Credit Facility; |
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| • | | amend or otherwise alter certain debt documents; |
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| • | | make capital expenditures; |
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| • | | engage in mergers, acquisitions, and asset sales; |
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| • | | enter into transactions with affiliates; and |
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| • | | alter the business we conduct. |
In addition, the Credit Facility requires us to satisfy certain financial covenants and we may become subject to additional or more restrictive covenants in connection with future borrowing.
Although we must either amend or refinance our Credit Facility in order to complete the rights offering and we will use the proceeds of the rights offering to repurchase our Senior Notes, any new borrowing would be expected to include similar financial and restrictive covenants. These covenants may prevent us from accessing any revolving credit line and may limit our liquidity. Our ability to comply with these covenants may be affected by events beyond our control. If we are unable to comply with the covenants under any of our debt instruments, there would be a default which could result in acceleration of our debt and potentially our bankruptcy. Additionally, a default resulting from our failure to comply with such covenants or the applicable borrowing conditions would preclude us from borrowing additional funds. Compliance with the covenants could cause us to conduct our business, or to forgo opportunities, in such a manner as to materially harm our business.
We may not generate sufficient cash flow to fund required capital expenditures and for that and other reasons we may need additional financing in the future, which we may be unable to obtain.
Our business requires us to make significant capital expenditures to acquire equipment needed to produce products for new customer programs, maintain existing equipment, and implement technologies to reduce production costs in response to customer pricing pressure. We may not generate sufficient cash flow from operations to fund our capital expenditure requirements. In that event, we may need to obtain additional financing or take other steps to reduce expenses or generate cash. In addition, lower sales or unanticipated expenses could give rise to additional financing requirements. We may be unable to obtain financing on favorable terms, or at current levels. The lossall. If adequate funds are not available on acceptable terms, we may be required to make significant reductions in expenses and capital expenditures, which could significantly restrict our operations and limit our ability to enhance our products, fund capital investments, respond to competitive pressures, or take advantage of business opportunities.
We may suffer future asset impairments and other restructuring charges, including write downs of goodwill or intangible assets.
We record asset impairment losses when we determine that our estimates of the future undiscounted cash flows from an operation will not be sufficient to recover the carrying value of that facility’s building, fixed assets, and production tooling. During fiscal 2006 we recorded total asset impairment losses and other restructuring charges of
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approximately $42.7 million and we may incur significant similar losses and charges with respect to other facilities in the future.
In connection with our emergence from Chapter 11 and the application of fresh start accounting, we recorded significant increases in goodwill and intangible assets. At January 31, 2007, we had approximately $ million in goodwill and other intangible assets recorded on our balance sheet. We are required to evaluate annually whether our goodwill and other intangible assets have been impaired. Any future write-off of a significant portion of salesgoodwill or intangible assets would have an adverse effect on our financial condition and results of operations.
Our exposure to Ford, DaimlerChryslervariable interest rates and foreign currency fluctuations may negatively affect our results.
A portion of our debt, including our borrowings under the Credit Facility, bears interest at variable rates. Any increase in the interest rates will increase our expenses and reduce funds available for our operations and future business opportunities. Increases in interest rates will also increase the risks resulting from our significant debt levels.
Due to the increase in our operations outside the United States, we have experienced increased foreign currency exchange gains and losses in the ordinary course of our business. Fluctuations in exchange rates may have a material impact on our financial condition as cash flows generated in other currencies will be used, in part, to service our dollar-denominated debt. This fluctuation could result in an increase in our overall leverage and could result in less cash flow available for our operations, capital expenditures, and repayment of our obligations.
In addition, fluctuations in foreign currency exchange rates may affect the value of our foreign assets as reported in U.S. dollars, and may adversely affect reported earnings and, accordingly, the comparability of period-to-period results of operations. Changes in currency exchange rates may affect the relative prices at which we and foreign competitors sell products in the same market. In addition, changes in the value of the relevant currencies may affect the cost of certain items required in our operations. Although we attempt to hedge against fluctuations in interest rates or General Motorsexchange rates, such fluctuations may have a material adverse effect on our financial condition or results of operations, or cause significant fluctuations in quarterly and annual results.
We may be unable to maintain trade credit with our suppliers.
We currently maintain trade credit with our key suppliers and utilize such credit to purchase significant amounts of raw material and other supplies with payment terms. As conditions in the automotive supply industry have become less favorable, key suppliers have been seeking to shorten trade credit terms or to require cash in advance for payment. If a significant number of our key suppliers were to shorten or eliminate our trade credit, our inability to finance large purchases of key supplies and raw materials would increase our costs and negatively impact our liquidity and cash flow.
Our failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and the price of our common stock.
Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to assess the effectiveness of our internal control over financial reporting at the end of each fiscal year, including a statement as to whether or not internal control over financial reporting is effective. Our assessment as of January 31, 2006 identified a material weakness in internal control over financial reporting related to income tax accounting matters. As a result of this material weakness, we did not detect errors in the accounting for income tax amounts in a timely manner. These errors were corrected and the corrections are reflected in the audited consolidated financial statements as of and for the year ended January 31, 2006.
Because of the material weakness described in the preceding paragraph, we have concluded that, as of January 31, 2006, our internal control over financial reporting was not effective based on those criteria. This failure and any failure in the future to achieve and maintain effective internal controls over financial reporting and otherwise comply with the requirements of Section 404 could have a material adverse effect on our business and the price of
16
our common stock. Such noncompliance could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements. In addition, perceptions of our business among customers, suppliers, rating agencies, lenders, investors, securities analysts, and others could be adversely affected.
The nature of our business exposes us to product liability, recall, and warranty claims and other legal proceedings.
We are subject to litigation in the ordinary course of our business. The risk of product liability, recall, and warranty claims are inherent in the design, manufacture, and sale of automotive products, the failure of which could result in property damage, personal injury, or death. Although we currently maintain what we believe to be suitable and adequate product liability insurance, we may not be able to maintain this insurance on acceptable terms and this insurance may not provide adequate protection against potential liabilities. In addition, we may be required to participate in a recall involving our products. Such a recall would not be covered by our insurance. Furthermore, our customers can initiate a recall of our products without our agreement and offset their costs of the recall against payments due to us for other products. A successful product liability claim in excess of available insurance coverage or a requirement to participate in a product recall could have a material adverse effect on our business. These customers have been experiencing decreasing market share in North America. In addition, if anywe are involved in other legal proceedings, which could adversely affect our cash flows, financial condition, or results of operations.
Our pension and other postretirement employee benefits expense could materially increase.
Certain of our significant customers werecurrent and former employees participate in defined benefit pension plans. The plans are currently underfunded. Declines in interest rates or the market values of the securities held by the plans, or certain other changes, could materially increase the amount by which the plans are underfunded, affect the level and timing of required contributions, and significantly increase our pension expenses and reduce profitability.
We also sponsor other postretirement employee benefit plans that cover certain current and former employees and eligible dependents. We fund these obligations on a pay-as-you-go basis. Increases in the expected cost of the benefits, particularly health care, in excess of our assumptions could increase our actuarially determined liability and related expense along with future cash outlays.
Our credit ratings have recently been downgraded, we may experience further downgrades in the future, and the cost of amending or refinancing our Credit Agreement may consequently increase.
Our debt is rated by nationally recognized statistical rating organizations. These organizations have downgraded certain of our debt ratings in the last twelve months and may further downgrade our debt ratings in the future. While these actions do not impact our current cost of borrowing, they could significantly reduce our access to
encounterthe debt markets and increase the cost of amending or refinancing our Credit Facility. If we are unable to amend or refinance our Credit Facility, we will be unable to complete the rights offering and may be required to seek alternative means to de-leverage the Company, which may not be available on commercially reasonable terms, if at all. If we are unable to de-leverage the Company, our financial
difficulties or seek bankruptcy protection, our business couldcondition will be adversely affected.
Furthermore, our OEM customers are not required to purchase any minimum amount of products from us. The contracts we have entered into with most of our customers provide for supplying the customers for a particular vehicle model, rather than for manufacturing a specific quantity of products. Such contracts range from one year to the life of the model (usually three to seven years), typically are non-exclusive, and do not require the purchase by the customer of any minimum number of parts from us. Therefore, a significant decrease in demand for certain key models or group of related models sold by any of our major customers, or a decision by a manufacturer not to purchase from us, or to discontinue purchasing from us, for a particular model or group of models, could have a material adverse effect on us.
3
Dependence on third-party suppliers and manufacturers — increasedOperational Risks
Increased cost of supplies and raw materials, especially steel and iron, could affect our financial health. Generally, our supplies and raw materials are obtained from various sources and in the quantities desired. Although we currently maintain alternative sources for raw materials, our
Our business is subject to the risk of price increases and periodic delays in the delivery of certain raw materials and supplies. Our operations require substantial amountsThe availability and price of sheet, formed, tube and scrap steel, iron, electricity, coke, natural gas, aluminum, purchased components, fasteners, silicon sand, binders, sand additives and coated sand.these commodities are subject to market forces largely beyond our control. Fluctuations in the prices or availability of these raw materials may be driven by the supply/demand relationship foror supplies will affect our profitability and could have a material factors particular to that materialadverse effect on our business, results of operations, or governmental regulation for raw materials such as electricity and natural gas.financial condition. In addition, if any of our suppliers seek bankruptcy relief or otherwise cannot continue their business as anticipated, the availability or price of raw materials could be adversely affected. Fluctuations in prices and/or availability of the raw materials or purchased components used by us may affect our profitability and, as a result, have a material adverse effect on our business, results of operations or financial condition.
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In recent periods there have been significant increases in the global prices of steel,
aluminum, and
iron,natural gas, which have had and may continue to have an impact on our business.
We anticipate that theseContinued increases
will continue to impact our business through fiscal 2005. Any continued fluctuations in the price
or availability of steel,
aluminum, natural gas, or
ironother key materials and supplies may have a material adverse effect on our business, results of operations, or financial condition.
The availability and price of steel and iron are subject to market forces largely beyond our control, including: North American and international economic conditions and demand for steel and iron; worldwide production capacity; freight and labor costs; industry consolidation; import duties, tariffs and other governmental regulation; and speculation and foreign exchange rates. To address increased costs associated with these market forces, a number of our steel suppliers have implemented surcharges on existing fixed price contracts. Without the surcharge, some suppliers claim they will be unable to provide adequate supplies of steel. Although we have been able to pass some of the supply and raw material cost increases onto our customers, competitive and marketing pressures may prevent us from doing so in the future. In addition, our customers are not contractually obligated to accept certain of these price increases that we may attempt to pass along to them.increases. This inability to pass on price increases to our customers when raw material prices increase rapidly or to significantly higher than historic levels could adversely affect our operating margins and cash flow, possibly resultingand result in lower operating income and profitability.
Unexpected production interruptions — equipment failures, delays in deliveries, or catastrophic loss at any of our manufacturing facilities could lead to production curtailments or shutdowns. An interruption in production capabilities at any of our plants as a result of equipment
Equipment failure, interruption of supply, labor disputes, or other reasonscauses could result in our inability to producesignificantly reduce production of our products, which would reduce our sales and earnings for the affected period. In addition, we generally deliverproduce our products only after receiving the order from the customeron a “just in time” basis and thus do not hold large inventories. In the event of a stoppage inIf production is interrupted at any of our manufacturing facilities, even if only temporary,temporarily or if we experience delays as a result of events that are beyond our control, delivery times could be severely affected. Any significant delay in deliveries to our customers could lead to returns or cancellations and cause us to lose future sales, as well as expose us to claims for damages. Our manufacturing facilities are also subject to the risk of catastrophic loss due to unanticipated events such as fires, explosions, or violent weather conditions. We have in the past and may in the future experience plant shutdowns or periods of reduced production as a result of equipment failure, delays in deliveries, or catastrophic loss, which could have a material adverse effect on our results of operations or financial condition.
We have significant international operations that subject us to risks not faced by domestic competitors.
Approximately 77% of our consolidated net sales (after reclassification of our suspension components business as discontinued operations) in fiscal 2006 were from operations outside the United States. We expect sales from our international operations to continue to represent a substantial and growing portion of our business. Risks inherent in international operations include the following:
| • | | agreements may be difficult to enforce and receivables difficult to collect through a foreign country’s legal system; |
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| • | | foreign customers may have longer payment cycles; |
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| • | | foreign countries may impose additional withholding taxes or otherwise tax our foreign income, impose tariffs or adopt other restrictions on foreign trade or investment, including foreign exchange controls; |
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| • | | foreign laws or regulations may restrict our ability to repatriate cash from foreign operations; |
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| • | | necessary export licenses or customs clearances may be difficult to obtain; |
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| • | | intellectual property rights may be more difficult to enforce in foreign countries; |
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| • | | political or economic conditions or exposure to local social unrest, including any resultant acts of war, terrorism or similar events in the countries in which we operate could have an adverse effect on our earnings from operations in those countries; |
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| • | | unexpected adverse changes in foreign laws or regulatory requirements may occur; |
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| • | | compliance with a variety of foreign laws and regulations may be difficult; |
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| • | | in certain countries we are subject to nationwide collective labor agreements that we did not negotiate; |
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| • | | labor laws in certain countries may make it more difficult or expensive to reduce our labor force in response to reduced demand; and |
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| • | | differing foreign tax structures may subject us to additional taxes or affect our ability to repatriate cash from our foreign subsidiaries. |
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Dependence
Any of these factors could have a material adverse effect on key personnel — our business, cash flows, financial condition, and results of operations.
We may not be able to successfully implement our planned operational improvements or realize the benefits of those plans already implemented.
As part of our ongoing focus on being a low-cost provider of high quality products, we continually analyze our business to further improve our operations and identify cost-cutting measures. If we do not identify and implement operational improvements or if implemented improvements do not generate the expected benefits, we may be unable to offer products at a competitive price and generate sufficient operating funds to service our debt or make necessary capital expenditures. If that were to happen, alternative sources of financing may not be available to us on commercially reasonable terms or at all.
We may not be able to timely or successfully launch new products.
In order to effectively compete in the automotive supply industry, we must be able to launch new products to meet our customers’ demand. We may not be able to install and obtain customer approval of the equipment needed to produce products for new programs in time for the start of production. In addition, transitioning our manufacturing facilities and resources to full production under new product programs may impact production rates or other operational efficiency measures. Moreover, our customers may delay or cancel the launch of new product programs or actual production may be below planned quantities. Our failure to successfully launch new products, or a failure by our customers to successfully launch new programs in the quantities anticipated, could adversely affect our results.
Our success will depend on our ability to retain our key employees and to attract and retain new qualified employees. Our success depends in part on our ability to attract, hire, train, and retain qualified
engineering, managerial,
technical, sales, and marketing personnel. We face significant competition for these types of
employees inemployees. As we implement measures to improve our
industry.cost structure, employee morale may suffer. We may be unsuccessful in attracting and retaining the personnel we require
to conduct and
expand our operations successfully.4
In addition, key personnel may leave us and compete against us. Our success also depends to a significant extent on the continued service of our senior management team. We may be unsuccessful in replacing key managers who either resign or retire. The loss of any member of our senior management team or other experienced, senior employees could impair our ability to execute our business plan and strategic initiatives, cause us to lose customers and reduce our net sales, or lead to employee morale problems and/or the loss of other key employees. In any such event, our financial condition, results of operations, and cash flows could be adversely affected.
Legal proceedings — the nature of our business exposes us to product liability and warranty claims and other legal proceedings. The nature of our business subjects us to litigation in the ordinary course of our business. We are exposed to potential product liability and warranty risks that are inherent in the design, manufacture and sale of automotive products, the failure of which could result in property damage, personal injury or death. Accordingly, individual or class action suits alleging product liability or warranty claims could result. Although we currently maintain what we believe to be suitable and adequate product liability insurance in excess of our self-insured amounts, we cannot assure you that we will be able to maintain such insurance on acceptable terms or that such insurance will provide adequate protection against potential liabilities. In addition, if any of our products prove to be defective, we may be required to participate in a recall involving such products. A successful claim brought against us in excess of available insurance coverage, if any, or a requirement to participate in any product recall, could have a material adverse effect on our results of operations or financial condition. In addition, we are involved on an ongoing basis in other legal proceedings. See the “Legal Proceedings” section of our Annual Report on Form 10-K for our fiscal year ended January 31, 2005, which is incorporated herein by reference, for a description of the significant legal proceedings and investigations in which we are presently involved. We cannot assure you that any current or future claims will not adversely affect our cash flows, financial condition or results of operations.
Legal proceedings — we are being investigated by the SEC in connection with our restatement of our fiscal 1999 and 2000 consolidated financial statements.
On February 19, 2002, we issued restated consolidated financial statements included in our filings with the SEC as of and for the fiscal years ended January 31, 2001 and 2000, and related quarterly periods, and for the fiscal quarter ended April 30, 2001. The restatement was the result of our failure to properly apply certain accounting standards generally accepted in the United States and certain accounting errors and irregularities in our financial statements that we and our independent registered public accounting firm identified. Since then, we have made a number of significant changes to strengthen our disclosure controls and procedures and our internal controls, including those internal controls and procedures for financial reporting. We are continuing the process of identifying and implementing corrective actions where required to improve the effectiveness of our disclosure controls and procedures and internal controls, including the enhancement of systems and procedures.
The SEC is conducting an investigation into the facts and circumstances giving rise to our restatement. We have been and intend to continue cooperating with the SEC in connection with such investigation, but we cannot predict the outcome of the investigation. We cannot assure you that the SEC will not impose fines or take other corrective actions against us that could have a significant negative impact on our financial condition. In addition, publicity surrounding the SEC’s investigation or any enforcement action, even if ultimately resolved favorably for us, could have a material adverse impact on our cash flows, financial condition, results of operations or business.
Internal controls — failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and the price of our common stock.
As a reporting company, we are subject to rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires us to include an internal control report from management in our Annual Report on Form 10-K. The internal control report must include the following: (1) a statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting, (2) a statement identifying the framework used by management to conduct the required evaluation of the effectiveness of our internal control over financial reporting, (3) management’s assessment of the effectiveness of our internal control over
5
financial reporting as of January 31, of each fiscal year, including a statement as to whether or not internal control over financial reporting is effective, and (4) a statement that our independent registered public accounting firm has issued an attestation report on management’s assessment of internal control over financial reporting. This requirement first applied to our Annual Report on Form 10-K for the fiscal year ended January 31, 2005. Our assessment as of January 31, 2005, identified a material weakness in internal control over financial reporting related to the lack of adequate expertise, a lack of documentation, and ineffective reconciliation procedures associated with income tax accounting matters. A material weakness is defined as a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
As a result of this deficiency in our internal control over financial reporting, management did not detect errors in the accounting for income tax amounts in a timely manner as of and for the year ended January 31, 2005. Specifically, errors were detected that resulted in an adjustment of current and deferred income tax expense and accrued income tax liabilities. These errors were corrected, and the corrections are reflected in the audited consolidated financial statements as of and for the year ended January 31, 2005.
Because of the material weakness described in the preceding paragraph, management has concluded that, as of January 31, 2005, our internal control over financial reporting was not effective based on those criteria. This failure and any failure in the future to achieve and maintain effective internal controls over financial reporting and otherwise comply with the requirements of Section 404 could have a material adverse effect on our business and the price of our common stock. Such noncompliance could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements. In addition, perceptions of our business among customers, suppliers, rating agencies, lenders, investors, securities analysts and others could be adversely affected.
Implementation of new systems — we are in the process of implementing new systems that will support certain of our financial accounting, payroll and other operational functions within our business, and we may encounter technical or operational difficulties during the implementation that could disrupt our operations.
We are in the process of implementing a new software-based system that will support certain of our financial accounting, payroll and other operational functions within our business. We may encounter technical and operating difficulties during the implementation and transition to this new system. We may experience problems in implementing the new system as our employees learn and operate the system and transfer data from our existing system to this new system. This new system is critical to our operations. Any difficulties that we encounter in implementing the new system may affect our internal controls over financial reporting; disrupt our ability to deal effectively with our employees, customers and other companies with which we have commercial relationships; and also may prevent us from effectively reporting our financial results in a timely manner. Any such disruption could have a material adverse impact on our financial condition, cash flows, results of operations or business. In addition, the costs incurred in correcting any errors or problems with this new system could be substantial.
Intellectual property — we might fail to adequately protect our intellectual property or third parties might assert that our technologies infringe on their intellectual property.
We consider ourselves to be an industry leader in product and process technology, and therefore the protection of our intellectual property is important to our business.
We rely on a combination of patents, trade secrets, trademarks and copyrights to
provide protection in this regard,protect our intellectual property, but this protection might be inadequate. For example, our pending or future patent applications might not be approved or, if allowed, they might not be of sufficient strength or scope. Conversely, third parties might assert that our technologies infringe their proprietary rights.
In either case,We are currently involved in litigation
in which
the plaintiff has asserted that we have infringed on its patents. This litigation, and possible future litigation, could result in substantial costs and diversion of our efforts
might be necessary, and
could adversely affect our business, whether or not we are ultimately
successful, the litigation could adversely affect our business.successful.
Effect of debt — we have substantial levels of debt and debt service which will divert a significant amount of cash from our business operations. We have substantial levels of debt, including debt under our Credit Agreement, our 101/2% senior notes due 2012 (the “Senior Notes”) and other debt instruments. As of January 31, 2005, we had $642.2 million of total indebtedness
6
and $35.2 million of cash and cash equivalents. Although the Credit Agreement and the indenture governing the Senior Notes impose limits on our ability to incur additional debt, we may incur significant additional debt in the future. The degree to which we will be leveraged could have important consequences, including:
| • | requiring a substantial portion of our cash flow from operations to be dedicated to debt service and therefore not available to us for our operations, capital expenditures and future business opportunities; |
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| • | increasing our vulnerability to a downturn in general economic conditions or in our business; |
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| • | limiting our ability to adjust to changing market conditions, placing us at a competitive disadvantage compared to our competitors that have relatively less debt; and |
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| • | limiting our ability to obtain additional financing or access our Revolving Credit Facility in the future for capital expenditures, working capital or general corporate purposes. |
Substantial restrictions and covenants — restrictions and covenants in the indenture governing the Senior Notes, the Credit Agreement and our other debt agreements limit our ability to take certain actions and require us to satisfy certain financial ratios.
Our Credit Agreement and the indenture governing the Senior Notes and our other debt agreements contain a number of significant covenants that, among other things, will restrict our ability, and the ability of our subsidiaries, to:
| • | declare dividends or redeem or repurchase capital stock; |
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| • | prepay, redeem or purchase debt, including the Senior Notes; |
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| • | incur liens and engage in sale-leaseback transactions; |
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| • | make loans and investments; |
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| • | incur additional debt, including borrowings under our Revolving Credit Facility; |
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| • | amend or otherwise alter certain debt documents; |
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| • | make capital expenditures; |
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| • | engage in mergers, acquisitions and asset sales; |
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| • | enter into transactions with affiliates; and |
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| • | alter the business we conduct. |
In addition, under the Credit Agreement we are required to satisfy certain financial covenants, including covenants regarding a maximum total leverage ratio, a minimum interest coverage ratio and a minimum fixed charge coverage ratio, and we may become subject to additional or more restrictive covenants in connection with any future borrowing. Our ability to comply with these covenants may be affected by events beyond our control. If we are unable to comply with the covenants under the indenture governing the Senior Notes or the Credit Agreement or any of our other debt instruments, there would be a default which, if not waived, could result in acceleration of our debt and our bankruptcy if we were unable to repay the amounts owed. Additionally, a default resulting from our failure to comply with such covenants or the applicable borrowing conditions would preclude us from borrowing additional funds. Compliance with the covenants could cause us to conduct our business, or to forgo opportunities, in such a manner as to materially harm our business.
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Implementation of operational improvements — we may not be able to successfully implement our planned operational improvements or realize the benefits of those plans already implemented.
As part of our ongoing focus on being a low-cost provider of high quality products, we continually analyze our business to further improve our operations and identify cost-cutting measures. Our continued analysis includes identifying and implementing opportunities for: (i) further rationalization of manufacturing capacity; (ii) streamlining of marketing and general and administrative overhead; (iii) continued implementation of lean manufacturing and Six Sigma initiatives; and (iv) efficient investment in new equipment and technologies and the upgrading of existing equipment. We may be unable to successfully identify or implement plans targeting these initiatives, or fail to realize the benefits of the plans we have already implemented, as a result of operational difficulties, a weakening of the economy or other factors. If we cannot continue to identify and implement operational improvements, we may be unable to offer products at a competitive price to generate sufficient operating funds to pay the interest on the Senior Notes and make payments due under our Credit Agreement. In such event, we cannot assure you that alternative sources of financing would be available to us or, if available, that such financing would be on commercially reasonable terms.
Significant plans for expansion — we may be unable to successfully implement our expansion plans included in our business strategy.
We are in the process of expanding existing capacity in Thailand, Brazil and Czech Republic, and are refurbishing and expanding the cast aluminum wheel plant we acquired in January 2004 in Chihuahua, Mexico so that it will serve the North American wheel market utilizing low pressure casting technology. A significant change in our business, the economy or an unexpected decrease in our cash flow for any reason could result in an inability to obtain the capital required to complete these projects. In addition, our Credit Agreement imposes certain limits on our capital expenditures based on our financial performance. Failure to successfully complete the expansion of these facilities, launch production, produce saleable products or meet customer demand in a timely manner could result in damage to or loss of customer relationships.
New product introduction — we may not be able to timely or successfully launch new products.
In order to effectively compete in the automotive supply industry, we must be able to launch new products to meet our customers’ demand in a timely manner. We cannot assure you, however, that we will be able to install and certify the equipment needed to produce products for new product programs in time for the start of production, or that the transitioning of our manufacturing facilities and resources to full production under new product programs will not impact production rates or other operational efficiency measures at our facilities. In addition, we cannot assure you that our customers will execute on schedule the launch of their new product programs, for which we might supply products. Our failure to successfully launch new products, or a failure by our customers to successfully launch new programs, could adversely affect our results.
Technological and regulatory changes — our products may be rendered obsolete or less attractive by changes in regulatory requirements or competitive technologies.
Changes in legislative, regulatory or industry requirements or in competitive technologies may render certain of our products obsolete or less attractive. Our ability to anticipate changes in technology and regulatory standards and to successfully develop and introduce new and enhanced products on a timely basis will be a significant factor in our ability to remain competitive. We cannot assure you thatCertain of our products may become obsolete and we willmay not be able to achieve the technological advances that may be necessary for us to remain competitive or that certain of our products will not become obsolete.competitive. We are also subject to the risks generally associated
19
with new product introductions and applications, including lack of market acceptance, delays in product development, and failure of products to operate properly.
8
International operations — our international operations subject us to risks not faced by domestic competitors, which include unfavorable political, regulatory, labor and tax conditions in other countries.
Approximately 51% of our net sales in fiscal 2004 were derived from sales outside North America. We expect sales from international markets to continue to represent a substantial and growing portion of our net sales. Risks inherent in international operations include the following:
| • | agreements may be difficult to enforce and receivables difficult to collect through a foreign country’s legal system; |
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| • | foreign customers may have longer payment cycles; |
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| • | foreign countries may impose additional withholding taxes or otherwise tax our foreign income, impose tariffs or adopt other restrictions on foreign trade or investment, including exchange controls; |
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| • | necessary export licenses or customs clearances may be difficult to obtain; |
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| • | intellectual property rights may be more difficult to enforce in foreign countries; |
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| • | political or economic conditions in the countries in which we operate could have an adverse effect on our earnings from operations in those countries; |
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| • | unexpected adverse changes in foreign laws or regulatory requirements may occur; |
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| • | compliance with a variety of foreign laws and regulations may be difficult; and |
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| • | differing foreign tax structures may subject us to additional taxes or affect our ability to repatriate cash from our foreign subsidiaries in a tax-efficient manner. |
Any of these factors could have a material adverse effect on our business, cash flows, financial condition and results of operations.
Labor relations — aA high percentage of our customers’ employees and certain of our employees are unionized or covered by collective bargaining agreements.
Many employees of our major customers and certain of our employees are unionized.
At January 31, 2005, approximately 4.4%Certain of our employees in the United States
are represented by the United Steel Workers Union, all of
whichwhom are employed at our facility in Akron,
Ohio, were represented by the United Steel Workers Union (“USW”). The collective bargaining agreement with the USW affecting these employees was renewed in 2004 and will expire in 2008.Ohio. As is common in
Mexico and many European jurisdictions, substantially all of our employees in Europe
and Mexico are covered by country-wide collective bargaining agreements. Although we believe that our relations with our employees are
satisfactory,good, a dispute between us and our
employees, or between any of our major customers and that customer’s employees could have a material adverse effect on
us.Variable interest rates and foreign currency fluctuations — our exposure to variable interest rates and foreign currency fluctuations may affect our financial health.
A portionbusiness. In addition, significant percentages of the workforces at certain of our debt, including our borrowings under the Credit Agreement, bears interestmajor customers are unionized. Strikes or labor disputes at variable rates. Any increase in the interest rates on our debt will reduce funds available to us for our operations and future business opportunities and will exacerbate the consequences of our leveraged capital structure.
Due to the increase in our operations outside the United States, we have experienced increased foreign currency exchange gains and losses in the ordinary course of our business. As a result, fluctuations in the exchange rate between the U.S. dollar, the euro and the currencies of other countries in which we conduct our business may have a material impact on our financial condition as cash flows generated in other currencies will be used, in part, to service our dollar-denominated debt. This fluctuationmajor customer could result in an increase inreduced production of vehicles incorporating our overall leverageproducts. This would reduce demand for our products and could result in less cash flow available for repayment of our domestic or foreign obligations.
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In addition, fluctuations in foreign currency exchange rates may affect the value of our foreign assets as reported in U.S. dollars, and may adversely affect reported earnings and, accordingly, the comparability of period-to-period results of operations. Changes in currency exchange rates may affect the relative prices at which we and foreign competitors sell products in the same market. In addition, changes in the value of the relevant currencies may affect the cost of certain items required in our operations. We cannot assure you that fluctuations in interest rates or exchange rates will not otherwise have a material adverse effect on our financial condition orsales and results of operations or cause significant fluctuations in quarterly and annual results of operations.
during the affected periods.
Environmental matters — weWe are subject to potential exposure to environmental liabilities. We are subject to various foreign, federal, state, and local environmental laws, ordinances, and regulations, including those governing discharges into the air and water, the storage, handling and disposal of solid and hazardous wastes, the remediation of contaminated soil and groundwater, contaminated by petroleum products or hazardous substances or wastes, and the health and safety of our employees. UnderWe are also required to obtain permits from governmental authorities for certain of these laws, ordinances or regulations, a current or previous owner or operator of propertyoperations. We may not be liable for the costs of removal or remediation of certain hazardous substances or petroleum products on, under, or in its property, without regard to whether the owner or operator knew of, or caused, the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time they occurred. The presence of, or failure to remediate properly, such substances may adversely affect the ability to sell or rent such property or to borrow using such property as collateral. Persons who generate, arrange for the disposal or treatment of, or dispose of hazardous substances may be liable for the costs of investigation, remediation or removal of these hazardous substances at or from the disposal or treatment facility, regardless of whether the facility is owned or operated by that person. Additionally, the owner of a site may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from a site. We believe that we are in materialcomplete compliance with environmental laws, ordinancesthese permits at all times. If we fail to comply with these permits, we could be fined or otherwise sanctioned by regulators and regulations and do not anticipate any material adverse effect on our earningsthe fine or competitive position relating to environmental matters. It is possible, however, that future developmentssanction could lead to material costs of environmental compliance for us.be material.
The nature of our current and former operations and the history of industrial uses at some of our facilities expose us to the risk of environmental liabilities or claims with respect to environmental and worker health and safety matters whichthat could have a material adverse effect on our business. For example, we may be liable for the costs of removal or remediation of contamination that may be present on our property, even if we did not know about or cause the contamination and even if the practices that resulted in the contamination were legal when they occurred.
Risks Related to the Rights Offering
The price of our common stock is volatile and may decline before or after the subscription rights expire.
The market price of our common stock could be subject to wide fluctuations in response to numerous factors, including factors that have little or nothing to do with us or our performance, and these fluctuations could materially reduce our stock price. These factors include, among other things, actual or anticipated variations in our operating results and cash flow, the nature and content of our earnings releases and our competitors’ and customers’ earnings releases, announcements of technological innovations that affect our products, customers, competitors, or markets, changes in financial health. Weestimates by securities analysts, business conditions in our markets and the general state of the securities markets and the market for similar stocks, the number of shares of our common stock outstanding, changes in capital markets that affect the perceived availability of capital to companies in our industries, governmental legislation or regulation, currency and exchange rate fluctuations, as well as general economic and market conditions, such as recessions. In addition, the stock market historically has experienced significant price and volume fluctuations. These fluctuations are also requiredoften unrelated to obtain permits from governmental authorities for certain operations.the operating performance of particular companies. These broad market fluctuations may cause declines in the market price of our common stock.
We cannot assure you that
the public trading market price of our common stock will not decline after you elect to exercise your rights. If that occurs, you may have committed to buy shares of common stock in the rights offering at a price greater than the prevailing market price and could have an immediate unrealized loss. Moreover, we
have been orcannot assure you that, following the exercise of your rights, you will be
able to sell your common stock at
a price equal to or greater than the subscription price, and you may lose all
timesor part of your investment in
complete compliance with such permits. If we violate or fail to comply with these permits, we could be fined or otherwise sanctioned by regulators. In some instances, such a fine or sanction could be material. In addition, some of our
propertiescommon stock. Until shares are
subject to indemnification and/or cleanup obligations of third parties with respect to environmental matters. However, in the eventdelivered upon expiration of the
insolvency or bankruptcy of such third parties, we could be required to bear the liabilities that would otherwise be the responsibility of such third parties.Asset impairments and other restructuring charges — we may suffer future asset impairments and other restructuring charges, including write downs of goodwill or intangible assets.
From time to time in the past, we have recorded asset impairment losses and closure, severance and restructuring losses relating to specific plants and operations. Generally, we record asset impairment losses when we determine that our estimates of the future undiscounted cash flows from an operation will not be sufficient to recover the carrying value of that facility’s building, fixed assets and production tooling. During fiscal 2004 we recorded total asset impairment losses and other restructuring charges of $9.3 million associated primarily with the closure of our facility in Howell, Michigan, and in fiscal 2003 we recorded total asset impairment losses and other restructuring charges of $35.3 million, associated primarily with three Automotive Wheels operations (La Mirada, California, Gainesville, Georgia and Howell, Michigan) and our Components facility in Wabash, Indiana. In light of the shifting nature of the competitive environment in which we operate, it is possible that we will incur similar losses and charges in the future, and that such losses and charges may be significant. See the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for our fiscal year ended January 31, 2005, which is incorporated herein by reference.
In addition, in connection with our emergence from Chapter 11 and the application of fresh start accounting, we recorded significant increases in goodwill and intangible assets. At January 31, 2005, goodwill and other intangible
10
assets, net, reflected on our consolidated balance sheet were $417.9 million and $78.0 million, respectively, which taken together represented approximately 21.5% of our consolidated total assets. Under Financial Accounting Standards Board Statement No. 142, we are required to evaluate at certain times whether our goodwill and other intangible assets have been impaired. The amount of any impairment is recorded as a charge to the statement of operations. Any future determination requiring the write-off of a significant portion of goodwill or intangible assets would have an adverse effect on our financial condition and results of operations. See the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for our fiscal year ended January 31, 2005, which is incorporated herein by reference.
Lack of comparable financial data — since our financial statements reflect fresh-start accounting adjustments made in connection with our emergence from bankruptcy, information reflecting our results of operations and financial condition is not comparable to prior periods.
In connection with our emergence from bankruptcy in June 2003, we adopted fresh-start accounting. As a result, the book value of our long-lived assets and the related depreciation and amortization schedules, among other things, have changed. As a result,rights offering, you will not be able to comparesell the shares of our common stock that you purchase in the rights offering. Certificates representing shares of our common stock
20
purchased will be delivered as soon as practicable after expiration of the rights offering. We will not pay you interest on funds delivered to the subscription agent pursuant to the exercise of rights.
If the rights offering and the sale of shares to the Investor and the Principal Additional Investor pursuant to their standby commitment under the Equity Agreement are consummated, and if the Direct Investment Option is exercised, your relative ownership interest may experience significant dilution.
Pursuant to the Equity Agreement, the Investor is obligated to purchase all of the shares of our common stock issuable upon the exercise of any rights that remain unsubscribed at the closing of the rights offering subscription period. In addition, the Investor may purchase up to 5,538,462 shares of our common stock upon exercise of the Direct Investment Option. The Principal Additional Investor has agreed with the Investor to acquire 50% of the shares that the Investor is obligated to acquire pursuant to the Equity Agreement. Should no stockholders exercise their rights in the rights offering, the ownership interest of the remaining stockholders would decrease to approximately 39.4%.
To the extent that you do not exercise your rights and shares are purchased by other stockholders in the rights offering, your proportionate voting interest will be reduced, and the percentage that your original shares represent of our expanded equity after exercise of the rights will be diluted. To the extent the Investor elects to exercise the Direct Investment Option your proportionate interest in our common stock will be diluted, regardless of whether you choose to exercise your subscription rights.
After the consummation of the rights offering and the sale of shares to the Investor and the Principal Additional Investor, a significant amount of our common stock could be concentrated in the hands of a few of our stockholders, and their interests may not coincide with yours.
If, upon the completion of the rights offering, only the Investor and the Principal Additional Investor purchase shares of our common stock, the Investor and the Principal Additional Investor will beneficially own approximately % of our issued and outstanding common stock. As a result, the Investor and the Principal Additional Investor will have the ability to exercise substantial control over matters generally requiring stockholder approval. These matters include the election of directors and the approval of significant corporate transactions, including potential mergers, consolidations, or sales of all or substantially all of our assets. Pursuant to the Standstill and Director Nomination Agreements described elsewhere in this prospectus, the Investor and the Principal Additional Investor will be entitled to nominate up to three newly established seats on our board of directors, depending upon their ownership of our common stock immediately following the closing of the rights offering. Pursuant to the Standstill and Director Nomination Agreements, the Investor and the Principal Additional Investor will be prohibited from (i) directly or indirectly acquiring common stock that would result in the Investor’s beneficially owning more than 45%, or the Principal Additional Investor’s owning more than 30%, of our issued and outstanding common stock unless such transaction is approved by a committee of independent directors of the Board of Directors or (ii) taking certain information reflectingother actions, including soliciting proxies, making acquisition proposals, or calling special meetings. Your interests as a holder of the common stock may differ from the interests of the Investor and any Principal Additional Investor.
The subscription rights are not transferable and there is no market for the subscription rights.
You may not sell, give away, or otherwise transfer your subscription rights. The subscription rights are only transferable by operation of law. Because the subscription rights are non-transferable, there is no market or other means for you to directly realize any value associated with the subscription rights. You must exercise the subscription rights and acquire additional shares of our resultscommon stock to realize any value from your subscription rights.
The subscription price determined for the rights offering is not an indication of the fair value of our common stock.
Our board of directors determined the subscription price after negotiations with the Investor, considering the likely cost of capital from other sources, the price at which our stockholders might be willing to participate in the
21
rights offering, historical and current trading prices for our common stock, our need to de-leverage the Company, and the need to provide an incentive to our stockholders to participate in the rights offering on apro ratabasis. The subscription price for a subscription right is $3.25 per share, which represents a 31.8% discount to the average closing price of our common stock for the ten trading days preceding the execution of the Equity Agreement. The subscription price does not necessarily bear any relationship to the book value of our assets or our past operations,
andcash flows, losses, financial condition,
net worth, or any other established criteria used to
those for periods priorvalue securities. You should not consider the subscription price to
emergence from bankruptcy.Global financial and economic instability — we may be adversely affected byan indication of the significant instability and uncertaintyfair value of the common stock to be offered in the world financial markets andrights offering. After the global economy, includingdate of this prospectus, our common stock may trade at prices above or below the subscription price.
Unless we give you a right of cancellation as a result of terrorisma fundamental (as determined by us) change to the terms of the rights offering, you may not revoke your subscription exercise and could be committed to buying shares above the war inprevailing market price.
Once you exercise your subscription rights, you may not revoke the
Middle East. Recent instability in the world financial markets and the global economy, includingexercise unless we give you a right of cancellation as a result of terrorisma fundamental (as determined by us) change to the terms of the rights offering. The public trading market price of our common stock may decline before the subscription rights expire. If you exercise your subscription rights and, afterwards, the public trading market price of our common stock decreases below the subscription price, you will have committed to buying shares of our common stock at a price above the prevailing market price. Our common stock is traded on the Nasdaq Global Market under the symbol “HAYZ,” and the warlast reported sales price of our common stock on the Nasdaq Global Market on March 15, 2007, was $4.80 per share. Moreover, you may be unable to sell your shares of common stock at a price equal to or greater than the subscription price you paid for such shares.
If we determine that there has been a fundamental change to the terms of the rights offering, we may give you the right to cancel the exercise of your subscription rights. Our determination of whether a change to the terms of the rights offering is “fundamental” will be made on a case-by-case basis, and we cannot assure you that we will deem “fundamental” a change that you would otherwise believe to be “fundamental.” If we elect to cancel or terminate the rights offering, neither we nor the subscription agent will have any obligation with respect to the subscription rights except to return, without interest, any subscription payments the subscription agent received from you.
If you do not act promptly and follow the subscription instructions, your exercise of subscription rights may be rejected.
Stockholders who desire to purchase shares in the
Middle East, has created uncertaintyrights offering must act promptly to ensure that all required forms and payments are actually received by the subscription agent before , 2007, the expiration date of the rights offering. If you are a beneficial owner of shares, you must act promptly to ensure that your broker, custodian bank, or other nominee acts for you and that all required forms and payments are actually received by the subscription agent before the expiration date of the rights offering. We will not be responsible if your broker, custodian, or nominee fails to ensure that all required forms and payments are actually received by the subscription agent before the expiration date of the rights offering. If you fail to complete and sign the required subscription forms, send an incorrect payment amount, or otherwise fail to follow the subscription procedures that apply to your exercise in the
automotive industry andrights offering, the subscription agent may,
adversely affect our business. If such economic and financial instability were to result in a decrease in new vehicle production, our business would be adversely affected. In addition,depending on the
war, related setbackscircumstances, reject your subscription or
adverse developments, including a retaliatory strike, may cause unpredictable or unfavorable economic conditions and could have a material adverse impact on our operating results and financial condition, and on our ability to raise capital and on our ability to implement our strategy. In addition, terrorist attacks similaraccept it only to the
ones committed on September 11, 2001 may directly affectextent of the payment received. Neither we nor our
abilitysubscription agent undertakes to
keep our operations and services functioningcontact you concerning an incomplete or incorrect subscription form or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether a subscription exercise properly
and could have a material adverse effect on our business and results of operations.follows the subscription procedures.
Risks Relating To This OfferingRelated to Our Common Stock
The price of our common stock historically has experienced significant price and volume fluctuations, which may make it difficult for you to resell the common stock. The market price of our common stock historically has experienced and may continue to experience significant price and volume fluctuations similar to those experienced by the broader stock market in recent years. In addition,
22
the price of our common stock may fluctuate significantly in response to various factors, including, but not limited to: variations in
our annual or quarterly financial results; changes by financial research analysts in their estimates of our earnings or the earnings of our
customers or competitors; and conditions in the economy in general or the automotive industry in particular, including increased competitive pressures and dependence on, and pricing pressures from, the industry and
itsour customers.
Significant sales of common stock, or the perception that significant sales may occur in the future, could adversely affect the market price for our common stock. The sale of substantial amounts of our common stock could adversely affect its price. The Shares we are registering hereby willSales of substantial amounts of our common stock in the public market, and the availability of shares for future sale, including 55,384,615 shares of our common stock to be immediately available for sale, without regardissued in the rights offering (including pursuant to volume limits, timing, mannerthe Direct Investment Option), 2,993,251 shares of saleour common stock issuable upon exercise of outstanding options to acquire shares of our common stock or other restrictions under federal and state securities laws. We cannot estimate whether or when the Selling Stockholder will resell anyupon vesting of restricted stock units, 773,331 shares of our common stock that may be issued upon conversion of the Shares registeredpreferred stock of our subsidiary, HLI Operating Company, Inc. and 957,447 shares covered by our Series B warrants issued and issuable under our 2003 plan of reorganization (such share totals not adjusted for resale as described in this prospectus. The availability of a large block of stock for sale in relation to our normal trading volume, including a large block soldanti-dilution adjustments that may be triggered by the Selling Stockholder,rights offering and sale of shares of our common stock), could result in a decline inadversely affect the prevailing market price of our common stock. SalesFollowing the rights offering, the Investor and the Additional Investors, if any, could own up to 57,512,219 shares of common stock, including shares acquired outside the rights offering and Direct Investment Option. We have agreed to file a registration statement with respect to all of the shares acquired by the Selling StockholderInvestor and any Additional Investors in the rights offering and through exercise of the Direct Investment Option and to use commercially reasonable efforts to make it effective. Accordingly, all of such shares acquired by the Investor, the Principal Additional Investor, and the Additional Investors, if any, will be available for sale immediately after such registration statement becomes effective without any control over the timing or volume of sales thereof by us or any third party. We cannot foresee the impact of such potential sales on the market, but it is possible that if a significant percentage of such available shares are attempted to be sold within a short period of time, the market for our shares would be adversely affected. It is also unclear as to whether or not the market for our common stock could absorb a large number of attempted sales in a short period of time, regardless of the price at which the same might be offered. Even if a substantial number of sales do not occur within a short period of time, the mere existence of this “market overhang” could have a negative impact on the market for our common stock and our ability to raise additional capital.
1123
also might make it more difficult for us to sell equity securities in the future at times and prices that we deem appropriate.
FORWARD-LOOKING STATEMENTS This prospectus
contains forward-looking statements with respect to our financial condition and
the documents incorporated by reference in this prospectus include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).business. All statements other than statements of historical
facts includedfact made in this prospectus
are forward-looking. Such forward-looking statements include, among others, those statements including
without limitation,the words “expect,” “anticipate,” “intend,” “believe,” “may,” “should,” and similar language. These forward-looking statements
underinvolve certain risks and uncertainties. Our actual results may differ significantly from those projected in the
caption “Risk Factors,” located elsewhere or incorporated by reference in this prospectus regarding the prospects of our industry and our prospects, plans, financial position and business strategy, may constitute forward-looking statements.
In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “plan,” “foresee,” “believe” or “continue,” or the negatives of these terms or variations of them or similar terminology. Although we believeFactors that
the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to be correct. Important factors, that couldmay cause actual results to differ materially from
our expectations are disclosed in this prospectus and the documents incorporatedthose contemplated by
reference in this prospectus, including in conjunction with the forward-lookingsuch forward looking statements
included in this prospectus and under “Risk Factors.” All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this document. These forward-looking statements speak only as of the date of this prospectus. We will not update these statements unless the securities laws require us to do so. Factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected include, among others:
| | • | Decreased demand | competitive pressure in the automotiveour industry; |
| |
| | • | Changes | fluctuations in the automotive industry, including increased consolidationprice of steel, aluminum, and cost reduction;other raw materials; |
| |
| | • | Pricing pressure from our customers; | changes in general economic conditions; |
| |
| | • | Cyclical nature of | our dependence on the automotive industry;industry (which has historically been cyclical) and on a small number of major customers for the majority of our sales; |
| |
| | • | Competition in | pricing pressure from automotive industry customers and the automotive supply industry, including from low cost sources;potential for re-sourcing of business to lower-cost providers; |
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| | • | Dependence on major customers | changes in the financial markets or our debt ratings affecting our financial structure and the competitive positionour cost of capital and financial condition of these customers;borrowed money; |
| |
| | • | Increased cost of supplies or raw materials, such as steel, aluminum and energy; |
|
| | • | Unexpected production interruptions; |
|
| • | Dependence on key personnel; |
|
| • | Exposure to product liability and warranty claims and other legal proceedings; |
|
| • | Pending SEC investigation; |
|
| • | Failure to achieve and maintain effective internal controls; |
|
| • | Technical or operational difficulties during the implementation of our new systems; |
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| • | Protection of our intellectual property and potential infringement upon rights of others; |
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| • | Effects of our substantial level of debt on our operations; |
12
| • | Our inability to take certain actions due to restrictionsuncertainties inherent in our debt agreements; |
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| • | Our ability to implement operational improvements; |
|
| • | Our ability to execute our strategic plans; |
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| • | Our ability to successfully launch new products; |
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| • | Technological or regulatory changes that could render our products obsolete; |
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| • | Effects of political, regulatory and legal conditions on our international operations; |
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| • | Our and our customers’ relations with employees; |
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| • | Exposure to variable interest ratesoperations and foreign currency fluctuations; |
| |
| | • | Exposure to environmental liabilities; |
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| | • | Incurrence of asset impairmentour ability to divest non-core assets and other restructuring charges; |
|
| • | Lack of comparable financial data due to the adoption of fresh-start accounting;businesses; and |
| |
| | • | Global financial | the risks described in this prospectus and economic instability.our most recent Annual Report on Form 10-K. |
You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this prospectus. Although we believe the expectations reflected in the forward-looking statements at the time they are made are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We have no duty to update the forward looking statements in this prospectus, and we do not intend to provide such updates.
24
USE OF PROCEEDS We will not receive any of the
The net proceeds from the sale by the Selling Stockholder of the Shares. All proceedsto us from the sale of Sharesour common stock offered hereby will goin the rights offering and sale of shares of common stock to the Selling Stockholder.Investor is estimated to be approximately $180.0 million, less the commitment fee of $5.4 million paid to the Investor and estimated offering expenses of approximately $ . We will use the proceeds of the rights offering and from the sale of shares of our common stock to the Investor, if any, to repurchase our outstanding Senior Notes and to pay the fees and expenses related to this rights offering. As of March 14, 2007, 22.1% and 14.8% of our Senior Notes were held by the Investor and the Principal Additional Investor, respectively, and, as a result, approximately $64.0 million of the proceeds of the rights offering will be paid to the Investor and the Principal Additional Investor in order to repurchase our Senior Notes. Such use of proceeds is subject to an amendment or refinancing of our Credit Facility.
We believe that the rights offering and sale of shares of common stock to the Investor will strengthen our financial condition by de-leveraging the Company and increasing our stockholders’ equity.
25
CAPITALIZATION
The following table describes capitalization as of October 31, 2006, on an actual basis and on a pro forma, as adjusted basis to give effect to the sale of all 55,384,615 shares offered in the rights offering and the Direct Investment Option (including application of net proceeds as described above) at a price of $ per share.
| | | | | | | | | |
| | | At October 31, 2006 | |
| | | Historical | | | Pro Forma | |
| | | (In Millions) | |
| Current liabilities: | | | | | | | | |
| Bank borrowings and other notes | | $ | 24.3 | | | $ | 18.0 | |
| Current portion of long-term debt | | | 9.2 | | | | 9.2 | |
| Accounts payable and accrued liabilities | | | 402.8 | | | | 402.8 | |
| | | | | | | |
| Total current liabilities | | | 436.3 | | | | 430.0 | |
| Senior Notes | | | 162.5 | | | | 5.0 | (a) |
| Long-term debt, net of current portion | | | 504.5 | | | | 504.5 | |
| Deferred tax liabilities | | | 66.6 | | | | 66.6 | |
| Pension and other long-term liabilities | | | 409.4 | | | | 409.4 | |
| Minority interest | | | 53.3 | | | | 53.3 | |
| Commitments and contingencies | | | — | | | | — | |
| Stockholders’ equity: | | | | | | | | |
| Preferred stock, 1,000,000 shares authorized, none issued or outstanding at October 31, 2006 | | | — | | | | — | |
| Common stock, par value $0.01 per share: | | | | | | | | |
| 100,000,000 shares authorized (a); 38,468,213 issued and outstanding at October 31, 2006 | | | 0.4 | | | | 0.8 | |
| Additional paid in capital | | | 677.9 | | | | 849.6 | |
| Accumulated deficit | | | (670.6 | ) | | | (678.9 | ) |
| Accumulated other comprehensive income | | | 98.4 | | | | 98.4 | |
| | | | | | | |
| Total stockholders’ equity | | | 106.1 | | | | 269.9 | |
| | | | | | | |
| Total capitalization | | $ | 1,738.7 | | | $ | 1,738.7 | |
| | | | | | | |
| | |
| (a) | | $5.0 million of remaining Senior Notes were converted to common stock on February 15, 2007. |
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SELLING STOCKHOLDER
DILUTION
Purchasers of our common stock in the rights offering and the transactions contemplated by the Equity Agreement will experience an immediate and substantial dilution of the net tangible book value of their common stock. At October 31, 2006, we had a net tangible book value of approximately $(273.3) million, or $(7.11) per share of our common stock held by continuing stockholders. After giving effect to the sale of 55,384,615 shares of our common stock in the rights offering and to the Investor and after deducting transaction and offering expenses and expenses incurred to repurchase our outstanding Senior Notes, the pro forma net tangible book value at October 31, 2006, attributable to common stockholders would have been $(281.6) million, or $(3.00) per share of our common stock. This prospectus relatesamount represents an immediate dilution to purchasers in the rights offering of $6.25. The following table illustrates this per share dilution.
| | | | | |
| Subscription price | | $ | 3.25 | |
| | | | | |
| Net tangible book value per share at October 31, 2006, before the rights offering and the sale of shares of our common stock pursuant to the terms of the Equity Agreement | | $ | (7.11 | ) |
| | | | | |
| Net increase in pro forma net tangible book value per share attributable to the rights offering and the sale of shares of our common stock pursuant to the terms of the Equity Agreement | | $ | 4.11 | |
| | | | | |
| Pro forma net tangible book value per share after giving effect to the rights offering and the sale of shares of our common stock pursuant to the terms of the Equity Agreement | | $ | (3.00 | ) |
| | | | |
| | | | | |
| Dilution in pro forma net tangible book value per share to purchasers | | $ | 6.25 | |
| | | | |
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THE RIGHTS OFFERING
The Rights
We are distributing to the record holders of our common stock as of , 2007, non-transferable subscription rights to purchase shares of our common stock. The per share price of $3.25 is equal to a 31.8% discount to the average closing price of our common stock for the ten trading days preceding March 16, 2007, the date we entered into the Equity Agreement. The subscription rights will entitle the holders of common stock to purchase shares of common stock for an aggregate purchase price of 3,470,374 Shares beneficially$180.0 million. See below for additional information regarding subscription by DTC participants.
You will receive subscription rights for each share of our common stock you owned at the close of business on the record date, subject to adjustments to eliminate fractional rights. If the Investor exercises all or any portion of the Direct Investment Option, the number of shares that each holder will be entitled to purchase will be proportionately reduced to reflect the Investor’s purchase of such shares. If the Investor exercises the Direct Investment Option in full, the number of subscription rights distributed to our stockholders will be reduced to rights for each share of common stock owned at the close of business on the record date. In addition, if the Investor exercises the Direct Investment Option, the gross proceeds to be raised from our stockholders in the rights offering will be reduced by the Selling Stockholder. Ofaggregate purchase price of the 3,470,374shares purchased by the Investor, but the total gross proceeds received by the Company will remain the same.
Each subscription right will entitle the holder thereof to purchase at the subscription price, on or before the expiration time of the rights offering, one share of common stock. Stockholders who elect to exercise their basic subscription privilege in full may also subscribe, at the subscription price, for additional shares of our common stock under their respective over-subscription privileges to the extent that other rights holders do not exercise their basic subscription privileges in full. If a sufficient number of shares of our common stock are unavailable to fully satisfy the over-subscription privilege requests, the available shares of common stock will be soldpro rataamong subscription rights holders who exercised their over-subscription privilege based on the number of shares each subscription rights holder subscribed for under the basic subscription privilege.
We intend to keep the rights offering open until , 2007, unless our board of directors, in its sole discretion, extends such time; provided, however, that the period between the distribution of the rights and the expiration date may not exceed thirty business days without the prior written consent of the Investor.
Reasons for the Rights Offering and Sale of Shares being registered, 30,492 Sharesof Common Stock to the Investor
In approving the rights offering, our board of directors carefully evaluated our need to de-leverage the Company in order to increase our financial flexibility and cash flow. Our board of directors also considered several alternative transactions to de-leverage the Company before concluding that the rights offering was the appropriate alternative. In conducting its analysis, our board of directors also considered the dilution of the ownership percentage of the current holders of our common stock that may be caused by the rights offering and the sale of shares of common stock to the Investor. In addition, our board of directors considered that the rights offering would only occur if our stockholders approved the rights offering and the transactions contemplated by the equity Agreement.
After weighing the factors discussed above and the effect of the $180.0 million in additional capital, before expenses, to be generated by the sale of shares pursuant to the rights offering and the Direct Investment Option, our board of directors believes that the rights offering is the best alternative for us to de-leverage the Company and that it is in the best interests of our Company and our stockholders. As described in the section of this prospectus entitled “Use of Proceeds,” the proceeds of the rights offering will be used to de-leverage the Company by repurchasing our outstanding Senior Notes and to pay the fees and expenses associated with the rights offering.
Although we believe that the rights offering will strengthen our financial condition, our board of directors is not making any recommendation as to whether you should exercise your subscription rights.
28
Standby Commitment
Equity Agreement.On March 16, 2007, we entered into the Equity Agreement with the Investor. The following description of the Equity Agreement summarizes the material terms of the Equity Agreement and is qualified in its entirety by the full text of the Equity Agreement. A copy of the Equity Agreement is attached as an exhibit to the registration statement of which this prospectus forms a part. We urge you to carefully read that entire document.
Subject to the terms and conditions of the Equity Agreement, we are obligated to sell, and the Investor is obligated to purchase from us, any and all shares of our common stock issuable upon the exercise ifof any rights remaining unsubscribed at the closing of the Series A Warrants heldrights offering subscription period. The price per share paid by the Selling StockholderInvestor for such common stock will be equal to the subscription price offered in the rights offering. The Principal Additional Investor has agreed with the Investor to acquire 50% of the shares that the Investor is obligated to acquire pursuant to the Equity Agreement. In no event, however, will the Investor be permitted to acquire shares that would cause its beneficial ownership to exceed 45% of our issued and 92,899 Sharesoutstanding common stock, nor may the Principal Additional Investor acquire shares that would cause its beneficial ownership to exceed 30% of our issued and outstanding common stock.
We also agreed to grant the Direct Investment Option to the Investor to purchase, concurrently with the rights offering, up to 5,538,462 shares of our common stock at a price equal to the subscription price for the rights offering for gross proceeds of up to $18.0 million. The Investor may exercise the Direct Investment Option at any time before the close of business on the second business day after the expiration of the rights offering.
With respect to both its standby commitment in the rights offering and the Direct Investment Option, the Investor may elect to assign some or all of its rights to purchase shares of our common stock to such Additional Investors as are reasonably acceptable to the Company. If the Investor assigns some or all of its rights to purchase shares of our common stock to a limited number of Additional Investors, no such Additional Investor may become issuable duringacquire shares of our common stock that would result in its beneficially owning more than 15% of our total issued and outstanding common stock after consummation of the periodrights offering.
As compensation to the Investor for the standby commitment, we agreed to keeppay the Investor a standby commitment fee equal to 3.00% of the maximum dollar value of the rights offering, of which $3.15 million has been paid and $2.25 million will be paid upon the closing of the rights offering. The Investor has agreed to pay 50% of this commitment fee to the Principal Additional Investor.
The obligation of the Investor to fulfill the standby commitment under the Equity Agreement is subject certain conditions, including, but not limited to, the following conditions:
• the continued accuracy of the Company’s representations and warranties and the fulfillment of the Company’s covenants contained in the Equity Agreement;
• since the date of the Equity Agreement, there shall not have occurred any changes or events that, individually or in the aggregate would reasonably be expected to result in any material adverse effect on the business, condition (financial or otherwise), or results of operations of the Company or its subsidiaries, taken as a whole, or any material adverse effect on the ability of the Company to consummate the transactions contemplated by the Equity Agreement;
• no loss of a customer of the Company or any subsidiary that accounted for 4% or more of the Company’s revenues on a consolidated basis during the twelve months ended on the Company’s last full fiscal quarter immediately preceding the closing of the rights offering shall have occurred;
• no material adverse change shall have occurred in the financial markets in the United States, and no outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial, or economic conditions shall have occurred, in each case the effect of which would make it, in the judgment of the Investor, impracticable or inadvisable to conduct the closing of the transactions contemplated by the Equity Agreement;
• no suspension or material limitation on trading by the SEC or the Nasdaq Stock Market, Inc., shall have occurred, and no material disruption in commercial banking or securities settlement or clearance services in the
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United States shall have occurred, and no banking moratorium by either federal or New York authorities shall have been declared;
• the Company shall not have indebtedness in excess of $750.0 million, excluding indebtedness under securitization and other accounts receivable factoring and financing programs;
• all governmental and third party notifications, filings, consents, waivers, and approvals required for the closing of the transactions contemplated by the Equity Agreement, including the termination or expiration of any waiting periods imposed by any governmental or regulatory authority, shall have been made or received;
• no action shall have been taken and no statute, rule, regulation, or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority, and no judgment, injunction, decree, or order of any federal, state, or foreign court shall have been issued, that prohibits the implementation of the rights offering or the transactions contemplated by the Equity Agreement;
• approval of the rights offering, the transactions contemplated by the Equity Agreement, and the necessary amendments to the Company’s Certificate of Incorporation by the Company’s stockholders shall have been obtained;
• the Standstill and Director Nomination Agreement with the Investor described below shall have been executed and delivered;
• the registration statement for this rights offering and a registration statement on Form S-3 relating to the resale of any common stock purchased by the Investor, the Principal Additional Investor, or any Additional Investors shall have been declared effective upon exchangeby the United States Securities and Exchange Commission (the SEC); and no stop order shall have been entered by the SEC with respect thereto;
• the Company shall have complied with the requirements of the Nasdaq Stock Market, Inc., for the listing of the shares of common stock offered in the rights offering on the Nasdaq Global Market;
• payment of the standby commitment fee and other fees and expenses of the Investor and Principal Additional Investor;
• the Company shall have reported adjusted EBITDA of at least $180.0 million for the fiscal year ended January 31, 2007, and shall have provided guidance of adjusted EBITDA, minus capital expenditures, of not less than $95.0 million for the fiscal year ending January 31, 2008 (all calculations of EBITDA, adjusted EBITDA, and capital expenditures being made in a manner consistent with calculations of such items in documents filed or submitted to the SEC by the Company prior to the date of the Equity Agreement), and such guidance shall have been publicly affirmed by a method compliant with Regulation FD prior to the closing of the rights offering;
• the Company shall have refinanced or otherwise amended the Credit Facility to permit repurchase of the Company’s Senior Notes and incremental third-party debt outside the United States in an amount of at least $125.0 million; and
• the Company shall have furnished customary legal opinions and accounting comfort letters relating to the initial registration statement for the resale of the shares of the Preferred StockCompany’s common stock acquired by the Investor, the Principal Additional Investor, and any Additional Investors in the rights offering and pursuant to the Direct Investment Option.
In addition, subject to certain limitations, we will indemnify the Investor, the Principal Additional Investor, and any Additional Investors from and against certain losses arising out of HLIthe rights offering and the transactions contemplated by the Equity Agreement.
In the event the Investor terminates the Equity Agreement as a result of a material adverse change in the Company’s business, condition (financial or otherwise), or results of operations since March 16, 2007, we will be required to pay the Investor a termination fee of $1.8 million. In the event the Investor terminates the Equity Agreement as a result of, among other events, an inaccuracy of our representations and warranties or failure to fulfill our covenants in the Equity Agreement, the Company’s incurring indebtedness in excess of $750.0 million, the failure of the Company to receive the approval of its stockholders for the rights offering and the transactions contemplated by the Equity Agreement, failure to obtain approval from the Nasdaq Global Market to list the Company’s shares of common stock acquired in the rights offering, failure to execute the Standstill and Director Nomination Agreement with the Investor, failure to pay the agreed upon fees and expenses of the Investor and the Principal Additional Investor, the failure of the Company to achieve certain financial targets and affirm its previous earnings guidance, or the failure of the Company to obtain an amendment or other refinancing of
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the Credit Facility, or in the event we terminate the Equity Agreement for any reason in our sole discretion (provided there was no breach by the Investor of the Equity Agreement), then we will be required to pay the Investor a termination fee of $3.6 million.
In addition, unless the Investor is in breach of its obligations under the Equity Agreement, we will be required to pay the Investor’s and the Principal Additional Investor’s reasonable out-of-pocket expenses incurred in connection with the transactions contemplated by the Equity Agreement in an amount not to exceed $1.5 million.
As of March 15, 2007, based on the methodology for calculating shares beneficially owned by the Investor that is disclosed in the Investor’s filings of Schedule 13G with the SEC, the Investor beneficially owned 2,127,604 shares of our common stock, consisting of approximately 5.4% of our issued and outstanding common stock. As of March 15, 2007, the Principal Additional Investor beneficially owned no shares of our common stock. The Investor and the Principal Additional Investor have agreed not to purchase any additional shares of our common stock between the date of the Equity Agreement and the completion of the rights offering and the Investor has agreed not to take, directly or indirectly, any action designed to or that would reasonably be expected to cause or result in any stabilization or manipulation of the price of our common stock.
Registration Rights Agreement.In connection with the Equity Agreement, we have entered into a Registration Rights Agreement with the Investor, the Principal Additional Investor, and any Additional Investors in the form attached to the Equity Agreement and filed as an exhibit to our Form 8-K filed on March 16, 2007. The following description of the registration rights agreement summarizes the material terms of the registration rights agreement and is qualified in its entirety by the full text of the Registration Rights Agreement. A copy of the Registration Rights Agreement is attached as an exhibit to the registration statement of which this prospectus forms a part. We urge you to carefully read that entire document.
Pursuant to such Registration Rights Agreement, we will register the resale of the shares of the Company’s common stock acquired by the Investor, the Principal Additional Investor, and any Additional Investors in the rights offering and pursuant to the Direct Investment Option.
As a result, once the registration statement with respect to such shares is declared effective by the SEC, such shares will be eligible for resale in the public market without restriction to the extent not already eligible for resale.
Pursuant to the Registration Rights Agreement, we:
• have filed a registration statement relating to the shares that may be acquired by the Investor, the Principal Additional Investor, and any Additional Investors and shall use our reasonable best efforts to cause such registration statement to be declared effective by the SEC before the closing of the rights offering; and
• use our reasonable best efforts to keep the registration statement continuously effective for three years after the closing of the rights offering.
If such registration statement is not effective and subject to certain restrictions, the Investor, the Principal Additional Investor, and any Additional Investors who hold at least one third of all registrable securities may demand, on up to four separate occasions, that the Company register the shares of common stock held by the Selling Stockholder.Investor, the Principal Additional Investor, and the Additional Investors.
Under the Registration Rights Agreement, at any time the registration statement is not effective and after written request of the Investor or its permitted assigns, we will be required to effect the registration of securities addressed in such request. In addition, if we propose to file on our behalf or on behalf of selling securityholders a registration statement, the Investor or its permitted assigns may request that their securities be registered on such registration statement.
Subject to certain restrictions, we may delay without penalty the foregoing obligations to file any registration statement or keep any registration statement usable for resales during one or more periods aggregating not more than 90 days in any twelve-month period in the event that we would be required to disclose in the registration statement information not otherwise then required by law to be publicly disclosed and in the judgment of our board of directors,
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there is a reasonable likelihood that such disclosure or any other action to be taken in connection with the registration statement would materially and adversely affect any existing or prospective material business situation, transaction, or negotiation or otherwise materially and adversely affect our Company.
The Selling StockholderInvestor and the Principal Additional Investor may each assign the rights, interests, and obligations under the registration rights agreement to one third party who acquires at least 10.0 million shares of our common stock from timeeither such party, provided that the Company shall have received notice of the transfer and such transferee shall have executed a properly completed joinder agreement to timethe registration rights agreement.
Standstill Agreements.In connection with the Equity Agreement, the Investor and the Principal Additional Investor have agreed that, upon the closing of the transactions contemplated by the Equity Agreement, they will each enter into a Standstill and Director Nomination Agreement (together, the Standstill Agreements) with the Company, forms of which are attached to the Equity Agreement and filed as exhibits to our Form 8-K filed on March 16, 2007. The following description of the Standstill Agreements summarizes the material terms of the Standstill Agreements and is qualified in its entirety by the full text of the Standstill Agreements. A copy of each of the Standstill Agreements is attached as an exhibit to the registration statement of which this prospectus forms a part. We urge you to carefully read that entire document.
Pursuant to the Standstill Agreements, each of the Investor and the Principal Additional Investor will agree that neither it nor any of its affiliates will, directly or indirectly, without the prior written approval of the Company: (i) acquire, agree to acquire, or make any proposal to acquire, directly or indirectly, any shares of the Company’s issued and outstanding common stock (or any securities convertible into or exchangeable for common stock) if, after giving effect to such acquisition, the Investor would beneficially own (as defined in Rule 13d-3 under the Exchange Act) more than 45%, or the Principal Additional Investor would beneficially own more than 30%, of the Company’s issued and outstanding common stock, whether by purchase, tender offer, andor exchange offer, through the acquisition of control of another person, by joining a partnership, limited partnership, syndicate association or other “group” (within the meaning of Section 13(d)(3) of the Exchange Act), other than as a result of a recapitalization of the Company or a transaction approved by a majority of the members of the Company’s board of directors (other than any nominee of the Investor or the Principal Additional Investor); (ii) propose to enter into, directly or indirectly, any merger or similar business combination involving the Company or any of its subsidiaries; (iii) propose that the Company or any of its subsidiaries enter into any plan of liquidation or dissolution or engage in any recapitalization transaction or sell all or substantially all of its assets; (iv) make, or in any way participate, directly or indirectly, in any “solicitation” of “proxies” (as such terms are used in the proxy rules of the SEC) or consents to vote, or seek to advise or influence any person with respect to the voting of any voting securities of the Company or initiate, propose, or otherwise “solicit” stockholders of the Company for the approval of stockholder proposals, whether made pursuant to this prospectusRule 14a-8 promulgated by the SEC under the Exchange Act or otherwise, induce or attempt to induce any other Person to initiate any such stockholder proposal, or otherwise communicate with the stockholders of the Company or others pursuant to the rules governing the solicitation of proxies promulgated by the SEC under the Exchange Act with respect to any such proposal; (v) form, join, or in any way participate in a “group” with respect to any voting securities of the Company; (vi) deposit any of the voting securities of the Company in any voting trust or subject any such voting securities to any agreement or other arrangement with respect to the voting of any such voting securities; (vii) execute any written consent as a stockholder with respect to the voting securities of the Company; (viii) otherwise act, alone or in concert with others, to seek to control or influence the management, board of directors, or policies of the Company; (ix) seek, alone or in concert with others, to call a meeting of stockholders of the Company, representation on the board of directors of the Company (other than as described below), or the removal of any member of the board of directors of the Company; (x) take any action or publicly announce any plan or intent to take any action, inconsistent with the foregoing; (xi) publicly request any amendment or waiver of any provision of the Standstill Agreements; or (xii) advise, assist, or encourage any person in connection with any of the foregoing.
In addition, pursuant to the Standstill Agreements, the Investor and the Principal Additional Investor will, for 90 days following the consummation of the transactions contemplated by the Equity Agreement, be entitled to designate certain individuals to fill newly-established seats on our board of directors, depending upon the percentage ownership of our common stock held by the Investor and the Principal Additional Investor, as applicable, immediately following the rights offering. Such individuals must be independent within the meaning of the Nasdaq Marketplace Rules, may not be employed or otherwise affiliated with the Investor or the Principal Additional Investor, and will be subject to the reasonable approval of our current board of directors. Each of the Investor and the Principal Additional
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Investor shall be entitled to designate one candidate (each, an Initial Director) to hold a seat on the board of directors if the ownership of our common stock by the Investor or the Principal Additional Investor, as the case may be, is equal to or greater than 15% of the total issued and outstanding shares of our common stock following the closing of the transactions contemplated by the Equity Agreement, excluding any shares of our common stock held by the Investor prior to the date of the Standstill Agreements. In the event that the ownership of common stock by either the Investor or the Principal Additional Investor is equal to or greater than 30% of the total issued and outstanding shares of our common stock following the closing of the transactions contemplated by the Equity Agreement, excluding any shares of our common stock held by the Investor prior to the date of the Standstill Agreements, and the other party’s ownership is equal to or greater than 15%, then the Initial Directors shall be entitled to jointly designate one additional director. Notwithstanding the foregoing, in the event that the Investor owns 30% or more, and the Principal Additional Investor owns less than 15%, of the total issued and outstanding shares of our common stock immediately following the consummation of the transactions contemplated by the Equity Agreement, excluding any shares of our common stock held prior to the date of the Standstill Agreements, the Principal Additional Investor shall have no right to designate a candidate for our board of directors and the Investor shall be entitled to designate one additional director. In addition, in the event that the Principal Additional Investor owns 30% or more, and the Investor owns less than 15%, of the total issued and outstanding shares of our common stock immediately following the consummation of the transactions contemplated by the Equity Agreement, excluding any shares of our common stock held prior to the date of the Standstill Agreements, the Investor shall have no right to designate a candidate for our board of directors and the Principal Additional Investor shall be entitled to designate one additional director. In the case of either the Investor’s or Principal Additional Investor’s right to appoint an additional director, as the case may be, each director so appointed to the board shall serve for the remainder of the term of the class of directors for which he is appointed.
Pursuant to the Standstill Agreements, the Investor and the Principal Investor have agreed that each will vote or cause to vote all shares that it beneficially owns in favor of the slate of directors nominated by the board of directors of the Company at the Company’s Annual Meetings of Stockholders to be held in 2007 and 2008, so long as the Company is not in breach of its obligations described in the immediately preceding paragraph.
The Standstill Agreements will expire upon the earliest to occur of the date (i) that is two years and six months after the date of its execution; (ii) on which the Investor or the Principal Additional Investor, as the case may be, no longer beneficially owns 15% or more of the Company’s issued and outstanding common stock; (iii) on which a third party acquires beneficial ownership representing more than 25% of the Company’s issued and outstanding common stock; (iv) of issuance by the Company to a third party of shares of common stock that, when combined with common stock beneficially owned by such third party, representing more than 15% of the Company’s issued and outstanding common stock (as determined under Rule 13d-3 under the Exchange Act), and the Company and such third party do not enter into a standstill agreement upon terms substantially similar to the Standstill Agreements; (v) of a sale of all or substantially all of the assets of the Company or a liquidation or dissolution of the company; (vi) on which the Company enters into a definitive agreement that would result in a change of control (as that term is defined in the Standstill Agreements); (vii) on which the Company publicly announces that it is soliciting, directly or indirectly, proposals to effect a change of control; or (viii) after the expiration of certain periods, on which the Company receives a proposal relating to a change of control transaction that the Company does not reject.
Expiration of the Rights Offering and Extensions, Amendments, and Termination
You may exercise your subscription rights at any time before 5:00 p.m., Eastern Daylight Time, on , 2007, the expiration date of the rights offering. We may, in our sole discretion, extend the time for exercising the subscription rights. If the commencement of the rights offering is delayed for a period of time, the expiration date of the rights offering will be similarly extended, provided that the period between the distribution of the rights and the expiration date may not exceed thirty business days without the prior written consent of the Investor.
We will extend the duration of the rights offering as required by applicable law, and may choose to extend it if we decide that changes in the market price of our common stock warrant an extension or if we decide to give investors more time to exercise their subscription rights in the rights offering. We may extend the expiration date of the rights offering by giving oral or written notice to the subscription agent and information agent on or before the scheduled expiration date. If we elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later than 9:00 a.m., Eastern Daylight Time, on the next business day after the most recently announced expiration date.
We reserve the right, in our sole discretion, to amend or modify the terms of the rights offering.
If you do not exercise your subscription rights before the expiration date of the rights offering, your unexercised subscription rights will be null and void and will have no value. We will not be obligated to honor your exercise of subscription rights if the subscription agent receives the documents relating to your exercise after the rights offering expires, regardless of when you transmitted the documents.
Subscription Privileges
Your subscription rights entitle you to a basic subscription privilege and an over-subscription privilege.
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Basic Subscription Privilege.The basic subscription privilege of each whole right entitles you to purchase one share of our common stock at the subscription price of $3.25 per share. You will receive subscription rights for each share of our common stock you owned at the close of business on the record date. If the Investor chooses to exercise the Direct Investment Option, the number of shares that each holder will be entitled to purchase will be proportionately reduced to reflect the Investor’s purchase of such shares. If the Investor exercises the Direct Investment Option in full, the number of subscription rights distributed to our stockholders will be reduced to rights for each share of common stock owned at the close of business on the record date. You are not required to exercise all of your subscription rights unless you wish to purchase shares under your over-subscription privilege. We will deliver to the holders of record who purchase shares in the rights offering certificates representing the shares purchased with a holder’s basic subscription privilege as soon as practicable after the rights offering has expired.
Over-Subscription Privilege.In addition to your basic subscription privilege, you may subscribe for additional shares of our common stock (up to the number of shares for which you subscribed under your basic subscription privilege), upon delivery of the required documents and payment of the subscription price of $3.25 per share, before the expiration of the rights offering. You may only exercise your over-subscription privilege if you exercised your basic subscription privilege in full and other holders of subscription rights do not exercise their basic subscription privileges in full. If you would otherwise be entitled to a return of subscription funds because the number of shares you are entitled to purchase is reduced as the result of the Investor’s exercise of the Direct Investment Option, then you may elect to apply such funds to the exercise of your over-subscription privilege.
Pro Rata Allocation.If there are not enough shares of our common stock to satisfy all subscriptions made under the over-subscription privilege, we will allocate the remaining shares of our common stockpro rata, after eliminating all fractional shares, among those over-subscribing rights holders. “Pro rata” means in proportion to the number of shares of our common stock that you and the other subscription rights holders have purchased by exercising your basic subscription privileges. If there is apro rataallocation of the remaining shares of our common stock and you receive an allocation of a greater number of shares than you subscribed for under your over-subscription privilege, then we will allocate to you only the number of shares for which you subscribed. We will allocate the remaining shares among all other holders exercising their over-subscription privileges.
Full Exercise of Basic Subscription Privilege.You may exercise your over-subscription privilege only if you exercise your basic subscription privilege in full. To determine if you have fully exercised your basic subscription privilege, we will consider only the basic subscription privilege held by you in the same capacity. For example, suppose that you were granted subscription rights for shares of our common stock that you own individually and shares of our common stock that you own collectively with your spouse. If you wish to exercise your over-subscription privilege with respect to the subscription rights you own individually, but not with respect to the subscription rights you own collectively with your spouse, you only need to fully exercise your basic subscription privilege with respect to your individually owned subscription rights. You do not have to subscribe for any shares under the basic subscription privilege owned collectively with your spouse to exercise your individual over-subscription privilege.
When you complete the portion of your subscription rights certificate to exercise your over-subscription privilege, you will be representing and certifying that you have fully exercised your subscription privileges as to shares of our common stock that you hold in that capacity. You must exercise your over-subscription privilege at the same time you exercise your basic subscription privilege in full.
Return of Excess Payment.If you exercised your over-subscription privilege and are allocated less than all of the shares of our common stock for which you wished to subscribe, your excess payment for shares that were not allocated to you will be returned to you by mail, without interest or deduction, as soon as practicable after the expiration date of the rights offering. We will deliver to the holders of record who purchase shares in the rights offering certificates representing the shares of our common stock that you purchased as soon as practicable after the expiration date of the rights offering and after allpro rataallocations and adjustments have been completed.
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No Fractional Rights
We will not issue fractional subscription rights or cash in lieu of fractional rights. Fractional subscription rights will be rounded to the nearest whole number, with such adjustments as may be necessary to ensure that we offer 55,384,615 shares of common stock in the rights offering. In the unlikely event that, because of the rounding of fractional subscription rights, the rights offering would have been subscribed in an amount in excess of 55,384,615 shares of common stock, all holders’ subscription rights will be reduced in an equitable manner. Any excess subscription funds will be promptly returned without interest.
Conditions to the Rights Offering
The rights offering is conditioned upon (i) stockholder approval of the rights offering and (ii) an amendment to or a refinancing of our Credit Facility to allow for the repurchase of the Senior Notes with the proceeds of the rights offering and the Direct Investment Option. We may cancel or terminate the rights offering, in whole or in part, at any time in our sole discretion. If we cancel or terminate the rights offering, in whole or in part, all affected subscription rights will expire without value, and all subscription payments received by the subscription agent will be returned promptly, without interest or deduction. See also “—Cancellation Rights.”
Method of Subscription—Exercise of Rights
If you are a record holder of shares of our common stock, you may exercise your subscription rights by delivering the following to the subscription agent, at or before 5:00 p.m., Eastern Daylight Time, on , 2007, the expiration date of the rights offering:
• Your properly completed and executed subscription rights certificate with any required signature guarantees or other supplemental documentation; and
• Your full subscription price payment for each share subscribed for under your subscription privileges.
If you are a beneficial owner of shares of our common stock whose shares are registered in the name of a broker, custodian bank, or other nominee, you should instruct your broker, custodian bank or other nominee to exercise your rights and deliver all documents and payment on your behalf before 5:00 p.m., Eastern Daylight Time, on , 2007, the expiration date of the rights offering.
Your subscription rights will not be considered exercised unless the subscription agent receives from you, your broker, custodian, or nominee, as the case may be, all of the required documents and your full subscription price payment before 5:00 p.m., Eastern Daylight Time, on , 2007, the expiration date of the rights offering.
Method of Payment
Your payment of the subscription price must be made in United States dollars for the full number of shares of common stock for which you are subscribing by either:
• cashier’s or certified check drawn upon a United States bank payable to the subscription agent; or
• wire transfer of immediately available funds, to the subscription account maintained by the subscription agent at , Account No. .
For wire transfer of funds, please ensure that the wire instructions include the identity of the subscriber paying the subscription price and the subscription rights certificate number, and send your subscription rights certificate via overnight courier to be delivered on the next business day following the day of the wire transfer to the subscription agent. You are responsible for any wire transfer fees.
Receipt of Payment
Your payment will be considered received by the subscription agent only upon:
• Receipt by the subscription agent of any certified check or bank draft drawn upon a United States bank or of any postal, telegraphic, or express money order; or
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• Receipt of collected funds in the subscription account designated above.
Delivery of Subscription Materials and Payment
You should deliver your subscription rights certificate and payment of the subscription price to the subscription agent by one of the methods described below:
| | |
By Mail or Overnight Courier: | | By Hand: |
| | |
| Attn: | | Attn: |
Your delivery to an address or by any method other than as set forth above will not constitute valid delivery.
Calculation of Subscription Rights Exercised
If you do not indicate the number of subscription rights being exercised, or if you do not forward full payment of the total subscription price payment for the number of subscription rights that you indicate are being exercised, then you will be deemed to have exercised your basic subscription privilege with respect to the maximum number of subscription rights that may be exercised with the aggregate subscription price payment you delivered to the subscription agent. If your aggregate subscription price payment is greater than the amount you owe for your subscription, you will be deemed to have exercised your over-subscription privilege to purchase the maximum number of shares of our common stock with your over-payment. If we do not apply your full subscription price payment to your purchase of shares of our common stock, we or the subscription agent will return the excess amount to you by mail, without interest or deduction, as soon as practicable after the expiration date of the rights offering.
Your Funds Will Be Held by the Subscription Agent until Shares listed below that are availableof Our Common Stock Are Issued
The subscription agent will hold your payment of the subscription price in a segregated account with other payments received from other subscription rights holders until we issue your shares of our common stock to it for sale,you upon consummation of the rights offering.
Medallion Guarantee May Be Required
Your signature on each subscription rights certificate must be guaranteed by an eligible institution, such as a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States, subject to standards and procedures adopted by the subscription agent, unless:
• Your subscription rights certificate provides that shares are to be delivered to you as record holder of those subscription rights; or
• You are an eligible institution.
Notice to Brokers and Nominees
If you are a broker, a trustee, or a depositary for securities who holds shares of our common stock for the account of others on , 2007, the record date, you should notify the respective beneficial owners of such shares of the rights offering as soon as possible to find out their intentions with respect to exercising their subscription rights. You should obtain instructions from the beneficial owner with respect to their subscription rights, as set forth in the instructions we have provided to you for your distribution to beneficial owners. If the beneficial owner so instructs, you should complete the appropriate subscription rights certificates and submit them to the subscription agent with the proper payment. If you hold shares of our common stock for the account(s) of more than one beneficial owner, you may exercise the number of subscription rights to which all such beneficial owners in the aggregate otherwise would have been entitled had they been direct record holders of our common stock on the record date, provided that you, as a nominee record holder, make a proper showing to the subscription agent by submitting the form entitled “Nominee
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Holder Certification” that we was provided to you with your rights offering materials. If you did not receive this form, you should contact the subscription agent to request a copy.
Beneficial Owners
If you are a beneficial owner of shares of our common stock or will receive your subscription rights through a broker, custodian bank, or other nominee, we will ask your broker, custodian bank, or other nominee to notify you of the rights offering. If you wish to exercise your subscription rights, you will need to have your broker, custodian bank, or other nominee act for you. If you hold certificates of our common stock directly and would prefer to have your broker, custodian bank, or other nominee act for you, you should contact your nominee and request it to effect the transactions for you. To indicate your decision with respect to your subscription rights, you should complete and return to your broker, custodian bank, or other nominee the form entitled “Beneficial Owners Election Form.” You should receive this form from your broker, custodian bank, or other nominee with the other rights offering materials. If you wish to obtain a separate subscription rights certificate, you should contact the nominee as soon as possible and request that a separate subscription rights certificate be issued to you. You should contact your broker, custodian bank, or other nominee if you do not receive this form, but you believe you are entitled to participate in the rights offering. We are not responsible if you do not receive the form from your broker, custodian bank, or nominee or if you receive it without sufficient time to respond.
Instructions for Completing Your Subscription Rights Certificate
You should read and follow the instructions accompanying the subscription rights certificates carefully.
You are responsible for the method of delivery of your subscription rights certificate(s) with your subscription price payment to the subscription agent. If you send your subscription rights certificate(s) and subscription price payment by mail, we recommend that you send them by registered mail, properly insured, with return receipt requested. You should allow a sufficient number of days to ensure delivery to the subscription agent prior to the time the rights offering expires. You must pay, or arrange for payment, by means of a certified or cashier’s check or wire transfer of funds.
Determinations Regarding the Exercise of Your Subscription Rights
We will decide all questions concerning the timeliness, validity, form, and eligibility of the exercise of your subscription rights and any such determinations by us will be final and binding. We, in our sole discretion, may waive, in any particular instance, any defect or irregularity, or permit, in any particular instance, a defect or irregularity to be corrected within such time as we may determine. We will not be required to make uniform determinations in all cases. We may reject the exercise of any of your subscription rights because of any defect or irregularity. We will not accept any exercise of subscription rights until all irregularities have been waived by us or cured by you within such time as we decide, in our sole discretion.
Neither we, the subscription agent, nor the information agent will be under any duty to notify you of any defect or irregularity in connection with your submission of subscription rights certificates, and we will not be liable for failure to notify you of any defect or irregularity. We reserve the right to reject your exercise of subscription rights if your exercise is not in accordance with the terms of the rights offering or in proper form. We will also not accept the exercise of your subscription rights if our issuance of shares of our common stock to you could be deemed unlawful under applicable law.
Material United States Federal Income Tax Consequences
A holder should not recognize income or loss for United States federal income tax purposes in connection with the receipt or exercise of subscription rights in the rights offering. You should consult your tax advisor as to the particular consequences to you of the rights offering. For a detailed discussion, see “Material United States Federal Income Tax Consequences.”
Regulatory Limitation
We will not be required to issue shares of our common stock to you pursuant to the rights offering if, in our opinion, you would be required to obtain prior clearance or approval from any state or federal regulatory authorities to
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own or control such shares if, at the time the rights offering expires, you have not obtained such clearance or approval.
Questions about Exercising Subscription Rights
If you have any questions or require assistance regarding the method of exercising your subscription rights or requests for additional copies of this document or the Instructions for Use of Hayes Lemmerz International, Inc. Subscription Rights Certificates, you should contact the information agent at the address and state securities laws, but istelephone number set forth above under “Questions and Answers relating to the Rights Offering” included elsewhere in this prospectus.
Subscription Agent and Information Agent
We have appointed to act as subscription agent and Innisfree M & A Incorporated to act as information agent for the rights offering. You should direct any questions or requests for assistance concerning the method of subscribing for the shares of common stock or for additional copies of this prospectus to the information agent.
Fees and Expenses
We will pay all fees charged by the subscription agent and the information agent. You are responsible for paying any other commissions, fees, taxes or other expenses incurred in connection with the exercise of the rights. Neither we nor the subscription agent will pay such expenses.
No Revocation
Once you have exercised your subscription privileges, you may not revoke your exercise. Subscription rights not exercised before the expiration date of the rights offering will expire and will have no obligation to do so. The registration of these Shares does not necessarily meanvalue.
Procedures for DTC Participants
We expect that the Selling Stockholder will sell all or anyexercise of your basic subscription privilege and your over-subscription privilege may be made through the facilities of the Shares.Depository Trust Company. If your subscription rights are held of record through DTC, you may exercise your basic subscription privilege and your over-subscription privilege by instructing DTC to transfer your subscription rights from your account to the account of the subscription agent, together with certification as to the aggregate number of subscription rights you are exercising and the number of shares of our common stock you are subscribing for under your basic subscription privilege and your over-subscription privilege, if any, and your subscription price payment for each share of our common stock that you subscribed for pursuant to your basic subscription privilege and your over-subscription privilege.
Subscription Price
The subscription price is $3.25 per share. For more information with respect to how the subscription price was determined, see “—Reasons for the Rights Offering and Sale of Shares of Common Stock to the Investor” and “Questions and Answers relating to the Rights Offering” included elsewhere in this prospectus.
Foreign Stockholders
We will not mail subscription rights certificates to stockholders on the record date, or to subsequent transferees, whose addresses are outside the United States. Instead, we will have the subscription agent hold the subscription rights certificates for those holders’ accounts. To exercise their subscription rights, foreign holders must notify the subscription agent before 11:00 a.m., Eastern Daylight Time, on , 2007, three business days prior to the expiration date, and must establish to the satisfaction of the subscription agent that it is permitted to exercise its subscription rights under applicable law. If these procedures are not followed prior to the expiration date, your rights will expire.
Non-Transferability of the Rights
Except in the limited circumstances described below, only you may exercise the basic subscription privilege and the over-subscription privilege. You may not sell, give away, or otherwise transfer the basic subscription privilege or the over-subscription privilege.
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The
Notwithstanding the foregoing, your rights may be transferred by operation of law; for example a transfer of rights to the estate of the recipient upon the death of the recipient would be permitted. If the rights are transferred as permitted, evidence satisfactory to us that the transfer was proper must be received by us before the expiration date of the rights offering.
Cancellation Rights
Our board of directors may cancel the rights offering, in whole or in part, in its sole discretion at any time before the time the rights offering expires for any reason (including a change in the market price at whichof our common stock). If we cancel the Selling Stockholders may sellrights offering, any funds you paid to the Sharessubscription agent will be determinedrefunded, without interest or deduction, as soon as practicable.
No Board Recommendation
An investment in shares of our common stock must be made according to each investor’s evaluation of his own best interests and after considering all of the information herein, including the “Risk Factors” section of this prospectus. Neither we nor our board of directors nor their financial advisors make any recommendation to subscription rights holders regarding whether they should exercise or sell their subscription rights. You should not view the Investor’s obligation under the Equity Agreement to purchase any shares not subscribed for by other stockholders in this rights offering as a recommendation or other indication that the prevailing market forexercise of your subscription rights is in your best interests.
Shares of Common Stock Outstanding After the Shares orRights Offering
Based on the shares of our common stock currently outstanding and assuming that all 55,384,615 shares of common stock offered in negotiated transactions. When we referthe rights offering are issued, shares of our common stock will be issued and outstanding following the rights offering and sale of shares of common stock to the “Selling Stockholder”Investor.
Effects of Rights Offering on the Investor’s Stock
Even though the subscription rights will be offered on apro ratabasis to each holder of our common stock, because of the Investor’s commitment to purchase any shares not subscribed for by other stockholders in this
prospectus, we meanrights offering, the
entity listed in the table below, as well as the pledgees, donees, assignees, transferees, successors and others who later hold anypercentage of common stock owned by other stockholders will decrease unless all of the
Selling Stockholder’s interests.Series A Warrants
The Series A Warrants held byother stockholders exercise the Selling Stockholder entitle itsubscription rights they will receive in full. In addition, if the Investor exercises its option to purchase up to 30,4925,538,462 shares of our common stock pursuant to the Direct Investment Option, the gross proceeds to be raised from our stockholders in the rights offering will be reduced by the aggregate purchase price of the shares purchased by the Investor, and the subscription rights for each share of our common stock granted to each of our stockholders will be proportionately reduced to reflect such purchase.
Set forth below, for illustrative purposes only, are scenarios that indicate the effect that the rights offering and related share issuance could have on the Investor’s relative interest following the rights offering.
Scenario A.All subscription rights are subscribed for on apro ratabasis by all of the stockholders to whom the subscription rights were issued. Because all of the subscription rights are exercised by holders in either or both of the basic subscription privilege and the over-subscription privilege, the Investor does not need to purchase any shares in respect of shares not subscribed for by other stockholders, nor, in this scenario, does the Investor exercise its option to purchase shares of our common stock pursuant to the Direct Investment Option. The Principal Additional Investor similarly purchases no shares of our common stock in this scenario.
Scenario B.Pursuant to its commitment to purchase shares not otherwise subscribed for, the Investor is obligated to purchase all of the shares offered in the rights offering. The Investor purchases 50% of the shares not otherwise subscribed for in the rights offering, and the Principal Additional Investor acquires the other 50% of such shares. In addition, the Investor exercises the Direct Investment Option.
Scenario C.Stockholders exercise 50% of their subscription rights, and the Investor and the Principal Additional Investor each purchase 50% of the shares for which subscription rights were not exercised, pursuant to the standby
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commitment to purchase shares not otherwise subscribed for in the rights offering. In addition, the Investor exercises the Direct Investment Option.
| | | | | | | | | | | | | | | | | | | | |
| | Total Shares | | | Number of Shares | | | Percentage | | | Percentage | | | Aggregate | |
| | Offered | | | Purchased by the | | | Ownership by the | | | Ownership by | | | Proceeds to the | |
| | | | | | Investor and | | | Investor and | | | Stockholders | | | Company | |
| | | | | | Principal Additional | | | Principal | | | Other Than the | | | | | |
| | | | | | Investor | | | Additional | | | Investor and | | | | | |
| | | | | | | | | | Investor | | | Principal | | | | | |
| | | | | | | | | | | | | | Additional | | | | | |
| | | | | | | | | | | | | | Investor | | | | | |
| Scenario A | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Scenario B | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Scenario C | | | | | | | | | | | | | | | | | | | | |
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the material United States Federal income tax consequences of the rights offering to holders of our common stock. This discussion assumes that the holders of our common stock hold such common stock as a capital asset for United States Federal income tax purposes. This discussion is based on the Internal Revenue Code of 1986, as amended, Treasury Regulations promulgated thereunder, Internal Revenue Service rulings and pronouncements and judicial decisions in effect on the date hereof, all of which are subject to change (possibly with retroactive effect) and to differing interpretations. This discussion applies only to holders that are United States persons and does not address all aspects of United States federal income taxation that may be relevant to holders in light of their particular circumstances or to holders who may be subject to special tax treatment under the Internal Revenue Code, including, without limitation, holders who are dealers in securities or foreign currency, foreign persons, insurance companies, tax-exempt organizations, banks, financial institutions, broker-dealers, holders who hold our common stock as part of a hedge, straddle, conversion or other risk reduction transaction, or who acquired our common stock pursuant to the exercise of compensatory stock options or otherwise as compensation.
We have not sought, and will not seek, an opinion of counsel or a ruling from the Internal Revenue Service regarding the United States Federal income tax consequences of the rights offering or the related share issuance. The following summary does not address the tax consequences of the rights offering or the related share issuance under foreign, state, or local tax laws. ACCORDINGLY, EACH HOLDER OF OUR COMMON STOCK SHOULD CONSULT ITS TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE RIGHTS OFFERING AND THE RELATED SHARE ISSUANCE TO SUCH HOLDER.
The United States Federal income tax consequences to a holder of our common stock of the receipt and exercise of subscription rights under the rights offering should be as follows:
1. A holder should not recognize taxable income for United States Federal income tax purposes in connection with the receipt of subscription rights in the rights offering.
2. Except as provided in the following sentence, a holder’s tax basis in the subscription rights received in the rights offering should be zero. If either (i) the fair market value of the subscription rights on the date such subscription rights are distributed is equal to at least 15% of the fair market value on such date of the common stock with respect to which the subscription rights are received or (ii) the holder elects, in its United States Federal income tax return for the taxable year in which the subscription rights are received, to allocate part of its tax basis in such common stock to the subscription rights, then upon exercise of the subscription rights, the holder’s tax basis in the common stock should be allocated between the common stock and the subscription rights in proportion to their respective fair market values on the date the subscription rights are distributed. A holder’s holding period for the subscription rights received in the rights offering should include the holder’s holding period for the common stock with respect to which the subscription rights were received.
3. A holder which allows the subscription rights received in the rights offering to expire should not recognize any gain or loss, and the tax basis in the common stock owned by such holder with respect to which such subscription rights were distributed should be equal to the tax basis in such common stock immediately before the receipt of the subscription rights in the rights offering.
4. A holder should not recognize any gain or loss upon the exercise of the subscription rights received in the rights offering. The tax basis in the common stock acquired through exercise of the subscription rights should equal the sum of the subscription price for the common stock and the holder’s tax basis, if any, in the rights as described above. The holding period for the common stock acquired through exercise of the subscription rights should begin on the date the subscription rights are exercised.
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PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Trading Prices
The following table sets forth, for the fiscal quarters indicated, the high and low sales prices for our common stock as reported by the Nasdaq Global Market from February 1, 2005 through , 2007.
| | | | | | | | | |
| | | High | | Low |
| Fiscal 2005 | | | | | | | | |
| | | | | | | | | |
| First Quarter | | $ | 8.04 | | | $ | 3.98 | |
| Second Quarter | | | 8.37 | | | | 5.02 | |
| Third Quarter | | | 7.99 | | | | 3.42 | |
| Fourth Quarter | | | 4.61 | | | | 2.55 | |
| | | | | | | | | |
| Fiscal 2006 | | | | | | | | |
| | | | | | | | | |
| First Quarter | | $ | 3.75 | | | $ | 2.04 | |
| Second Quarter | | | 3.38 | | | | 2.47 | |
| Third Quarter | | | 3.20 | | | | 1.64 | |
| Fourth Quarter | | | 5.23 | | | | 1.75 | |
| | | | | | | | | |
| Fiscal 2007 | | | | | | | | |
| | | | | | | | | |
| First Quarter (through , 2007) | | | | | | | | |
Dividend Policy
We did not pay cash dividends on our common stock during the periods presented and do not intend to pay dividends in the foreseeable future. Our Credit Facility and the indenture governing our Senior Notes restrict our ability to pay cash dividends to the holders of our common stock. Although we intend to amend or refinance our Credit Facility and use the proceeds of the rights offering to repurchase our Senior Notes, any new debt will likely have similar restrictions on our ability to pay dividends. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements, and contractual restrictions.
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DESCRIPTION OF CAPITAL STOCK
General
Pursuant to our amended certificate of incorporation, we are authorized to issue up to 100,000,000 shares of common stock, par value $.01 per share, and 1,000,000 shares of preferred stock, par value $.01 per share, which preferred stock may contain special preferences as determined by our board of directors including, but not limited to, the bearing of dividends and convertibility into shares of our common stock. At the Special Meeting of our stockholders to be held on , 2007, we are asking our stockholders to approve an amendment to our certificate of incorporation to increase our authorized shares of common stock from 100,000,000 to 200,000,000.
The following summary of our common stock and Series B Warrants does not purport to be complete and is subject to, and qualified in its entirety by, reference to our amended certificate of incorporation, by-laws, and agreements for the Series B Warrants, which are available upon request from us and to the applicable provisions of the General Corporation Law of the State of Delaware.
Our amended certificate of incorporation and by-laws contain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and that may have the effect of delaying, deferring, or preventing a future takeover or change in control of our company unless such takeover or change in control is approved by our board of directors.
Common Stock
Our authorized capital structure consists of 100,000,000 shares of common stock, par value $.01 per share, and 1,000,000 shares of preferred stock, par value $.01 per share. At , 2007, there were shares of our common stock outstanding. If our stockholders approve an amendment to our certificate of incorporation at the Special Meeting to be held on , 2007, the number of authorized shares of common stock will increase to 200,000,000.
Each share of our common stock entitles its holder to one vote on all matters upon which our stockholders are entitled or permitted to vote, including the election of directors. Unless otherwise required by law, any question brought before any meeting of the stockholders, other than the election of directors, shall be decided by the vote of the holders of a majority of the total number of votes of our common stock represented and entitled to vote at a meeting of our stockholders, voting as a single class. There are no cumulative voting rights. Shares of our common stock would participate ratably in any distribution of assets in a liquidation, dissolution, or winding up of the Company, subject to prior distribution rights of any shares of preferred stock then outstanding. Our common stock has no preemptive rights or conversion rights, nor are there any redemption or sinking fund provisions applicable to our common stock. Holders of our common stock are entitled to participate in dividends as and when declared by our board out of funds legally available therefor. Our ability to pay cash dividends is subject to restrictions under the law of the State of Delaware. In addition, our Credit Facility and the indenture governing the Senior Notes restrict our ability to pay cash dividends. All outstanding shares of our common stock are fully paid and nonassessable. The rights, preferences, and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we have designated and issued or may designate and issue in the future.
The transfer agent and registrar for our common stock is Mellon Investor Services LLC.
Warrants
At , 2007, Series B Warrants to purchase in the aggregate up to 957,447 shares of our common stock were outstanding. These warrants were issued under separate warrant agreements each entered into by us and Mellon Investor Services LLC, as Warrant Agent, on June 3, 2003.
The Series B Warrants are exercisable at a cash exercise price of $25.83 per share, subject to adjustment as provided in the applicable warrant agreement. On May 5, 2005,The Series B Warrants will expire on June 3, 2008. The Series B Warrants are subject to anti-dilution adjustments (with certain exceptions) to the closing salepurchase price per sharefor events including, but not limited to, the issuance of ouradditional shares of common stock, as reported byextraordinary dividends and distributions, the Nasdaq National Market, was $5.91.
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The warrant agreement provides
issuance of options and convertible securities, except for
redemptionsuch issuances pursuant to an equity-based compensation plan for directors or employees, stock dividends or stock splits, or the combination or consolidation of the
unexercised warrantsoutstanding shares of common stock. The terms of the warrant agreements pertaining to the Series B Warrants further provide for redemption in the case of certain extraordinary transactions
of the unexercised warrants for an amount per warrant equal to the greater of (i) the fair market value of the consideration given in the extraordinary transaction, less the purchase price, (ii) the value of the
warrantwarrants at the consummation of the extraordinary transaction, or (iii) $0.01.
In addition, the Series A Warrants are subject to anti-dilution adjustments (with certain exceptions) to the purchase price forThe terms of such
events, including, but not limited to, the issuance of additional shares of common stock, extraordinary dividends and distributions, the issuance of options and convertible securities, except for such issuances pursuant to equity-based compensation plan for directors or employees, stock dividends or stock splits or the combination or consolidation of the outstanding shares of common stock. The warrant agreementagreements also
providesprovide that, in the event of a merger, consolidation, or similar transaction involving
Hayesus in which the holders of
Hayes’our common stock receive capital stock or other securities of
Hayesus or the surviving entity, the unexercised warrants will become exercisable for such consideration.
The Series A Warrants expire on June 3, 2006. Preferred Stock
Our board of
HLI Thedirectors may, without further action by our stockholders, from time to time, direct the issuance of shares of Preferred Stock heldpreferred stock in one or more classes or series and may, at the time of issuance, determine the rights, preferences, and limitations of each class or series. Satisfaction of any dividend preferences of outstanding shares of preferred stock would reduce the amount of funds available for the payment of dividends on shares of common stock. Holders of shares of preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution, or winding-up of our company before any payment is made to the holders of shares of common stock. The issuance of shares of preferred stock may render more difficult or tend to discourage a merger, tender offer, or proxy contest, the assumption of control by a holder of a large block of our securities, or the removal of incumbent management. Upon the affirmative vote of two-thirds or more of the total number of directors then in office, our board of directors, without stockholder approval, may issue shares of preferred stock with voting and conversion rights that could adversely affect the holders of shares of common stock. There are no shares of preferred stock outstanding, and we have no present intention to issue any shares of preferred stock.
Other Provisions of Our Amended Certificate of Incorporation and By-laws
Our amended certificate of incorporation provides for our board of directors to be divided into three classes, as nearly equal in number as possible, serving staggered terms. Approximately one-third of the board will be elected each year. The provision for a classified board could prevent a party who acquires control of a majority of the outstanding voting stock from obtaining control of the board until the second annual stockholders meeting following the date the acquiror obtains the controlling stock interest. The classified board provision could have the effect of discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control of our company and could increase the likelihood that incumbent directors will retain their positions.
Pursuant to the Standstill Agreements, the Investor and the Principal Additional Investor will, for 90 days following the consummation of the transactions contemplated by the
Selling Stockholder are, atEquity Agreement, be entitled to designate certain individuals to fill newly-established seats on our board of directors, depending upon the
holder’s option, exchangeable into a number of Shares of common stock of Hayes equal to (i) the aggregate liquidation preference of the shares of Preferred Stock so exchanged ($100 per share plus all accrued and unpaid dividends thereon (whether or not declared) to the exchange date) (the “Liquidation Preference”) divided by (ii) 23.125. Accordingly, as of May 6, 2005, the Selling Stockholder is deemed to beneficially own 88,942 Sharespercentage ownership of our common stock
held by the Investor and the Principal Additional Investor, as
a resultapplicable, immediately following the rights offering. Such individuals must be independent within the meaning of the
Preferred Stock it holdsNasdaq Marketplace Rules, may not be employed or otherwise affiliated with the Investor or the Principal Additional Investor, and will be subject to the reasonable approval of
record. The Preferred Stockour current board of directors. Each of the Investor and the Principal Additional Investor shall be entitled to designate one candidate (each, an Initial Director) to hold a seat on the board of directors if the ownership of our common stock by the Investor or the Principal Additional Investor, as the case may be, redeemed by HLI at its option, any time, or from time to time, after June 3, 2013 for either cashis equal to or greater than 15% of the Liquidation Preference or a number oftotal issued and outstanding shares of our common stock following the closing of Hayes equal to the Liquidation Preference dividedtransactions contemplated by the fair valueEquity Agreement, excluding any shares of suchour common stock onheld by the date of redemption, based on the average closing price of the common stock during the twenty business daysInvestor prior to the date of the noticeStandstill Agreements. In the event that the ownership of redemption.
Beneficial Ownershipcommon stock by either the Investor or the Principal Additional Investor is equal to or greater than 30% of the Selling Stockholder
Thetotal issued and outstanding shares of our common stock following table sets forth certain information regarding the Selling Stockholder as of May 6, 2005, including the nameclosing of the Selling Stockholder, the number of Shares beneficially ownedtransactions contemplated by the Selling Stockholder,Equity Agreement, excluding any shares of our common stock held prior to the percentagedate of the Standstill Agreements, and the other party’s ownership is equal to or greater than 15%, then the Initial Directors shall be entitled to jointly designate one additional director. Notwithstanding the foregoing, in the event that the Investor owns 30% or more, and the Principal Additional Investor owns less than 15%, of Sharesthe total issued and outstanding shares of our common stock immediately following the consummation of the transactions contemplated by the Equity Agreement, excluding any shares of our common stock held by the Selling Stockholder asInvestor prior to the date of such datethe Standstill Agreements, the Principal Additional Investor shall have no right to designate a candidate for our board of directors and the numberInvestor shall be entitled to designate one additional director. In addition, in the event that the Principal Additional Investor owns 30% or more, and the Investor owns less than 15%, of Shares being registeredthe total issued and outstanding shares of our common stock immediately following the consummation of the transactions contemplated by the Equity Agreement, excluding any shares of our common stock held prior to the date of the Standstill Agreements, the Investor shall have no right to designate a candidate for our board of directors and the Principal Additional Investor shall be entitled to designate one additional director. In the case of either the Investor’s or Principal Additional Investor’s right to appoint an additional director, as the case may be, each director so appointed to the board shall serve for the Selling Stockholder.
A person generally “beneficially owns” shares ifremainder of the term of the class of directors for which he has either the right to vote those shares or dispose of them. More than one person may be considered to beneficially own the same shares. In the table below, unless otherwise noted, a person has sole voting and dispositive power for those shares shown as beneficially owned by such person.
is appointed. The information provided in the table below with respect to the Selling Stockholder has been obtained from the Selling Stockholder and we have not sought to verify this information.
| | | | | | | | | |
| | | Shares Beneficially Owned | | |
| | | Prior to Registration | | |
| | | Number of Shares | | Percentage | | Number of Shares |
| Beneficial Owner | | Beneficially Owned | | Beneficially Owned | | Being Registered |
| AP Wheels, LLC (1) | | 3,466,417(2) | | | 9.2 | % | | 3,470,374(2)(3) |
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This prospectus also covers any additional
Each director so appointed to the board shall serve for the remainder of the term of the class of directors for which he is appointed.
Our amended certificate of incorporation and by-laws provide that stockholder action can be taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting. Our amended certificate of incorporation and by-laws provide that, except as otherwise required by law, special meetings of the stockholders can only be called by our board of directors, a committee or the chairman thereof, or by our Chief Executive Officer. Stockholders will not be permitted to call a special meeting or to require our board to call a special meeting.
Our by-laws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board. Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given to our secretary timely written notice, in proper form, of such stockholder’s intention to bring that business before the meeting. Although our by-laws do not give our board the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, our by-laws may have the effect of precluding the conduct of business at a meeting if the proper procedures are not followed or may discourage or defer a potential acquiror from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of our company.
Section 203 of the Delaware General Corporation Law
As a corporation organized under the laws of the State of Delaware, we are subject to Section 203 of the state’s General Corporation Law, an anti-takeover law. Generally, Section 203 of the Delaware General Corporation Law prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless:
• before the date of the business combination, the business combination or the transaction that resulted in the stockholder’s becoming an interested stockholder is approved by the board of directors of the corporation;
• upon consummation of the transaction that resulted in the stockholder’s becoming an interested stockholder, the interested stockholder owns at least 85% of the voting stock outstanding at the time the transaction commenced; or
• on or after the date of the business combination, it is approved by the board and by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
A “business combination” includes mergers, asset sales, and other transactions resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years, did own) 15% or more of the corporation’s outstanding voting stock, other than a stockholder who owns 15% or more of our outstanding voting stock prior to our becoming subject to Section 203. The existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock
that we may issue or that may be issuable by reason of any stock split, stock dividend or similar transaction involving our common stock.(1) The members of AP Wheels are Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Netherlands Partners V (A), L.P., Apollo Netherlands Partners V (B), L.P. and Apollo German Partners V GmbH & Co. KG. Apollo Management V, L.P. serves as the day-to-day manager of AP Wheels and its members. Apollo Advisors V, L.P. is the general partner of each of the members of AP Wheels. AIF V Management, Inc. is the general partner of Apollo Management V, L.P. Apollo Capital Management V, Inc. is the general partner of Apollo Advisors V, L.P. Messrs. Leon Black and John Hannan, are the executive officers and directors of AIF V Management, Inc. and Apollo Capital Management V, Inc. The address of AP Wheels and each of the other affiliated entities identified in the foregoing is Two Manhattanville Road, Purchase, NY 10577. The address of Messrs. Black and Hannan is 9 West 57th Street, 43rd Floor, New York, NY 10019. The entities identified in the foregoing, other than AP Wheels, and Messrs. Leon Black and John Hannan each disclaim beneficial ownership of the Shares beneficially owned by AP Wheels.
(2) The number of Shares reported as beneficially owned by AP Wheels includes 88,942 Shares issuable as of May 6, 2005 upon exchange of the 17,823 shares of Preferred Stock held by AP Wheels. The numberstockholders.
Our board of
Shares being registered includes 92,899 Shares that are or may become issuable duringdirectors has taken all actions necessary to approve, for purposes of Section 203, the
180-day period for which we agreed to maintain the effectivenessacquisition of
the registration statement of which this prospectus forms a part, assuming the registration statement is declared effective by July 7, 2005. The number of Shares reported as beneficially owned by AP Wheels and as being registered also includes 30,492 Shares issuable upon the exercise, if any, of the Series A Warrants held by AP Wheels that are currently exercisable or are exercisable within 60 days of May 6, 2005, at an exercise price of $25.83 per share. The Series A Warrants expire on June 3, 2006.(3) If all of the Shares registered hereby are sold, or if all of the Shares other than the Shares the Selling Stockholder is deemed to beneficially own as a result of its ownership of the Series A Warrants are sold and the Series A Warrants expire, the Selling Stockholder will no longer be deemed to beneficially own any Shares of our common stock.
Material Relationships with the Selling Stockholder
Board of Directors.
Pursuant to our modified first amended joint plan of reorganization which became effective in June 2003 (the “Plan of Reorganization”), two members of our Board of Directors, current member Mr. Laurence Berg and former director Mr. Steve Martinez, were selected by the Selling Stockholder, and one current member, Mr. George T. Haymaker, Jr., was selected by the mutual agreement of the Selling Stockholder, our Prepetition Agent and the ad hoc committee of lenders under our Third Amended and Restated Credit Agreement, dated as of February 3, 1999. The Selling Stockholder’s selections were made with the advice and participation of the former holders of our former 11.875% senior notes due 2006 that expressed an interest to the Selling Stockholder in participating in the selection process based upon their respective holdings of such notes and the number of shares of our common stock they received under our Plan of Reorganization. In connection with the registration rights granted to the Selling Stockholder as described more fully below, the Selling Stockholder has agreed to use its best efforts to cause Mr. Berg to tender his resignation from our Board of Directors when the Selling Stockholder owns less than one million Shares of our common stock.
Registration Rights.
In connection with our February 2004 primary offering of approximately 7.7 million shares of common stock, including approximately 1.3 million shares to cover over-allotments, and a secondary offering of 2.0 million shares of our common stock by the Selling Stockholder, we entered into a registration agreement with the Selling Stockholder that provided for, among other things, the registration of the shares offered by the Selling Stockholder in that offering, lock-up agreements entered into by members of our Board of Directors, certain of our executive officersInvestor and the Selling Stockholder and the sharing of expenses relating to the offering. Pursuant to the registration
15
rights agreement, the Selling Stockholder was responsible for a portion of the actual costs, fees and expenses of the independent certified public accountants and our counsel, and a portion of all other expenses that we incurred directly in connection with the offering, other than the fees and expenses of the financial advisor retained by a special committee of our Board of Directors in connection with the offering, the registration and filing fees, printing and copying fees and travel expenses for our personnel. Pursuant to the registration rights agreement, Mr. Martinez resigned from our Board of Directors upon the closing of the offering.
In connection with our February 2004 offering, we also granted the Selling Stockholder certain additional registration rights with respect to shares of our common stock owned by the Selling Stockholder that provided, in part, that we would file the registration statement of which this prospectus forms a part. Specifically,Principal Additional Investor pursuant to the Registration RightsEquity Agreement and the Selling Stockholder is entitled to two demand registrations, each of which will require us to register under the Securities Act at least one million Shares of our common stock owned by the Selling Stockholder. The Registration RightsPrincipal Additional Investor Agreement, provides that one of the demands made by the Selling Stockholder may be a demand for a “shelf registration” under the Securities Act.
respectively. In addition, we have agreed to indemnify the Selling Stockholder against certain liabilities related to the selling of the common stock. Subject to certain exceptions, we have also agreed to pay for certain reasonable expenses incurred in connection with such registrations in an amount up to $750,000. In addition to any reasonable expenses incurred in excess of $750,000, the Selling Stockholder will pay, among other things, any brokerage commissions, discounts and transfer taxes relating to the sale of the Shares of common stock. The Registration Rights Agreement also provides that the Selling Stockholder will use its best efforts to cause Mr. Berg to tender his resignation from our Board of Directors when the Selling Stockholder owns less than one million Shares of our common stock.
1645
PLAN OF DISTRIBUTION Hayes is registering
On or about , 2007, we will distribute the Shares covered byrights, rights certificates, and copies of this prospectus to individuals who owned shares of common stock on , 2007. If you wish to exercise your rights and purchase shares of common stock, you should complete the rights certificate and return it with payment for the Selling Stockholder pursuantshares, to the Registration Rights Agreement.subscription agent, , at the following address:
By Mail:
| | |
By Mail or Overnight Courier: | | By Hand: |
| | |
| Attn: | | Attn: |
See further the “Selling Stockholder” section of this prospectus. As used in this “Plan of Distribution” section of this prospectus “Selling Stockholder” includesentitled “The Rights Offering.” If you have any questions, you should contact the donees, transfereesinformation agent, Innisfree M & A Incorporated, (888) 750-5834.
Other than as described herein, we do not know of any existing agreements between any stockholder, broker, dealer, underwriter, or
others who may later hold the Selling Stockholder’s interests. The Selling Stockholder may sell the common stock being offered hereby in one or more of the following ways at various times:
| • | to underwriters for resale to the public or to institutional investors; |
|
| • | directly to institutional investors; or |
|
| • | through agents to the public or to institutional investors. |
The Selling Stockholder will act independently of Hayes in making decisions with respectagent relating to the timing, manner and size of each sale. The Selling Stockholder may sell the common stock on the Nasdaq National Marketsale or otherwise, at market prices prevailing at the time of sale, at prices related to the prevailing market prices, or at negotiated prices. If underwriters are used in the sale, the common stock will be acquired by the underwriters for their own account and may be resold at various times in one or more transactions, including negotiated transactions, at a fixed public offering price or prices, which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, or at negotiated prices. A distribution of the underlying common stock by the Selling Stockholder may also be effected through the issuance by the Selling Stockholder or others of derivative securities, including without limitation, warrants, exchangeable securities, forward delivery contracts and the writing of options.
stock. In addition, the Selling Stockholder may sell some or all of the Shares covered by this prospectus through:
| • | a cross trade or block trade in which a broker-dealer will attempt to sell as agent, but may position or resell a portion of the block, as principal, in order to facilitate the transaction; |
|
| • | sales “at the market” to or through market makers or into an existing market for the Shares; |
|
| • | purchases by a broker-dealer, as principal, and resale by the broker-dealer for its account; |
|
| • | through transactions in options, swaps or other derivatives, whether exchange-listed or otherwise; |
|
| • | ordinary brokerage transactions and transactions in which a broker solicits purchasers; or |
|
| • | privately negotiated transactions. |
The Selling Stockholder may also enter into hedging transactions. For example, the Selling Stockholder may:
| • | enter into transactions with a broker-dealer or affiliate thereof in connection with which such broker-dealer or affiliate will engage in short sales of the common stock pursuant to this prospectus, in which case such broker-dealer or affiliate may use Shares of common stock received from the Selling Stockholder to close out its short positions; |
|
| • | itself sell common stock short and redeliver such Shares to close out its short positions; |
1746
| • | enter into option or other types of transactions that require the Selling StockholderWHERE YOU CAN FIND MORE INFORMATION We are subject to deliver common stock to a broker-dealer or an affiliate thereof, who will then resell or transfer the common stock under this prospectus; or |
|
| • | loan or pledge the common stock to a broker-dealer or an affiliate thereof, who may sell the loaned Shares or, in an event of default in the case of a pledge, sell the pledged Shares pursuant to this prospectus. |
The Selling Stockholder may negotiate and pay broker-dealers’ commissions, discounts or concessions for their services. Broker-dealers engaged by the Selling Stockholder may allow other broker-dealers to participate in resales. The Selling Stockholder and any broker-dealers involved in the sale or resale of the common stock may qualify as “underwriters” within the meaning of Section 2(a)(11)information reporting requirements of the Securities Act. In addition,Exchange Act of 1934, as amended, and, in accordance with these requirements, we are required to file periodic reports and other information with the broker-dealers’ commissions, discountsUnited States Securities and Exchange Commission. The reports and other information filed by us with the SEC may be inspected and copied at the public reference facilities maintained by the SEC as described below.
You may copy and inspect any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further information about the operation of the public reference rooms. The SEC also maintains an internet website at http://www.sec.gov that contains our filed reports, proxy and information statements, and other information that we file electronically with the SEC. Additionally, we make these filings available, free of charge, on our website at www.hayes-lemmerz.com as soon as reasonably practicable after we electronically file such materials with, or concessionsfurnish them to, the SEC. The information on our website, other than these filings, is not, and should not be, considered part of this prospectus, is not incorporated by reference into this document, and should not be relied upon in connection with making any investment decision with respect to our common stock.
You may
qualify as underwriters’ compensationalso request a copy of any Securities Exchange Commission filings, and any information required by Rule 144A(d)(4) under the Securities
Act. If the Selling Stockholder qualifies as an “underwriter,” it will beAct during any period in which we are not subject to
the prospectus delivery requirements of Section
5(b)(2) of the Securities Act. The Selling Stockholder and any other person participating in such distribution will be subject to the Exchange Act. The Exchange Act rules include, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the Shares by the Selling Stockholder and any such other person. In addition, Regulation M13 or 15(d) of the Exchange Act, may restrict the ability of any person engaged in the distribution of the Shares to engage in market-making activities with respect to the particular Shares being distributed for a period of up to five business days prior to the commencement of distribution. This may affect the marketabiliy of the Shares and the ability of any person or entity to engage in market-making activities with respect to the Shares.
In addition to selling its common stock under this prospectus, the Selling Stockholder may:
| • | agree to indemnify any broker-dealer or agent against certain liabilities related to the selling of the common stock, including liabilities arising under the Securities Act; |
|
| • | transfer its common stock in other ways not involving market makers or established trading markets, including directly by gift, distribution, or other transfer; |
|
| • | sell its common stock under Rule 144 of the Securities Act rather than under this prospectus, if the transaction meets the requirements of Rule 144; or |
|
| • | sell its common stock by any other legally available means. |
Upon being notifiedat no cost, by the Selling Stockholder that any material arrangement has been entered into with a broker-dealer for the sale of Shares through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, we will file a supplement to this prospectus, if required, pursuant to Rule 424(b) under the Securities Act, disclosing:
contacting: Hayes Lemmerz International, Inc.
15300 Centennial Drive
Northville, Michigan 48168
Attention: Corporate Secretary
| • | the name of the participating broker-dealer; |
|
| • | the number of Shares involved; |
|
| • | the price at which such Shares were sold; |
|
| • | the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable; |
|
| • | that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus; and |
|
| • | any other facts material to the transaction. |
1847
Pursuant
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We disclose important information to you by referring you to documents that we have previously filed with the Securities Exchange Commission or documents that we will file with the Securities Exchange Commission in the future. The information incorporated by reference is considered to be part of this prospectus, and information in documents that we file later with the Securities Exchange Commission will automatically update and supersede information in this prospectus. We incorporate by reference the documents listed below into this prospectus, and any future filings made by us with the Securities Exchange Commission under Section 13(a), 13(c), 14 or 15(d) or the Exchange Act until we close this offering, including all filings made after the date of the initial registration statement and prior to the Registration Rights Agreement, we agreed to use our best efforts to keepeffectiveness o the registration statement. We hereby incorporate by reference the following documents:
• Our Annual Report on Form 10-K for the fiscal year ended January 31, 2006, filed with the SEC on April 21, 2006, and the portions of the Proxy Statement dated May 26, 2006, that are incorporated by reference into the Form 10-K;
• Our Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2006, filed with the SEC on December 11, 2006;
• Our Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2006, filed with the SEC on September 11, 2006;
• Our Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2006, filed with the SEC on June 9, 2006;
• Our Current Report on Form 8-K filed with the SEC on April 26, 2006 (other than information contained in Current Reports on Form 8-K that is furnished, but not filed);
• Our Current Report on Form 8-K filed with the SEC on June 5, 2006 (other than information contained in Current Reports on Form 8-K that is furnished, but not filed);
• Our Current Report on Form 8-K filed with the SEC on September 20, 2006 (other than information contained in Current Reports on Form 8-K that is furnished, but not filed);
• Our Current Report on Form 8-K filed with the SEC on February 2, 2007 (other than information contained in Current Reports on Form 8-K that is furnished, but not filed);
• Our Current Report on Form 8-K filed with the SEC on February 12, 2007 (other than information contained in Current Reports on Form 8-K that is furnished, but not filed);
• Our Current Report on Form 8-K filed with the SEC on February 21, 2007 (other than information contained in Current Reports on Form 8-K that is furnished, but not filed);
• Our Current Report on Form 8-K filed with the SEC on February 26, 2007 (other than information contained in Current Reports on Form 8-K that is furnished, but not filed); and
• Our Current Report on Form 8-K filed with the SEC on March 16, 2007 (other than information contained in Current Reports on Form 8-K that is furnished, but not filed).
Any statement of whichcontained in a document incorporated or deemed to be incorporated by reference in this prospectus formsis modified or superseded for purposes of the prospectus to the extent that a statement contained in this prospectus or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded does not, except as so modified or superseded, constitute a part effective under the Securities Act until or such shorter period that will terminate when the distribution of all of the Shares registered by the registration statement has been completed. The period in which we are obligated to keep the registration statement effective, however, will be extended on a day-to-day basis for any delay during such period that the Selling Stockholder is unable to sell Shares due to any delay imposed by us on the sale of the Shares in accordance with the terms of the Registration Rights Agreement. Pursuant to the Registration Rights Agreement, we are permitted to delay the sale of Shares by the Selling Stockholder for a period up to ninety days if the Board of Directors determines in good faith that proceeding with the offering would have a material adverse effect on us, or, during the pendency of a transaction that the Board of Directors determines in good faith is material to us. For more information regarding the Registration Rights Agreement, see the “Selling Stockholder” section of this prospectus.
You may request a copy of these filings, at no cost, by written or oral request made to us at the following address or telephone number:
48
Hayes Lemmerz International, Inc.
15300 Centennial Drive
Northville, MI 48168
(734) 737-5000
Attention: Corporate Secretary
VALIDITY OF SHARES
LEGAL MATTERS
The validity of the Shares being offered hereby is beingsubscription rights and the common stock issuable upon subscription of the rights will be passed upon for us by Skadden, Arps, Slate, Meagher & Flom LLP, Wilmington, Delaware.LLP.
The consolidated balance sheets of Hayes Lemmerz International, Inc.
and subsidiaries (the Successor) as of January 31,
20052006 and
2004 (the Successor),2005, and the related consolidated statements of operations, changes in stockholders’ equity (deficit)
, and cash flows for the
yearyears ended January 31,
2006 and 2005, and
for the period from June 1, 2003 to January 31, 2004 (Successor periods),
and the period from February 1, 2003 to May 31, 2003
(Predecessor period), and the
year ended January 31, 2003 (Predecessor periods),related financial statement schedule, management’s assessment of the effectiveness of internal control over financial reporting as of January 31,
20052006 and the effectiveness of internal control over financial reporting as of January 31,
20052006, have been incorporated by reference herein
and in the prospectus in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
The report
on financial statementsdated April 18, 2006 contains an explanatory paragraph that states that on June 3, 2003,
Hayes Lemmerz International, Inc.the Company emerged from bankruptcy pursuant to a Plan of Reorganization confirmed by the Bankruptcy Court by order dated May 12, 2003. Accordingly, the consolidated financial statements of the Successor have been prepared in conformity with the fresh start accounting provisions of the AICPA’s Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code.” As a result, the consolidated financial statements of the Successor are presented on a different basis than that prior to the reorganization and, therefore, are not comparable in all respects. Also, for the year ended January 31, 2005, the report
on financial statements refers to the elimination of the one-month lag previously related to the consolidation of the financial statements of
the international subsidiaries.
In addition, the report on financial statements refers to changes in the method of accounting for goodwill and other intangible assets, effective February 1, 2002. The report
dated April 18, 2006, on management’s
assessmentassessments of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of January 31,
2005,2006, expresses
an opinion that the
opinion of KPMG LLP that Hayes Lemmerz International, Inc.Company did not maintain effective internal control over financial reporting as of January 31,
20052006 because of the effect of a material weakness on the achievement of the objectives of the control criteria and contains an explanatory paragraph that states that a material weakness has been identified and included in management’s assessment related to
the lack of adequate expertise, a lack of documentation, and ineffective reconciliation procedures associated with income tax accounting matters. Because of
these deficiencies,this deficiency, management did not detect errors in the accounting for income
taxtaxes amounts in a timely manner as of and for the year ended January 31,
2005.2006. Specifically, errors were detected
that resulted in
an adjustment of amounts recorded for current and deferred income tax expense,
deferred tax assets and
accruedliabilities, as well as intra-period allocation of income tax
liabilities.WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information reporting requirements of the Exchange Act, and, in accordance with these requirements, we are required to file periodic reportsamong continuing operations, discontinued operations and other information with the SEC. The reports and other information filed by us with the SEC may be inspected and copied at the public reference facilities maintained by the SEC as described below.
comprehensive income. We have filed with the SEC a registration statement on Form S-3 (the “Registration Statement,” which term shall encompass all amendments, exhibits, annexes and schedules thereto and all documents incorporated by reference therein) pursuant to the Securities Act, and the rules and regulations promulgated thereunder, with respect to the Shares offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all the information contained in the registration statement, parts of which are omitted in accordance with the rules and regulations of the SEC. For further information with respect to us and the common stock offered hereby, reference is made to the Registration Statement.
You may copy and inspect the Registration Statement, including the exhibits thereto, and the periodic reports and information referred to above at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our public filings are also available to the public from commercial document retrieval services and at the Internet worldwide website maintained by the SEC at “http://www.sec.gov.”
In addition, you may obtain these materials on our website. Our Internet website address is www.hayes-lemmerz.com. Information on our website does not constitute part of this prospectus and should not be relied upon in connection with making any investment decision with respect to our common stock.
1949
You may also request a copy of any SEC filings, and any information required by Rule 144A(d)(4) under the Securities Act during any period in which we are not subject to Section 13 or 15(d) of the Exchange Act, at no cost, by contacting:
Hayes Lemmerz International, Inc.
15300 Centennial Drive
Northville, Michigan 48167
Attention: General Counsel
(734) 737-5000
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we later file with the SEC will automatically update and supersede the information contained or incorporated by reference in this prospectus. Accordingly, we incorporate by reference the specific documents listed below and any future filings made with the SEC after the date hereof under Section 13(a), 13(c), 14, or 15(d) of the Exchange Act which will be deemed to be incorporated by reference into this prospectus and to be part of this prospectus from the date we subsequently file such reports and documents until the termination of this offering:
| • | our Current Report on Form 8-K filed on May 4, 2005; |
|
| • | our Annual Report on Form 10-K filed on April 19, 2005 for the fiscal year ended January 31, 2005; |
|
| • | our Current Report on Form 8-K filed on April 15, 2005; |
|
| • | our Current Report on Form 8-K filed on April 14, 2005; |
|
| • | our Current Report on Form 8-K filed on March 22, 2005; |
|
| • | our Current Report on Form 8-K filed on March 17, 2005; |
|
| • | our Current Reports on Form 8-K filed on March 3, 2005; and |
|
| • | our Registration Statement on Form 8-A/A filed on June 4, 2003, describing our common stock, and the description of our common stock in the Prospectus that forms a part of our Registration Statement on Form S-3 filed on November 14, 2003 (File No. 333-110514) under the Securities Act, as amended by Amendment No. 1 thereto filed December 22, 2003, Amendment No. 2 thereto filed January 20, 2004, Amendment No. 3 thereto filed January 23, 2004, Amendment No. 4 thereto filed February 3, 2004, and declared effective by the SEC on February 5, 2004, including any amendments or reports filed for the purpose of updating such descriptions. |
You may request a copy of these filings, and any exhibits we have specifically incorporated by reference as an exhibit to the registration statement of which this prospectus forms a part, at no cost by writing or telephoning us at the following address:
Hayes Lemmerz International, Inc.
15300 Centennial Drive
Northville, Michigan 48167
Attention: General Counsel
(734) 737-5000
20
INFORMATION NOT REQUIRED IN THE PROSPECTUS Item 14.Other Expenses of Issuance and Distribution. The following table sets forthexpenses relating to the estimated expenses to be incurred in connection with the issuance and distributionregistration of the securities being registered hereby will be borne by the registrant. Such expenses are estimated to be paid by the Registrant.1All of the amounts shown are estimates except the SEC registration fee.as follows:
| | | | | |
| SEC registration fee | | $ | 2,155 | |
| Legal fees and expenses | | | 65,000 | |
| Accounting fees and expenses | | | 7,500 | |
| Transfer agent and Registrar fees | | | — | |
| Miscellaneous | | | — | |
| | | | | |
| Total | | $ | 74,655 | |
| | | | |
(1) | | Pursuant to the | |
Securities and Exchange Commission Registration Rights Agreement dated as of July 1, 2004, byFee | | $ | |
Subscription Agent Fees and between the RegistrantExpenses | | $ | |
| Printing Costs | | $ | |
Investment Banking Fees and AP Wheels, LLC, a Delaware limited liability company (the “Registration Rights Agreement”), the Registrant is responsible for certain reasonable expenses incurred in connection with the issuanceExpenses | | $ | |
Information Agent Fees and distribution of the securities being registered in an amount up to $750,000. In addition to paying certain reasonable expenses incurred in excess of $750,000, the Selling Stockholder will pay, among other things, any brokerage commissions, discountsExpenses | | $ | |
Accounting Fees and transfer taxes relating to the sale of the Shares of common stock.Expenses | | $ | |
| Legal Fees | | $ | |
| Miscellaneous Expenses | | $ | |
| Total | | $ | |
Item 15.Indemnification of Directors and Officers. The following summary is qualified in its entirety by reference to the complete text of any statutes referred to below and the
amended certificate of incorporation and the
bylawsby-laws of Hayes Lemmerz International, Inc., a Delaware
corporation (the “Registrant”).corporation.
Section 145 of the
Delaware General Corporation Law
of the State of Delaware (the “DGCL”) permits a Delaware corporation to indemnify any person who was or is a party 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 the 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, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit, or proceeding if the person acted in good faith and in a manner the 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 the person’s conduct was unlawful.
In the case of an action by or in the right of the corporation, Section 145 of the DGCL permits a Delaware corporation to indemnify any 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 reason of the fact that the 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, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit, or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view
II-1
of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
Section 145 of the DGCL also permits a Delaware corporation to purchase and maintain insurance on behalf of any person who 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, partnership, joint venture, trust, or other enterprise against any liability asserted against such person and incurred by such person in any such
II-1
capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under Section 145 of the DGCL.
Article ELEVENTH of
the Registrant’sour Certificate of Incorporation and Article VIII of
itsour By-Laws provide that
the Registrantwe shall, to the fullest extent permitted by applicable law, indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding by reason of the fact that he
or she is or was, or has agreed to become, a director or officer of the
Registrant,Company, or is or was serving at the written request of the
Registrant,Company, as a director, officer, trustee, partner, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise. The indemnification provided for in
theour By-Laws
of the Registrant is expressly not exclusive of any other rights to which those seeking indemnification may be entitled under any law, agreement, or vote of stockholders or disinterested directors or otherwise. The By-Laws also provide that
the Registrantwe shall have the power to purchase and maintain insurance to protect
itselfthe Company and any director, officer, employee, or agent of the
RegistrantCompany or other corporation, partnership, joint venture, trust, or other enterprise against any such expense, liability or loss, whether or not
the Registrantwe would have the power to indemnify such persons against such expense, liability or loss under the DGCL.
The Registrant maintains
We maintain an insurance policy on behalf of
itselfthe Company and its subsidiaries, and on behalf of the directors and officers thereof, covering certain liabilities
whichthat may arise as a result of the actions of such directors and officers.
Section 102(b)(7) of the DGCL allows a Delaware corporation to eliminate or limit the personal liability of directors to a corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase or redemption in violation of Delaware corporate law or obtained an improper personal benefit.
Pursuant to Section 102(b)(7) of the DGCL, Article SEVENTH of the Registrant’s Amended and Restatedour Certificate of Incorporation eliminates a director’s personal liability for monetary damages to the RegistrantCompany and its stockholders for breaches of fiduciary duty as a director, except in circumstances involving a breach of a director’s duty of loyalty to the RegistranttheCompany or its stockholders, acts or omissions not in good faith or which involve intentional misconduct or knowing violations of the law, the unlawful payment of dividends or repurchase of stock, or self-dealing.
Item 16. List of Exhibits.
The Exhibits to this registration statement are listed in the Index to Exhibits.
Item 17. Undertakings.
| (a) | | Hayes Lemmerz International, Inc. hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Company’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. |
| (b) | | 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 Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid 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 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 Securities Act and will be governed by the final adjudication of such issue. |
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Item 16.Exhibits and Financial Statement Schedules.
(a) Exhibits.
| (c) | | Hayes Lemmerz International, Inc. hereby undertakes that: |
|
| | | For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
Exhibit |
| | |
Numbers | | Description |
3.1 | | CertificateFor the purpose of Incorporationdetermining any liability under the Securities Act of HLI Holding Company, Inc., effective as1933, each post-effective amendment that contains a form of May 6, 2003 (incorporated by referenceprospectus shall be deemed to Exhibit 3.1be a new registration statement relating to the Company’s Form 8-A/A, filed June 4, 2003). |
3.2 | | Amendment to the Certificate of Incorporation of HLI Holding Company, Inc., effective as of June 3, 2003 (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-A/A, filed June 4, 2003). |
3.3 | | By-Laws of Hayes Lemmerz International, Inc. (formerly known as HLI Holding Company, Inc.), effective as of May 30, 2003 (incorporated by reference to Exhibit 3.3 to the Company’s Form 8-A/A, filed June 4, 2003). |
4.1 | | Series A Warrant Agreement, dated as of June 2, 2003, by and between Hayes Lemmerz International, Inc. and Mellon Investor Services LLC, as Warrant Agent (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-A, filed June 4, 2003). |
4.2 | | Series B Warrant Agreement, dated as of June 2, 2003, by and between Hayes Lemmerz International, Inc. and Mellon Investor Services LLC, as Warrant Agent (incorporated by reference to Exhibit 4.2 to the Company’s Form 8-A, filed June 4, 2003). |
4.3 | | Registration Agreement by and among Hayes Lemmerz International, Inc.securities offered therein, and the Selling Stockholders identified therein, dated asoffering of October 30, 2003 (incorporated by referencesuch securities at that time shall be deemed to Exhibit 10.1 tobe the Company’s Form S-3, filed November 14, 2003). |
4.4 | | Registration Rights Agreement by and between Hayes Lemmerz International, Inc. and AP Wheels, LLC, dated as if July 1, 2004 (incorporated by reference to Exhibit 4.9 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2004, filed September 8, 2004.) |
5.1 | | Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding the validity of certain securities being registered. |
23.1 | | Consent of KPMG LLP, Registered Public Accounting Firm. |
23.2 | | Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in the opinion of Skadden, Arps, Slate, Meagher & Flom LLP filed as Exhibit 5.1 hereto). |
24.1 | | Power of Attorney (included on signature page).initial bona fide offering thereof. |
Item 17.Undertakings.
The undersigned Registrant hereby undertakes:
(A) (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 SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
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(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;
provided,however, that the undertakings set forth in clauses (A)(1)(i) and (A)(1)(ii) above do not apply if the information required to be included in a post-effective amendment by those clauses is contained in periodic reports filed with or furnished to the Securities and Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, that are incorporated by reference in this 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; and
(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.
(B) 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 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 initialbona fideoffering thereof.
(C) 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 provisions described in Item 15 above, 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
.SIGNATURESIn the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid 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.II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Citycity of Northville, State of Michigan on this 6th day of May, 2005.March 16, 2007.
| | | | | |
| | HAYES LEMMERZ INTERNATIONAL, INC.
| |
| | By: | /s/ Curtis J. Clawson James A. Yost | |
| | | Name: | Curtis J. ClawsonJames A. Yost | |
| | Title: | Title: | Vice President, Finance and Chief ExecutiveFinancial Officer and Chairman of the Board | |
| |
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Patrick C. Cauley and
Steven Esau,James A. Yost, and each of them, his true and lawful attorneys-in-fact and
agentsagent with full power of substitution and
resubstitution,re-substitution, for him
and in his name, place and stead, in any and all capacities, to sign any and all
(1) amendments
(including post-effective amendments) and additions to this
Registration Statement and (2) Registration Statements,registration statement and any
and all amendments thereto (including post-effective amendments), relating to the offering contemplatedadditional registration statement pursuant to Rule 462(b) under the Securities Act of 1933 and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such
attorneys-in-factattorney-in-fact and
agentsagent, 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-factattorney-in-fact and
agentsagent or his 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 by the following persons in the capacities and on the dates indicated.
| | | | | |
| Signature | | Title | | Date |
| | | | | |
/s/ Curtis J. Clawson
Curtis J. Clawson | | President, and Chief Executive Officer, and | | March 16, 2007 |
| Curtis J. Clawson | | Chairman of the Board (Principalof Directors
(Principal Executive Officer) | | May 6, 2005 |
| | | | | |
/s/ James A. Yost
James A. Yost | | Vice President, Finance and Chief | | March 16, 2007 |
| James A. Yost | | Financial Officer (Principal Financial
and Accounting Officer) | | May 6, 2005 |
| | | | | |
/s/ Mark A. Brebberman
Mark Brebberman | | Corporate Controller — Operations | | May 6, 2005March 16, 2007 |
| Mark A. Brebberman | | (Principal Accounting Officer) | | |
| | | | | |
/s/ George T. Haymaker, Jr.
| | Director | | March 16, 2007 |
| George T. Haymaker, Jr. | | Lead Director | | May 6, 2005 |
| | | | | |
/s/ Laurence Berg
Laurence BergWilliam H. Cunningham | | Director | | May 6, 2005March 16, 2007 |
| William H. Cunningham | | | | |
| | | | | |
/s/ William H. Cunningham
William H. CunninghamCynthia Feldmann | | Director | | May 6, 2005March 16, 2007 |
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| Cynthia Feldmann | | | | |
/s/ Laurie Siegel
Laurie Siegel | | Director | | May 6, 2005 |
| | | | | |
/s/ Mohsen Sohi
Mohsen Sohi | | Director | | May 6, 2005March 16, 2007 |
| Mohsen Sohi | | | | |
| | | | | |
/s/ Henry D. G. Wallace
Henry D. G. Wallace | | Director | | May 6, 2005March 16, 2007 |
| Henry D. G. Wallace | | | | |
| | | | | |
/s/ Richard F. Wallman
Richard F. WallmanWallmann | | Director | | May 6, 2005March 16, 2007 |
| Richard F. Wallman | | | | |
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EXHIBIT INDEX
| | | |
| Exhibit | | Description |
Numbers | | Description |
| 2.1 | | Equity Purchase and Commitment Agreement, dated as of March 16, 2007, by and between Hayes Lemmerz International, Inc., and Deutsche Bank Securities Inc. (incorporated by reference to Exhibit 99.2 to our Current Report on Form 8-K, filed March 16, 2007). |
| | |
| 2.2 | | Modified First Amended Joint Plan of Reorganization of Hayes Lemmerz International, Inc. and Its Affiliated Debtors and Debtors in Possession, as Further Modified (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K, filed May 21, 2003). |
| | |
| 2.3 | | Agreement and Plan of Merger, dated as of June 3, 2003, by and between Hayes Lemmerz International, Inc. and HLI Operating Company, Inc. (incorporated by reference to Exhibit 2.3 to our Current Report on Form 8-K, filed June 3, 2003). |
| | |
| 3.1 | | Certificate of Incorporation of HLI Holding Company, Inc., effective as of May 6, 2003 (incorporated by reference to Exhibit 3.1 to the Company’sour Form 8-A/A, filed June 4, 2003). |
| | |
| 3.2 | | Amendment to the Certificate of Incorporation of HLI Holding Company, Inc., effective as of June 3, 2003 (incorporated by reference to Exhibit 3.2 to the Company’sour Form 8-A/A, filed June 4, 2003). |
| | |
| 3.3 | | By-Laws of Hayes Lemmerz International, Inc. (formerly known as HLI Holding Company, Inc.), effective as of May 30, 2003 (incorporated by reference to Exhibit 3.3 to the Company’sour Form 8-A/A, filed June 4, 2003). |
4.1 | | Series A Warrant |
| 4.1 ** | | Form of Subscription Rights Certificate. |
| | |
| 4.2 | | Registration Rights Agreement, dated as of June 2,March 16, 2007, by and between Hayes Lemmerz International, Inc., Deutsche Bank Securities Inc., and SPCP Group, LLC (incorporated by reference to Exhibit 99.3 to our Current Report on Form 8-K, filed March 16, 2007). |
| | |
| 4.3 | | Form of Standstill and Director Nomination Agreement, to be entered into by and between Hayes Lemmerz International, Inc. and Deutsche Bank Securities Inc. (incorporated by reference to Exhibit 99.4 to our Current Report on Form 8-K, filed March 16, 2007). |
| | |
| 4.4 | | Form of Standstill and Director Nomination Agreement, to be entered into by and between Hayes Lemmerz International, Inc. and SPCP Group, LLC (incorporated by reference to Exhibit 99.5 to our Current Report on Form 8-K, filed March 16, 2007). |
| | |
| 4.5 ** | | Subscription Agent Agreement, dated as of , 2007, by and between Hayes Lemmerz International, Inc. and . |
| | |
| 4.5 | | Purchase Agreement, dated as of May 22, 2003, by and between Hayes Lemmerz International, Inc., its subsidiaries named therein, and Mellon Investor Services LLC, as Warrant Agentthe Initial Purchasers of the $250,000,000 of 101/2% Senior Notes due 2010 to be issued by HLI Operating Company, Inc. (incorporated by reference to Exhibit 4.1 to our Quarterly Report on Form 10-Q for the Company’s Form 8-A,quarterly period ended April 30, 2003, filed June 4,16, 2003). |
| | |
| 4.7 | | Indenture, dated as of June 3, 2003, regarding $250,000,000 of 101/2% Senior Notes due 2010, by and between HLI Operating Company, certain listed Guarantors, and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to our Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2003, filed June 16, 2003). |
| | |
| 4.8 | | Form of 101/2% Senior Notes due 2010 (attached as Exhibit A to the Indenture filed as Exhibit 4.2 |
| | |
| Exhibit | | Description |
| | |
| | to our Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2003, filed June 16, 2003). |
| | |
| 4.9 | | First Supplemental Indenture, dated as of June 19, 2003, by and between HLI Operating Company, Inc. certain listed Guarantors, and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to our Registration Statement No. 333-107539 on Form S-4, filed on July 31, 2003, as amended). |
| | |
| 4.10 | | Registration Rights Agreement, dated as of June 3, 2003, by and between HLI Operating Company, Inc. and the Initial Purchasers of the 101/2% Senior Notes due 2010 (incorporated by reference to Exhibit 4.3 to our Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2003, filed June 16, 2003). |
| | |
| 4.11 | | Series B Warrant Agreement, dated as of June 2, 2003, by and between Hayes Lemmerz International, Inc. and Mellon Investor Services LLC, as Warrant Agent (incorporated by reference to Exhibit 4.2 to the Company’sour Form 8-A, filed June 4, 2003). |
4.3 | | Registration |
| 4.12 | | Exchange Agreement, by and among Hayes Lemmerz International, Inc. and the Selling Stockholders identified therein, dated as of October 30,June 3, 2003, (incorporated by reference to Exhibit 10.1 to the Company’s Form S-3, filed November 14, 2003). |
4.4 | | Registration Rights Agreement by and between Hayes Lemmerz International, Inc., HLI Parent Company, Inc. and AP Wheels, LLC,HLI Operating Company, Inc. regarding the Series A Exchangeable Preferred Stock issued by HLI Operating Company, Inc. (incorporated by reference to Exhibit 4.3 to our Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2003, filed June 16, 2003). |
| | |
| 4.13 | | Registration Rights Agreement, dated as of July 1, 2004, by and between Hayes Lemmerz International, Inc., and AP Wheels, LLC (incorporated by reference to Exhibit 4.9 to the Company’sour Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2004, filed September 8, 2004.)2004). |
| | |
| 5.1 ** | | Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding the validity of certainthe securities being registered. |
| | |
| 23.1 * | | Consent of KPMG LLP,Independent Registered Public Accounting Firm. |
| | |
| 23.2 ** | | Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in the opinionas part of Skadden, Arps, Slate, Meagher & Flom LLP filed as Exhibit 5.1 hereto)5.1). |
24.1 | | Power |
| 24.1 * | | Powers of Attorney (included on signature page)page hereto). |
| | |
| 99.1 ** | | Form of Instruction for Use of Hayes Lemmerz International, Inc. Subscription Rights Certificates. |
| | |
| 99.2 ** | | Form of Letter to Stockholders who are Record Holders. |
| | |
| 99.3 ** | | Form of Letter to Stockholders who are Beneficial Holders. |
| | |
| 99.4 ** | | Form of Letter to Clients of Stockholders who are Beneficial Holders. |
| | |
| 99.5 ** | | Form of Nominee Holder Certification Form. |
| | |
| 99.6 ** | | Form of Beneficial Owner Election Form. |
| | |
| 99.7 ** | | Substitute Form W-9 for Use with Rights Offering. |
| | |
| * | | Filed herewith. |
|
| ** | | To be filed by amendment. |
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