ACLI American Commercial Lines (MM)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Rule 14a-101)

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AMERICAN COMMERCIAL LINES INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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AMERICAN COMMERCIAL LINES INC.

 

November 15, 2010

 

Dear Stockholder:

 

The board of directors of American Commercial Lines Inc., a Delaware corporation, or ACL, has approved a merger agreement providing for the acquisition of ACL by an affiliate of Platinum Equity, LLC. If the merger contemplated by the merger agreement is completed, except as described below, shareholders will be entitled to receive $33.00 in cash, without interest, less any applicable withholding taxes, for each share of our common stock owned by them (unless appraisal rights have been properly exercised with respect to such shares). GVI Holdings, Inc. and certain of its affiliates, or GVI Stockholders, who collectively own approximately 25.18% of our common stock, have agreed to receive $31.25 less any applicable withholding taxes for each share of our common stock owned by them if the transaction closes before December 31, 2010 and $33.00 less any applicable withholding taxes per share thereafter. GVI Stockholders have entered into a voting agreement pursuant to which they have agreed to vote shares owned by them in favor of the merger.

 

At a special meeting of our stockholders, you will be asked to consider and vote upon a proposal to adopt the merger agreement and a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement. The special meeting is to be held on December 14, 2010 at 11:00 a.m. Eastern Time, at American Commercial Lines Inc., 1701 E. Market Street, Jeffersonville, Indiana 47130.

 

Our board of directors, after considering the unanimous recommendation of a special committee of independent directors, has determined that the merger is advisable and in the best interests of ACL and its stockholders and approved and declared advisable the merger agreement and the merger and the other transactions contemplated by the merger agreement. The board of directors of ACL recommends that you vote “FOR” approval of the proposal to adopt the merger agreement and “FOR” approval of the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

 

Your vote is very important.   Whether or not you plan to attend the special meeting, please complete, date, sign and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope, or submit your proxy by telephone or the Internet. If you attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. The failure to vote will have the same effect as a vote against approval of the proposal to adopt the merger agreement.

 

If your shares of common stock are held in “street name” by your bank, brokerage firm or other nominee, your bank, brokerage firm or other nominee will be unable to vote your shares of common stock without instructions from you. You should instruct your bank, brokerage firm or other nominee to vote your shares of common stock, following the instructions provided by your bank, brokerage firm or other nominee. The failure to instruct your bank, brokerage firm or other nominee to vote your shares of common stock “FOR” approval of the proposal to adopt the merger agreement will have the same effect as voting against the proposal to adopt the merger agreement.

 

The accompanying proxy statement provides you with detailed information about the special meeting, the merger agreement and the merger. A copy of the merger agreement is attached as Annex A to the proxy statement. We encourage you to read the entire proxy statement and its annexes, including the merger agreement, carefully. You may also obtain additional information about ACL from documents we have filed with the Securities and Exchange Commission.

 

If you have any questions or need assistance voting your shares of common stock, please call Georgeson Inc., our proxy solicitor, who may be contacted by banks and brokers at 212-440-9800 and by all others toll-free at 888-293-6908.

 

Thank you in advance for your cooperation and continued support.

 

Sincerely,

 

Clayton K. Yeutter

Chairman of the Board of Directors

 

The proxy statement is dated November 15, 2010, and is first being mailed to our stockholders on or about November 15, 2010.

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE PROPOSED MERGER, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

AMERICAN COMMERCIAL LINES INC.

1701 East Market Street

Jeffersonville, Indiana 47130

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

December 14, 2010

 

To the Stockholders of American Commercial Lines Inc.:

 

A special meeting of stockholders of American Commercial Lines Inc., a Delaware corporation, or ACL, we, us or our, will be held at American Commercial Lines Inc., 1701 E. Market Street, Jeffersonville, Indiana 47130, on December 14, 2010, beginning at 11:00 a.m. Eastern Time, for the following purposes:

 

1. To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of October 18, 2010, as it may be amended from time to time, which we refer to as the merger agreement, by and among ACL, Finn Holding Corporation, a Delaware corporation, which we refer to as Parent, and Finn Merger Corporation, a Delaware corporation and a wholly owned subsidiary of Parent, which we refer to as Merger Sub. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement.

 

2. To consider and vote on a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement.

 

Only stockholders of record of our common stock as of the close of business on October 29, 2010, will be entitled to notice of, and to vote at, the special meeting and any adjournment or postponement of the special meeting. All stockholders of record are cordially invited to attend the special meeting in person.

 

Your vote is very important, regardless of the number of shares of common stock you own.

 

The merger cannot be completed unless the merger agreement is adopted by the affirmative vote of the holders of a majority of the outstanding shares of common stock entitled to vote thereon. Even if you plan to attend the special meeting in person, we request that you complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or submit your proxy by telephone or the Internet prior to the special meeting to ensure that your shares of common stock will be represented at the special meeting if you are unable to attend. If you fail to return your proxy card or fail to submit your proxy by phone or the Internet and do not attend and vote at the special meeting in person, your shares of common stock will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

 

If you are a stockholder of record, voting in person at the special meeting will revoke any proxy previously submitted. If you hold your shares of common stock through a bank, brokerage firm or other nominee, you should follow the instructions provided by your banker, brokerage firm or other nominee in order to vote.

 

Our board of directors, upon the unanimous recommendation of the special committee of independent directors, has determined (with Mr. Ryan abstaining) that the merger is advisable and in the best interests of ACL and its stockholders and approved and declared advisable the merger agreement and the merger and the other transactions contemplated by the merger agreement. Our board of directors recommends that you vote “FOR” the proposal to adopt the merger agreement and “FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

 

Only stockholders of record or their duly authorized proxies have the right to attend the special meeting. To gain admittance, you must present valid photo identification, such as a driver’s license or passport. If your shares of common stock are held through a bank, brokerage firm or other nominee, please bring to the special meeting a copy of your brokerage statement evidencing your beneficial ownership of the common stock and valid photo identification. If you are the representative of a corporate or institutional stockholder, you must present valid photo identification along with proof that you are the representative of such stockholder. Please note that cameras, recording devices and other electronic devices will not be permitted at the special meeting.

 

Stockholders who do not vote in favor of the proposal to adopt the merger agreement will have the right to seek appraisal of the fair value of their shares of common stock of ACL if they deliver a demand for appraisal before the vote is taken on the merger agreement and comply with all the requirements of Delaware law, which are summarized in the accompanying proxy statement and provided in their entirety on Annex C of the accompanying proxy statement.

 

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PREPAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET. IF YOU ATTEND THE SPECIAL MEETING AND VOTE IN PERSON, YOUR VOTE BY BALLOT WILL REVOKE ANY PROXY PREVIOUSLY SUBMITTED.

 

By Order of the Board of Directors,

 

Clayton K. Yeutter
Chairman of the Board of Directors

 

Dated: November 15, 2010

Jeffersonville, Indiana

 

TABLE OF CONTENTS

 

 

SUMMARY TERM SHEET

 

Parties to the Merger (Page 20)

 

The Special Meeting (Page 21)

 

Time, Place and Purpose of the Special Meeting (Page 21)

 

Record Date and Quorum (Page 21)

 

Vote Required (Page 21)

 

Proxies and Revocation (Page 23)

 

The Merger (Page 25)

 

Merger Consideration (Page 25)

 

Reasons for the Merger; Recommendation of the Special Committee and Board of Directors (Page 33)

 

Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated (Page 37)

 

Financing of the Merger (Page 45)

	•	pay our stockholders (and holders of our other equity-based interests) the amounts due to them under the merger agreement;
	•	refinance the outstanding indebtedness that comes due as a result of the merger; and
	•	pay fees and expenses related to the merger and the debt that will finance the merger,

	•	up to $550 million from a senior secured asset-based credit facility to be obtained by Intermediate Holdco; and
	•	equity financing of up to $500 million.

 

Equity Financing (Page 46)

 

Debt Financing (Page 46)

 

Limited Guarantee (Page 47)

 

Interests of Certain Persons in the Merger (Page 48)

	•	the cash-out of all vested stock options and vested restricted stock units held by our executive officers and directors and unvested equity grants held by our directors and the assumption or, at Parent’s election, cash-out by Parent of all unvested stock options and restricted stock units held by our executive officers; and
	•	pursuant to employment and severance agreements with certain of our executive officers, the payment of severance payments in the event of a termination of employment without cause, whether before or after the merger.

 

Material U.S. Federal Income Tax Consequences of the Merger (Page 51)

 

Regulatory Approvals (Page 52)

 

Litigation Relating to the Merger (Page 53)

 

The Merger Agreement (Page 53)

 

Treatment of Common Stock, Options and Other Equity Awards (Page 55)

 

Solicitation of Acquisition Proposals (Page 63)

	•	initiate, solicit or encourage the submission of one or more acquisition proposals, including by providing non-public information relating to the Company or any of its subsidiaries or by affording to any person access to the business, properties, assets, books, records or other non-public information, or to the personnel, of the Company or any of its subsidiaries pursuant to an acceptable confidentiality agreement;
	•	continue, enter into, participate in or engage in any discussions or negotiations with one or more persons with respect to one or more acquisition proposals or any other proposals that could reasonably be expected to lead to an acquisition proposal; and
	•	otherwise cooperate with, assist or take any action to facilitate any acquisition proposals or any other proposals that could reasonably be expected to lead to any acquisition proposals.

	•	solicit, initiate, propose or induce or knowingly encourage the making, submission or announcement of, or take actions that could reasonably be expected to encourage, facilitate or assist, an acquisition proposal;
	•	furnish to any person (other than Parent, Merger Sub or any designees of Parent or Merger Sub) any non-public information relating to the Company or any of its subsidiaries, or afford to any person access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company or any of its subsidiaries (other than Parent, Merger Sub or any designees of Parent or Merger Sub), in each case with the intent to induce the making, submission or announcement of, or to encourage, knowingly facilitate or assist, an acquisition proposal or any inquiries or the making of any proposal that would reasonably be expected to lead to an acquisition proposal;
	•	participate or engage in discussions or negotiations with any person with respect to an acquisition proposal or which may reasonably be expected to lead to an acquisition proposal; or
	•	enter into any letter of intent, memorandum of understanding or other contract with respect to an acquisition transaction (other than an acceptable confidentiality agreement).

 

Conditions to the Merger (Page 69)

 

Termination (Page 70)

	•	by mutual written agreement of Parent and the Company after action by their respective boards of directors;
	•	by either Parent or the Company, if:

	•	the effective time shall not have occurred by 5:00 p.m. (New York time) on March 18, 2011, which date we refer to as the termination date (but, the right to terminate will not be available to a party whose actions or omissions were the primary cause of, or the primary factor that resulted in the failure to consummate the merger prior to the termination date);
	•	our stockholders have not adopted the merger agreement at a stockholders meeting (as it may be adjourned or postponed) at which a vote has been taken on the adoption of the merger agreement; or
	•	a governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered a law that is in effect at the time of such termination that renders illegal or restricts, restrains, enjoins or otherwise prohibits the merger or issued or entered a permanent, final and non-appealable injunction, ruling, decree or order that restricts, restrains, enjoins or otherwise prohibits the merger in the United States or any state thereof.

	•	by the Company, if:

	•	(i) the Company is not in material breach of any of its covenants under the merger agreement and (ii) Parent and/or Merger Sub have breached or failed to perform any of their respective covenants or agreements, or any representations or warranties of Parent and/or Merger Sub in the merger

		agreement shall have become incorrect, in any case such that one or more of the conditions to the Company’s obligations to effect the merger would not be satisfied and have failed to cure such material breach, failure to perform or inaccuracy within thirty calendar days after Parent and Merger Sub have received written notice of such breach, failure to perform or inaccuracy from the Company or, if earlier, the date that is two business days prior to the termination date;

	•	at any time prior to the adoption of the merger agreement by our stockholders, in order to enter into an alternative acquisition agreement with respect to a superior proposal that the board of directors has authorized and directed us to execute, provided that (i) prior to or simultaneously with the termination of the merger agreement, we pay to Parent the Company termination fee discussed under the section entitled “The Merger Agreement — Fees and Expenses” beginning on page 72, (ii) simultaneously or promptly following such termination, we enter into the superior proposal merger agreement and (iii) we have complied with certain of our obligations in the merger agreement, including our obligation to negotiate with Parent in good faith (to the extent Parent desires to negotiate) for three business days prior to termination to make adjustments in the terms and conditions of the merger agreement so that such superior proposal would cease to constitute a superior proposal; or

	•	(A) the conditions to the obligations of Parent and Merger Sub to effect the merger have been satisfied (other than those conditions that (i) by their nature are to be satisfied at the closing and that would be capable of being satisfied if there were a closing or (ii) have not been satisfied as a result of Parent or Merger Sub’s breach or failure to perform any of their respective covenants in the merger agreement), (B) we, at least one business day prior to the date on which the closing should have occurred pursuant to the merger agreement, delivered in good faith written notice (by e-mail or by such other notice that complies with the terms of the merger agreement) to Parent to the effect that we would be ready, willing and able to consummate the merger on such date, and (C) Parent fails to consummate the merger within three business days of such date.

	•	by Parent, if:

	•	(i) neither Parent nor Merger Sub is in material breach of its covenants under the merger agreement and (ii) the Company has breached or failed to perform any of its covenants or agreements in the merger agreement or any representations or warranties of the Company in the merger agreement shall have become incorrect in any case such that one or more of the conditions to Parent’s and Merger Sub’s obligations to effect the merger would not be satisfied, and have failed to cure such material breach, failure to perform or inaccuracy within thirty calendar days after the Company has received written notice of such breach, failure to perform or inaccuracy from Parent or, if earlier, the date that is two business days prior to the termination date; or
	•	at any time any of the following trigger events has occurred:

	•	the board of directors shall have effected a board recommendation change; or
	•	a tender or exchange offer for the common stock that would, if consummated in accordance with its terms, constitute a competing acquisition transaction is commenced by a person unaffiliated with Parent and, within ten business days after the public announcement of the commencement of such acquisition proposal, the Company shall not have issued a public statement reaffirming the board recommendation and recommending that the Company stockholders reject such acquisition proposal and not tender any shares of the common stock into such tender or exchange offer.

 

Fees and Expenses (Page 72)

	•	if the Company has terminated the merger agreement in order to enter into an alternative acquisition agreement with respect to a superior proposal;

	•	if Parent has terminated the merger agreement because any of the trigger events described above have occurred;
	•	in the event that:

	•	(i) prior to the termination of the merger agreement, a competing acquisition proposal has been made to the Company and publicly disclosed or publicly announced and not publicly withdrawn;
	•	(ii) the merger agreement is terminated pursuant to the termination provisions providing for termination as a result of the (1) failure of the Company’s stockholders to adopt the merger agreement or (2) failure to consummate the merger by the termination date; and
	•	(iii) within twelve months of the termination of the merger agreement either an acquisition transaction is consummated or we enter into a definitive agreement providing for an acquisition transaction that is subsequently consummated (whether or not during such twelve-month period).

	•	if the Company has terminated the merger agreement pursuant to the termination provision relating to a breach by Parent and/or Merger Sub of their respective covenants under the merger agreement or the inaccuracy of the representations and warranties of Parent and Merger Sub under the merger agreement;
	•	the Company has terminated the merger agreement pursuant to the termination provision relating (A) to the conditions to the obligations of Parent and Merger Sub having been satisfied, (B) the Company having been ready, willing and able to consummate the merger, and (C) Parent having failed to consummate the merger; or
	•	if Parent or the Company has terminated the merger agreement pursuant to the termination provision relating to the failure to consummate the merger by the termination date and, at the time of termination, the merger agreement could have been terminated by the Company pursuant to the termination provisions referenced in the two bullet points above.

	•	the conditions to the funding of the debt commitment letter have been satisfied and the financing party thereto is prepared to fund the financing (or, if alternative financing is obtained in accordance with the merger agreement, such alternative financing); and
	•	all conditions of Parent and Merger Sub to consummate the merger have been satisfied at the time when the closing would have occurred but for the failure of the equity financing to be funded (or, with respect to those conditions that by their nature are to be satisfied at the closing, are capable of being satisfied at the closing).

 

Remedies (Page 73)

 

The Voting Agreement (Page 74)

 

Market Price of Common Stock (Page 78)

 

Appraisal Rights (Page 81)

 

Delisting and Deregistration of Common Stock (Page 85)

 

The following questions and answers are intended to address briefly some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that may be important to you as a Company stockholder. Please refer to the “Summary Term Sheet” and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement, which you should read carefully. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions under the section entitled “Where You Can Find More Information” beginning on page 85.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

 

This proxy statement contains certain “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Words such as “expect(s),” “feel(s),” “believe(s),” “will,” “may,” “anticipate(s),” “intend(s)” and similar expressions are intended to identify such forward-looking statements. These statements include, but are not limited to, the expected timing of the acquisition; the availability of the financing under the debt commitment letter; the ability of Parent and the Company to close the acquisition; the performance of the parties under the terms of the merger agreement and related transaction documents; and statements regarding future performance. All of such information and statements are subject to certain risks and uncertainties, the effects of which are difficult to predict and generally beyond the control of the Company, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Investors are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this proxy statement. Investors are also urged to carefully review and consider the various disclosures in the Company’s SEC periodic and interim reports, including but not limited to its Annual Report on Form 10-K for the fiscal year ended December 31, 2009, Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2010 and June 30, 2010 and Current Reports on Form 8-K filed from time to time by the Company, and the following factors:

 

 

Consequently, all of the forward-looking statements we make in this document are qualified by the information contained or incorporated by reference herein, including, but not limited to, (a) the information contained under this heading and (b) the information contained under the headings “Risk Factors” and in our consolidated financial statements and notes thereto included in our most recent filings on Forms 10-Q and 10-K (see the section entitled “Where You Can Find More Information” beginning on page 85). We are under no obligation to publicly release any revision to any forward-looking statement contained or incorporated herein to reflect any future events or occurrences.

 

You should carefully consider the cautionary statements contained or referred to in this section in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf.

 

American Commercial Lines Inc.

1701 East Market Street

Jeffersonville, Indiana 47130

(812) 288-0100

 

The Company, a Delaware corporation with its headquarters in Jeffersonville, Indiana, is one of the largest and most diversified marine transportation and services companies in the United States, providing barge transportation and related services under the provisions of the Jones Act, as well as manufacturing barges and other vessels, including ocean-going liquid tank barges. Information about ACL can be found at www.aclines.com. Our website address is provided as an inactive textual reference only. The information contained on our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document on file with or furnished to the SEC. See also the section entitled “Where You Can Find More Information” beginning on page 85. Our common stock is publicly traded on Nasdaq under the symbol “ACLI.”

 

Finn Holding Corporation

c/o Platinum Equity, LLC

52 Vanderbilt Avenue

New York, NY 10017

(212) 905-0010

 

Parent is a Delaware corporation that was formed by Platinum Equity, LLC, or Platinum Equity, solely for the purpose of entering into the merger agreement and completing the transactions contemplated by the merger agreement. Upon completion of the merger, the Company will be a wholly-owned subsidiary of Parent.

 

Finn Merger Corporation

c/o Platinum Equity, LLC

52 Vanderbilt Avenue

New York, NY 10017

(212) 905-0010

 

Merger Sub, a Delaware corporation, has the sole purpose of entering into the merger agreement and completing the transactions contemplated by the merger agreement. Upon completion of the merger, Merger Sub will cease to exist.

 

This proxy statement is being furnished to our stockholders as part of the solicitation of proxies by the board of directors for use at the special meeting to be held on December 14, 2010, starting at 11:00 a.m. Eastern Time, at American Commercial Lines Inc., 1701 E. Market Street, Jeffersonville, Indiana 47130, or at any postponement or adjournment thereof. At the special meeting, holders of our common stock will be asked to approve the proposal to adopt the merger agreement and to approve the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement.

 

Our stockholders must approve the proposal to adopt the merger agreement in order for the merger to occur. If our stockholders fail to approve the proposal to adopt the merger agreement, the merger will not occur. A copy of the merger agreement is attached as Annex A to this proxy statement, which we encourage you to read carefully in its entirety.

 

We have fixed the close of business on October 29, 2010 as the record date for the special meeting, and only holders of record of common stock on the record date are entitled to vote at the special meeting. You are entitled to receive notice of, and to vote at, the special meeting if you owned shares of common stock at the close of business on the record date. On the record date, there were 12,843,584 shares of common stock outstanding and entitled to vote. Each share of common stock entitles its holder to one vote on all matters properly coming before the special meeting.

 

A majority of the shares of common stock outstanding at the close of business on the record date and entitled to vote, present in person or represented by proxy, at the special meeting constitutes a quorum for the purposes of the special meeting. Shares of common stock represented at the special meeting but not voted, including shares of common stock for which a stockholder directs an “abstention” from voting, will be counted for purposes of establishing a quorum. Broker non-votes will not be counted as present for purposes of determining whether a quorum is present. A quorum is necessary to transact business at the special meeting. Once a share of common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. However, if a new record date is set for an adjourned special meeting, then a new quorum will have to be established. In the event that a quorum is not present at the special meeting, it is expected that the special meeting will be adjourned to solicit additional proxies.

 

 

Only stockholders of record or their duly authorized proxies have the right to attend the special meeting. To gain admittance, you must present valid photo identification, such as a driver’s license or passport. If your shares of our common stock are held through a bank, brokerage firm or other nominee, please bring to the special meeting a copy of your brokerage statement evidencing your beneficial ownership of our common stock and valid photo identification. If you are the representative of a corporate or institutional stockholder, you must present valid photo identification along with proof that you are the representative of such stockholder. Please note that cameras, recording devices and other electronic devices will not be permitted at the special meeting.

 

 

Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock. For the proposal to adopt the merger agreement, you may vote “FOR,” “AGAINST,” or “ABSTAIN.” Abstentions will not be counted as votes cast in favor of the proposal to adopt the merger agreement, but will count for the purpose of determining whether a quorum is present. If you fail to submit a proxy or to vote in person at the special meeting, or abstain, it will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

The proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies requires the affirmative vote of a majority of the votes cast thereon in person or by proxy at the special meeting, whether or not a quorum is present. For the proposal to adjourn the special meeting, if necessary or appropriate, you may vote “FOR” , “AGAINST” or “ABSTAIN” . For purposes of this proposal, if your shares of common stock are present at the special meeting but are not voted on this proposal, or if you have given a proxy and abstained on this proposal, this will have no effect on the proposal.

 

If your shares of the common stock are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered, with respect to those shares of common stock, the stockholder of record. This proxy statement and proxy card have been sent directly to you by the Company.

 

If your shares of common stock are held in street name through a bank, brokerage firm or other nominee, you are considered the beneficial owner of your shares of common stock. In that case, this proxy statement has been forwarded to you by your bank, brokerage firm or other nominee who is considered, with respect to those shares of common stock, the stockholder of record. As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee how to vote your shares by following their instructions for voting.

 

Brokers who hold shares in street name for customers only have the authority to vote on routine proposals when they have not received instructions from beneficial owners. However, brokers are precluded from exercising their voting discretion with respect to approving non-routine matters — this is known as a broker non-vote. Both the proposal to adopt the merger agreement and the proposal to adjourn the special meeting are considered non-routine matters. As a result, absent specific instructions from the beneficial owner of such shares of common stock, brokers are not empowered to vote those shares of common stock.

 

If you fail to direct your bank or brokerage how to vote your shares for both of the proposals, your shares will not be counted for purposes of determining a quorum, but will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement, and will have no effect on the proposal to adjourn the special meeting.

 

If you fail to direct your bank or brokerage how to vote your shares for the proposal to adopt the merger agreement, but you do give direction for how to vote your shares for the proposal to adjourn the special meeting, your shares will be counted for the purposes of determining a quorum, but will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

 

If you fail to direct your bank or brokerage how to vote your shares for the proposal to adjourn the special meeting, but you do give direction for how to vote your shares for the proposal to adopt the merger agreement, your shares will be counted for the purposes of determining a quorum, but will have no effect on the proposal to adjourn the special meeting.

 

If you are a stockholder of record, you may have your shares of our common stock voted on matters presented at the special meeting in any of the following ways:

 

 

 

If you are not a stockholder of record, you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your shares of common stock voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted. Please note that if you are a beneficial owner and wish to vote in person at the special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee.

A control number, located on your proxy card, is designed to verify your identity and allow you to vote your shares of common stock, and to confirm that your voting instructions have been properly recorded when submitting a proxy over the Internet or by telephone. Please be aware that if you submit a proxy over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible.

 

Please refer to the instructions on your proxy or voting instruction card to determine the deadlines for submitting a proxy over the Internet or by telephone. If you choose to have your shares voted at the special meeting by mailing a proxy card, your proxy card must be filed with the Corporate Secretary of the Company by the time the special meeting begins. Please do not send in your stock certificates with your proxy card. When the merger is completed, a separate letter of transmittal will be mailed to you that will enable you to receive the per share merger consideration in exchange for your stock certificates.

 

If you submit a proxy, regardless of the method you choose, the individuals named on the enclosed proxy card, and each of them, with full power of substitution, or your proxies, will vote your shares of the common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of common stock should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the special meeting.

 

If you properly sign your proxy card but do not mark the boxes showing how your shares of common stock should be voted on a matter, the shares of common stock represented by your properly signed proxy will be voted “FOR” the proposal to adopt the merger agreement and “FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

 

If you have any questions or need assistance voting your shares, please call Georgeson Inc., our proxy solicitor, who may be contacted by banks and brokers at 212-440-9800 and by all others toll-free at 888-293-6908.

 

IT IS IMPORTANT THAT YOU PROMPTLY SUBMIT A PROXY TO HAVE YOUR SHARES OF COMMON STOCK VOTED AT THE SPECIAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PREPAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET. STOCKHOLDERS WHO ATTEND THE SPECIAL MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON.

 

As of October 29, 2010, the record date, the directors and executive officers of the Company beneficially owned and were entitled to vote, in the aggregate, 131,743 shares of common stock (not including any shares of common stock deliverable upon exercise or conversion of any options or restricted stock units), representing 1.03% of the outstanding shares of common stock.

 

Any stockholder of record entitled to vote at the special meeting may submit a proxy by telephone, over the Internet, or by returning the enclosed proxy card in the accompanying prepaid reply envelope, or may vote in person by appearing at the special meeting. If your shares of common stock are held in “street name” by your broker, you should instruct your broker on how to vote your shares of common stock using the instructions provided by your broker. If you fail to submit a proxy or to vote in person at the special meeting, or do not provide your broker with instructions, your shares of common stock will not be voted on the proposal to adopt the merger agreement, which will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement, and your shares of common stock will not have an effect on the proposal to adjourn the special meeting.

 

You have the right to revoke a proxy, whether delivered by telephone, over the Internet, or by mail, at any time before it is exercised, by submitting another proxy again at a later date through any of the methods available to you, by giving written notice of revocation to our Corporate Secretary, which must be filed with the Corporate Secretary by the time the special meeting begins, or by attending the special meeting and voting in person. If you instructed your broker on how to vote your shares of common stock, you may revoke your proxy by using the instructions provided by your broker.

 

Although it is not currently expected, the special meeting may be adjourned or postponed for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement. Other than an announcement to be made at the special meeting of the time, date and place of an adjourned meeting, any adjournment may be made without notice (if the adjournment is not for more than thirty days and a new record date has not been fixed). Any adjournment or postponement of the special meeting for the purpose of soliciting additional proxies will allow the Company’s stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned or postponed.

 

We are working towards completing the merger as soon as possible. Assuming timely satisfaction of necessary closing conditions, we anticipate that the merger will be completed by the end of the fourth quarter of 2010. If our stockholders vote to approve the proposal to adopt the merger agreement, the merger will become effective as promptly as practicable following the satisfaction or waiver of the other conditions to the merger.

 

Stockholders are entitled to appraisal rights under the DGCL in connection with the merger. This means that you are entitled to have the fair value of your shares of common stock determined by the Delaware Court of Chancery and to receive payment based on that valuation if you properly exercise your appraisal rights. The ultimate amount you receive in an appraisal proceeding may be less than, equal to or more than the amount you would have received under the merger agreement.

 

To exercise your appraisal rights, you must submit a written demand for appraisal to the Company before the vote is taken on the merger agreement and you must not vote in favor of the proposal to adopt the merger agreement. Your failure to follow exactly the procedures specified under the DGCL may result in the loss of your appraisal rights. See the section entitled “Appraisal Rights” beginning on page 81 and the text of the Delaware appraisal rights statute reproduced in its entirety as Annex C to this proxy statement. If you hold your shares of common stock through a bank, brokerage firm or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or other nominee to determine the appropriate procedures for the making of a demand for appraisal by the nominee. In view of the complexity of the DGCL, stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors.

 

The expenses of preparing, printing and mailing this proxy statement and the proxies solicited hereby will by borne by us. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

We have engaged Georgeson Inc. to assist in the solicitation of proxies for the special meeting. The Company estimates that it will pay Georgeson a fee of approximately $22,000, plus customary administrative fees for expenses related to calls made to or received from our stockholders. We will reimburse Georgeson for reasonable out-of-pocket expenses and will indemnify Georgeson and its affiliates against certain claims, liabilities, losses, damages and expenses.

 

We may also reimburse brokers, banks and other custodians, nominees and fiduciaries representing beneficial owners of shares of common stock for their expenses in forwarding soliciting materials to beneficial owners of the common stock and in obtaining voting instructions from those owners.

 

If you have more questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please call Georgeson Inc., our proxy solicitor, who may be contacted by banks and brokers at 212-440-9800 and by all others toll-free at 888-293-6908.

 

This discussion of the merger is qualified in its entirety by reference to the merger agreement, which is attached to this proxy statement as Annex A. You should read the entire merger agreement carefully as it is the legal document that governs the merger.

 

The merger agreement provides that Merger Sub will merge with and into the Company. The Company will be the surviving corporation in the merger and will continue to do business following the merger. As a result of the merger, the Company will cease to be a publicly traded company. You will not own any shares of the capital stock of the surviving corporation.

 

In the merger, each outstanding share of common stock (except for certain shares owned, if any, by the Company, Parent, Merger Sub, and their direct and indirect wholly owned subsidiaries, GVI Stockholders, and shares owned by stockholders who have properly exercised their appraisal rights) will be converted into the right to receive $33.00 in cash, without interest, which amount we refer to as the per share merger consideration, less any applicable withholding taxes. GVI Stockholders will be entitled to receive $31.25 less any applicable withholding taxes in cash for each share of Company common stock they hold if the transaction closes on or before December 31, 2010, and $33.00 less any applicable withholding taxes in cash per share if the transaction closes thereafter.

 

GVI Stockholders have entered into a voting agreement pursuant to which they have agreed to vote shares owned by them representing, in the aggregate, 25.18% of the outstanding shares of the Company, in favor of the transaction. The voting agreement automatically terminates upon the termination of the merger agreement or the occurrence of certain other events. In the voting agreement GVI Stockholders have agreed to accept $1.75 less than other stockholders in consideration per share in the event that either the merger occurs on or prior to December 31, 2010 or the merger agreement is terminated because the Company has accepted a superior proposal, as defined in the merger agreement, if that transaction closes on or prior to December 31, 2010. GVI Stockholders have also granted an option to Parent to acquire GVI Stockholders’ shares at a price equal to the then-applicable merger consideration per share less $1.75, exercisable from and after December 15 so long as shares are purchased by Parent on or prior to December 31, 2010, provided that, if Parent exercises the option and the merger agreement is subsequently terminated for a superior proposal, Parent has agreed to both vote for such proposal and accept the same consideration that GVI Stockholders would have received in respect of those shares, subject to Parent’s obligation to share 50% of the profits with GVI Stockholders from its subsequent disposition of those shares (on or prior to the termination of the transaction contemplated by such proposal) within one year of the purchase of the shares if the Company terminates to accept a superior proposal prior to January 15, 2011.

 

The board of directors recommends that you vote “FOR” the proposal to adopt the merger agreement and “FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

 

In considering the recommendation of the board of directors with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, yours. The board of directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of the Company. See the section entitled “The Merger — Interests of Certain Persons in the Merger” beginning on page 48.

 

Our board of directors and senior management regularly review our business, our future business plans and strategic opportunities. As part of this review, factors they have considered include the Company’s competitive market position; growth and revenue potential; and the viability of potential strategic alternatives, such as acquisitions, expansion of service offerings and potential merger or sale.

In May 2010, Louis Samson, a Platinum Equity principal, approached a representative of BofA Merrill Lynch to seek an introduction to representatives of Equity Group Investments, L.L.C., or EGI, a private investment group and an affiliate of GVI Stockholders. At Mr. Samson’s request, a representative of BofA Merrill Lynch contacted EGI to determine if EGI would entertain a meeting about ACL with Platinum Equity.

 

Later in May 2010, Mr. Samson met with representatives of EGI about a potential transaction with the Company. EGI informed Platinum Equity that it would not be opposed to a transaction with the Company so long as any offer was at a sufficient premium to the market price at the time ($20.43 per share). Following the meeting, a representative of EGI contacted Mr. Ryan and requested that he put Dawn Landry, Senior Vice President, General Counsel and Corporate Secretary of the Company, in touch with Platinum Equity to facilitate the entering into of a nondisclosure agreement so that Mr. Ryan could make a presentation to Platinum Equity about the Company.

 

On May 28, 2010, the Company provided a draft non-disclosure agreement to Platinum Equity. The non-disclosure agreement was executed by Platinum Equity on June 1, 2010.

 

On June 3, 2010, a representative of EGI contacted Mr. Ryan to request a meeting between Platinum Equity, EGI and Mr. Ryan on June 7th or 8th, 2010.

 

On the evening of June 7, 2010, representatives of Platinum Equity met in Chicago with Mr. Ryan and representatives of EGI. At that meeting, Platinum Equity indicated that it was interested in a transaction with the Company, although no specific proposal was made. The next day, Mr. Ryan met further with representatives from Platinum Equity and discussed various facets of the Company’s business. The Platinum Equity representatives and Mr. Ryan agreed to keep in touch.

 

On June 14, 2010, the Company provided limited due diligence information to Platinum Equity.

 

On June 17, 2010, Mr. Samson submitted to Clayton Yeutter, the Chairman of the board of directors, a non-binding letter of intent to acquire the Company at a proposed price of $25.00 per share in cash, subject to due diligence and other conditions. Platinum Equity requested a period of exclusive negotiations to pursue its offer. Its offer suggested that the Company would be afforded a post-signing “go shop” period to occur concurrently with the tender offer contemplated by Platinum Equity’s proposal. On the day the offer was submitted, the closing price of the Company’s shares on Nasdaq was $20.64. On the day the offer was submitted, Platinum Equity contacted EGI to inform EGI of the proposal to the ACL board of directors and to solicit EGI’s support for the proposal in the form of a voting agreement from the GVI Stockholders. EGI informed Platinum Equity that EGI would be supportive if Platinum Equity could reach an agreement with the board of directors.

 

On June 23, 2010, the Company’s board of directors held a meeting to discuss Platinum Equity’s proposal. Because Platinum Equity had expressed interest in retaining senior management and providing management an interest in the surviving company, the board of directors discussed the advisability of forming a special committee consisting solely of independent and disinterested directors who are not members of the Company’s management and who do not have a material interest in the merger that is different from, or in addition to, the interests of the Company’s stockholders generally. After discussion, the board of directors formed a committee, referred to as the Special Committee, consisting of all members of the Company’s board of directors other than Mr. Ryan. Mr. Ryan was excluded from the Special Committee to avoid any perception that his potential retention by the surviving company if the merger should occur would influence the negotiations and, ultimately, the approval of any transaction with Platinum Equity.

 

The Special Committee was delegated authority to, among other things, review strategic alternatives for the Company; review and evaluate Platinum Equity’s proposal; review, evaluate and determinate whether a process to further explore strategic alternatives is desirable for the Company and, if so, the design and implementation of such a process; have general oversight of any and all agreements and activities involving, responding to or relating to any potential transaction that might be considered; take actions with respect to any strategic alternative and any review, discussion, consideration, analysis, evaluation, response, negotiation, termination, rejection, approval and/or authorization on behalf of the Company of the terms and conditions of any potential transaction; manage, respond, negotiate, accept or reject on behalf of the Company the proposed

terms of any potential transaction; terminate any and all negotiations concerning any potential transaction at any time; and recommend to the board of directors what action should be taken in respect of any potential transaction. Mr. Yeutter was appointed chair of the Special Committee. The Special Committee then met without Mr. Ryan. After discussion, the Special Committee instructed Mr. Yeutter to communicate to Platinum Equity, among other things, that, were the Special Committee interested in a business combination transaction, it would likely only be interested at a value per share that was higher than that proposed by Platinum Equity in its letter and was unwilling at this time to grant exclusivity to Platinum Equity. Attorneys from Hogan Lovells US LLP, counsel to the Company, or Hogan Lovells, and Richards, Layton & Finger, P.A., or RLF, engaged as counsel to the Special Committee, were present at the meeting of the board of directors and the Special Committee. The Special Committee also determined to retain a financial advisor. The Special Committee considered the qualifications and independence of BofA Merrill Lynch and noted their familiarity with the Company, and determined to engage that firm as financial advisor.

 

On June 24, 2010, Mr. Yeutter and Ms. Landry spoke by telephone with Mr. Samson and indicated that the board of directors had convened to discuss Platinum Equity’s offer and had formed the Special Committee, which had engaged legal advisors and determined to retain a financial advisor. Mr. Yeutter also stated that if the Special Committee were interested in a business combination transaction, it would likely only be interested at a value per share that was higher than that proposed by Platinum Equity in its letter of intent, and that the Special Committee was not currently prepared to grant exclusivity to Platinum Equity. Mr. Yeutter further stated that he or another Company representative would provide Platinum Equity with an update as to the likely timing of any further response from the Special Committee after the Fourth of July holiday.

 

On June 25, 2010, representatives of the Special Committee spoke by telephone to representatives of BofA Merrill Lynch regarding an engagement as financial advisor to the Special Committee, to assist in evaluating Platinum Equity’s proposed offer and prepare a financial analysis of the Company. Following that discussion, BofA Merrill Lynch was retained by the Special Committee.

 

On June 28, 2010, Mr. Yeutter contacted Mr. Samson to inform him that the Special Committee had selected BofA Merrill Lynch as its financial advisor and planned to convene a meeting of the Special Committee in late July. Mr. Yeutter also indicated that he hoped to communicate any further response from the Special Committee to Platinum Equity by August 1, 2010.

 

On July 23, 2010, BofA Merrill Lynch representatives reviewed with the Special Committee at a telephonic meeting its preliminary financial analyses regarding the Company, including its financial analysis in connection with a potential transaction with Platinum Equity at the indicated price. The Special Committee discussed that analysis, the potential transaction and other strategic considerations including potential strategic alternatives available to the Company other than a potential transaction with Platinum Equity. The Special Committee resolved to continue this analysis at a subsequent meeting after obtaining additional information from Platinum Equity with respect to its proposal. Later that day, a representative from BofA Merrill Lynch called Mr. Samson to inform him of the Special Committee’s meeting and to ask certain follow-up questions.

 

On July 26, 2010, the Special Committee convened in person with representatives from BofA Merrill Lynch to continue the Special Committee’s evaluation of a proposed transaction, as well as to further discuss the Company’s financial performance and prospects as a stand-alone entity relative to a potential transaction with Platinum Equity and other potential strategic alternatives. Attorneys from Hogan Lovells and RLF were also present. The Special Committee concluded that it might be willing consider a potential transaction with Platinum Equity at an appropriate price, but that the offer from Platinum Equity at a proposed price of $25.00 per share was inadequate. Further, the Special Committee discussed other possible transaction terms that would be important to it were it to consider a transaction, including a post-signing period to solicit alternative offers (commonly called a “go-shop”) and the possible range of potential termination fees. The Special Committee directed BofA Merrill Lynch to convey the Special Committee’s response to Platinum Equity. The Special Committee also directed BofA Merrill Lynch to inform Platinum Equity that, in order to allow Platinum Equity to make a better informed proposal, the Special Committee would grant Platinum Equity a period of three weeks to perform due diligence on non-public matters and access to Mr. Ryan and Mr. Thomas Pilholski, Senior Vice President and Chief Financial Officer of the Company, provided that Platinum would agree to

enter into a customary standstill agreement. The Special Committee also indicated a preference not to grant exclusivity to Platinum Equity during the three-week due diligence period.

 

On July 27, 2010, representatives from BofA Merrill Lynch informed Mr. Samson of the Special Committee’s position. Mr. Samson suggested that Platinum Equity meet with Messrs. Ryan and Pilholski for management meetings early the next week in Louisville, Kentucky, and stated that Platinum Equity would send to the Company a list of additional requested information. Mr. Samson also agreed to execute a standstill agreement as a condition to the further diligence, and confirmed that Platinum Equity did not require exclusivity to proceed at that time. He also indicated that he would provide the Special Committee with Platinum Equity’s views regarding any revised offer at the end of the three weeks.

 

On July 31, 2010, Platinum Equity and the Company entered into a standstill agreement.

 

On August 2, 2010, the Special Committee met telephonically, with Messrs. Ryan and Pilholski in attendance for a portion of the meeting. The Special Committee reviewed with Messrs. Ryan and Pilholski management’s most recent internal financial projections for the Company, including certain of the assumptions underlying such projections. Representatives of BofA Merrill Lynch, Hogan Lovells and RLF were present. After discussion, the Special Committee authorized making those projections available to Platinum Equity. That day, Mr. Samson also contacted Mr. Yeutter to express again Platinum Equity’s continuing interest in pursuing a transaction.

 

Platinum Equity commenced additional diligence activities beginning the week of August 2, 2010. From August 4 through August 6, 2010, representatives of Platinum Equity were present in Louisville, Kentucky to conduct due diligence, which included meetings with representatives of the Company and BofA Merrill Lynch. Representatives of Platinum Equity also conducted due diligence at the Jeffboat facility in Jeffersonville, Indiana during that time.

 

On August 17, 2010, with the permission of the Special Committee, Mr. Ryan met (along with a representative of BofA Merrill Lynch) with senior members of Platinum Equity’s management to discuss the Company’s business and operations and other diligence matters.

 

On August 23, 2010, a representative of Platinum Equity contacted a representative of BofA Merrill Lynch to discuss its diligence review and indicated that a revised non-binding proposal would be delivered later that day or the following morning.

 

On August 24, 2010, Mr. Samson contacted Mr. Yeutter to inform him that Platinum Equity would be submitting a revised offer letter, and to discuss possible next steps. Later that day, Platinum Equity delivered a revised offer to acquire the Company at a proposed price per share of $27.50 in cash, and required a 20 business day period of exclusivity to continue due diligence and negotiate definitive agreements. The letter also provided that the Company would be granted a 30-day “go-shop” period after signing a definitive agreement. On the day the revised offer was submitted, the closing price of the Company’s shares on Nasdaq was $26.40.

 

On August 26, 2010, the Special Committee met telephonically to discuss Platinum Equity’s revised offer. Attorneys from Hogan Lovells and RLF were present, as well as representatives of BofA Merrill Lynch. The representatives from BofA Merrill Lynch reviewed with the Special Committee the revised offer of $27.50 per share and discussed with the Special Committee potential responses. The members of the Special Committee discussed the implications of the various options, their views of near and long-term value for the Company and its stockholders and possible responses to Platinum Equity. The Special Committee reached a unanimous view that it was not prepared to accept an offer of $27.50 per share at that time, but that it was willing to allow Platinum Equity to continue with the 20 business days of additional due diligence requested by Platinum Equity, after which it would further consider that offer or any revised offer that Platinum Equity might make. The Special Committee agreed that this due diligence process could be undertaken under the exclusivity arrangement Platinum Equity had requested in light of the expense and time Platinum Equity would need to invest in the continued diligence process and to allow Platinum Equity the opportunity to make its best possible proposal. The Special Committee also discussed several structural aspects of a possible transaction and certain terms and conditions, including its view of the need for a further opportunity for the Company to

explore alternative offers were it to accept an offer from Platinum Equity. Among other potential terms the Special Committee considered, the Special Committee discussed requesting a “go-shop” period of 45 to 60 days in response to Platinum Equity’s offer of 30 days, a lower termination fee in the “go-shop” period of 1-2% of the equity value of a potential transaction, a termination fee of 2-3% of the equity value of a potential transaction in the post-go-shop period and an appropriate reverse termination fee or other adequate recourse if Platinum Equity were unable or unwilling to close a transaction. The Special Committee also discussed its preference, were a transaction to proceed, for a single-step transaction structure over the tender offer structure proposed by Platinum Equity, both to avoid the potential early triggering of “change in control” provisions under the Company’s outstanding bonds and to allow for a longer time period for any additional offers to be made by third parties. The Special Committee requested BofA Merrill Lynch to convey its positions to Platinum Equity.

 

On August 27, 2010, representatives of BofA Merrill Lynch informed Mr. Samson of the outcome of the previous day’s Special Committee meeting. Mr. Samson indicated that he would review the Special Committee’s positions with his colleagues before responding. Mr. Samson also reiterated his requirement to be granted a 20 business day period of exclusivity while additional due diligence was performed and agreements negotiated. Later that day, the Company and Platinum Equity executed an exclusivity agreement prohibiting the Company and its representatives from pursuing alternative transactions until 11:59 PM, Eastern Time, on September 27, 2010.

 

On September 2, 2010, representatives of Platinum Equity met with representatives of the Company’s management in Louisville, Kentucky to continue due diligence. Representatives of BofA Merrill Lynch also participated in the meeting. Over the next several weeks, Platinum Equity and its representatives, including legal advisors, engaged in additional due diligence on the Company and its operations.

 

On September 11, 2010, the Special Committee met telephonically, along with representatives of BofA Merrill Lynch, Hogan Lovells and RLF, to discuss the status of Platinum Equity’s diligence process and to review and discuss a draft merger agreement prepared by Hogan Lovells to be proposed for use in the event that the Special Committee determined to proceed with a transaction. The draft merger agreement contemplated, among other things, a 60-day “go-shop” period and Company and Parent termination fees consistent with the views expressed by the Special Committee at its August 26 meeting. On September 15, 2010, Platinum was provided a copy of the draft merger agreement prepared by Hogan Lovells, and asked that Platinum Equity provide its comments, and those of its counsel Latham & Watkins LLP, or Latham, to the merger agreement, as well as a draft of any bank commitment letter related to any required debt financing, when submitting any revised offer at the end of the exclusivity period.

 

On September 17, 2010, the Special Committee met telephonically, with Mr. Ryan and Mr. Pilholski in attendance for a portion of that meeting. The Special Committee reviewed with Messrs. Ryan and Pilholski management’s updated financial projections for the Company, including projected results of operations, certain of the assumptions underlying the projections, and changes reflected in the updated projections. Members of the Special Committee discussed the implications of the Company’s downward revised financial projections. A representative of BofA Merrill Lynch discussed with the Special Committee his recent discussions with Mr. Samson concerning Platinum Equity’s proposal. After discussion, the Special Committee authorized making management’s updated financial projections available to Platinum Equity. Representatives of Hogan Lovells and RLF were also present at the meeting.

 

On September 28, 2010, Platinum Equity provided the Special Committee a revised offer and a marked copy of the merger agreement, together with a draft commitment letter for debt financing. The revised offer provided for a price of $30.00 per share and noted several changes to other terms and conditions, including a request that unvested equity awards not be accelerated and paid out at closing. The revised offer also included a request for a voting agreement from the Company’s largest stockholder, GVI and affiliates, to support the transaction. Other revisions proposed a 30-day “go-shop” period, a single Company termination fee of over 3.5% for accepting a superior offer, limitations on the Special Committee’s ability to negotiate with persons making offers in the “go-shop” period that were not determined on their face to be superior, payment of Platinum Equity’s expenses if the stockholders voted against the proposed merger, and a Parent termination

fee of $14 million for failure to close in breach of the merger agreement. On the day the revised offer was submitted the closing price of the Company’s shares on the Nasdaq Stock Market was $28.52.

 

On September 29, 2010, the Special Committee met telephonically, along with representatives of BofA Merrill Lynch, Hogan Lovells and RLF, and discussed the revised offer from Platinum Equity and the terms of its proposal, including the issues raised in its marked draft merger agreement. The Special Committee reiterated its view that, in addition to price considerations, a number of additional terms were important to the Special Committee, including a longer “go-shop” period, lower termination fees payable by the Company than those proposed by Platinum Equity, particularly for any fees payable during the “go-shop” period, and a higher termination fee payable by Platinum Equity in the case of its failure to close the merger in breach of its obligation to do so. The Special Committee also instructed BofA Merrill Lynch to communicate to Platinum Equity a counter offer of $32.00 per share.

 

On October 2, 2010, representatives of Hogan Lovells and Latham held a conference call to discuss certain aspects of Platinum Equity’s proposed changes to the draft merger agreement. Among other things, Latham clarified that unvested equity awards would be assumed by Parent (not cancelled) and would continue vesting but would otherwise not be part of the merger consideration. Further discussions were held between representatives of BofA Merrill Lynch and Platinum Equity regarding the potential transaction, including the Special Committee’s request for an increase in the proposed merger consideration. Following those discussions, Mr. Samson conveyed to representatives of BofA Merrill Lynch that Platinum Equity would raise its offer price to $30.25 per share but was unwilling to increase its price beyond that level. This revised offer represented an almost 10% premium to the closing price of the Company’s shares, $27.56, on Nasdaq on the day before the revised offer was submitted. Further discussions between counsel regarding transaction terms were held on October 4 and 7, 2010.

 

The Special Committee met telephonically on October 5, 2010 and received an update from its legal and financial advisors on the status of discussions, including the latest price proposal from Platinum Equity, and Platinum Equity’s continued request for an additional ten-day period of exclusivity to complete negotiations and to perform certain targeted environmental due diligence. On the day before the Special Committee’s meeting, the closing price of the Company’s shares on Nasdaq was $27.33. The Special Committee determined, after consultation with its financial advisor, that the then current price offered by Platinum Equity was attractive when compared to both the current market price of the Company’s common stock and the intrinsic value of the Company, and it instructed its advisors to move forward with the proposed transaction with Platinum Equity, subject to satisfactory resolution of terms and a review of the status of negotiations at the conclusion of the ten day exclusivity period requested by Platinum Equity. The Special Committee then agreed to accept Platinum Equity’s request for an exclusivity period until October 15, 2010. The Special Committee also reiterated to its legal and financial advisors its views on other terms and conditions, including that, should any transaction with Platinum Equity be entered into, these terms and conditions should be consistent with customary and reasonable practice and the Special Committee’s specific views with respect to the period of the “go-shop,” the size of termination fees and other fees and the circumstances under which those fees were payable.

 

On October 11, 2010, representatives of BofA Merrill Lynch, Platinum Equity, the Company, Latham, Hogan Lovells and RLF met at Platinum Equity’s offices in New York to discuss the issues relating to transaction documents and to negotiate several non-price related transaction terms. At that meeting, the parties discussed a series of terms acceptable to Platinum Equity that would be presented to the Special Committee for consideration providing, among other things, that the “go-shop” period would be 40 days, the Company would be permitted to negotiate with bidders who submit offers in the “go shop” period that were reasonably likely to lead to a superior proposal, that the Company termination fees would be lower in the go-shop period and higher only thereafter, that the Company would not be required to pay Parent’s expenses should stockholders not adopt the merger agreement absent a competing offer, and that the Parent termination fee would be closer to the fee level requested by the Special Committee. The parties also discussed that unvested equity awards held by employees below operational level 16 would be accelerated and their value paid at Closing. On October 12, 2010, Hogan Lovells circulated revised transaction documents to Latham reflecting these terms.

Also on October 11, 2010, BB&T Capital Markets issued a research report on the Company in which it upgraded its recommendation of the Company’s common stock from “Hold” to “Buy” and set a price target for the Company’s common stock of $50.00 per share. The trading price of the Company’s common stock on that day closed at $32.18 per share, a 13.6% increase from the $28.34 closing price on the preceding trading day of Friday, October 8, 2010.

 

On October 13, 2010, the Special Committee met telephonically to consider the status of the discussions and its view of the current offer from Platinum Equity. Representatives of BofA Merrill Lynch, Hogan Lovells and RLF participated in the discussions. The Special Committee was briefed on the result of the negotiations that had taken place on October 11, 2010, including the agreement of Platinum Equity to a “go-shop” provision and termination fees that were within the ranges requested by the Special Committee and as to which the Special Committee had received advice from its legal counsel and financial advisors. The Special Committee discussed the October 11 BB&T Capital Markets research report and the fact that the trading price of the common stock had increased above the last offer from Platinum Equity. The Special Committee received an update from Mr. Ryan as to his views as to the contents of such report, as well as of the Company’s performance and prospects and how the Company’s prospects compared with those contained in that report. Specifically, Mr. Ryan noted that the report was premised upon more optimistic projections than the Company’s internal forecasts, which may have indirectly resulted in recent increases in the Company’s stock price, and which do not reflect management’s views of the intrinsic value of the Company or the common stock. Moreover, Mr. Ryan confirmed that this analyst report was published without input from management. After discussion, the Special Committee determined that, despite its prior conclusion that Platinum Equity’s offer of $30.25 was attractive relative to the intrinsic value of the Company, BofA Merrill Lynch should communicate to Platinum Equity that it would need to raise its offer further, as the Special Committee was skeptical that it would be willing to approve a transaction at Platinum’s proposed price of $30.25 per share in light of the current market price of the common stock. BofA Merrill Lynch subsequently contacted Platinum Equity and communicated the Special Committee’s views.

 

On October 14, 2010, Platinum Equity contacted EGI and informed EGI that Platinum Equity was considering raising its offer price if EGI would be willing to sell its shares at a meaningful per share discount.

 

On October 15, 2010, EGI and Platinum Equity discussed an arrangement, subject to the board of directors approving a transaction with Platinum Equity, whereby EGI would take a $1.75 per share discount on its shares if the merger closed by the end of the calendar year. In connection with this proposed arrangement, EGI would give Platinum Equity an option to purchase EGI’s shares at a $1.75 discount to the offer price prior to the end of the calendar year even if the merger had not yet closed.

 

Later on October 15, 2010, Platinum Equity proposed an offer price of $32.00 per share for the shares held by all stockholders other than GVI Stockholders and advised the Special Committee that it had contacted GVI Stockholders and requested and received an indication by GVI Stockholders of a willingness to accept an offer of $30.25 for its shares. The Special Committee met on October 16, 2010 to consider the revised offer, and noted that the latest offer represented a substantial premium to Platinum Equity’s original offer but was still below the recent trading price of the common stock, which closed at $33.31 on the last trading day before the latest revised offer was submitted. The Special Committee also was informed that GVI Stockholders intended to seek to dispose of their shares through a demand registration process prior to the end of 2010 if the Company did not enter into the proposed merger or another transaction under which their shares would be sold before year-end 2010. Representatives of BofA Merrill Lynch, Hogan Lovells and RLF participated in the discussions. The Special Committee understood that GVI Stockholders were willing to accept a lower price for its shares than was being offered to other shareholders so long as the sale could be completed by year end. The Special Committee continued to consider the current trading price of the common stock, which remained above the $32.00 offer by Platinum Equity, as well as its own views as to the short and long-term outlook for the Company notwithstanding the recent higher trading prices of the common stock. The Special Committee requested that representatives of BofA Merrill Lynch communicate to Platinum Equity that the Special Committee would likely be able to support a transaction with Platinum Equity were it to increase its offer price to $33.00 per share for the public shareholders. Following the meeting, representatives of BofA Merrill

Lynch contacted Platinum Equity to deliver that message and the representatives of Hogan Lovells and Latham negotiated other terms of the merger agreement and related documents.

 

On October 17, 2010, representatives of Platinum Equity communicated to BofA Merrill Lynch that they would agree to an offer price of $33.00 per share for the shares held by all stockholders other than GVI Stockholders, and $31.25 for shares held by GVI Stockholders so long as the closing occurred by year-end 2010, after which GVI Stockholders would receive $33.00 per share, and that this was Platinum Equity’s best and final offer and was conditioned on acceptance before the opening of the market on October 18, 2010. Further, Platinum Equity informed BofA Merrill Lynch that Platinum Equity and GVI Stockholders had discussed tentative arrangements under which Platinum Equity would have an option to purchase shares directly from GVI Stockholders under certain circumstances at $31.25 per share. The Special Committee met that afternoon with its financial and legal advisors and discussed the latest Platinum Equity offer. The Special Committee received and discussed advice from its legal counsel and its financial advisors, including reviewing fiduciary duties, the material terms of the merger agreement and factors the Special Committee had considered and was considering in evaluating the appropriate course of action. The Special Committee agreed that while Platinum Equity’s current offer was attractive relative to the intrinsic value of the Company and that it could support the price being offered, it was concerned that certain implications of the proposed arrangement between Platinum Equity and GVI Stockholders could affect the ability of the board of directors to receive or accept a superior proposal from an alternative bidder. Specifically, the Special Committee wanted to ensure that alternative bidders could avail themselves of the terms of the proposed arrangement that GVI Stockholders had discussed with Platinum Equity, or the Company termination fee should be proportionately reduced, with the net effect being that an alternative bidder that could close by year-end 2010 would be able to take advantage of the same reduced price for the GVI Stockholders available to Platinum Equity. The Special Committee also expressed concern with respect to the option proposed to be granted to Platinum Equity, including with respect to its ability to vote any shares acquired by it on exercise of the option against an alternative offer that the board of directors considered superior. Accordingly, representatives of BofA Merrill Lynch and Hogan Lovells conveyed the Special Committee’s views to Platinum Equity and Latham, and the representatives of Hogan Lovells and Latham negotiated other terms of the merger agreement and related documents. Separately, BofA Merrill Lynch contacted representatives of GVI Stockholders to discuss a proposed arrangement providing a similar option to alternative bidders.

 

The Special Committee met later that evening with its financial and legal advisors to receive an update on the status of discussions. The advisors briefed the Special Committee on the status and noted that the provisions relating to a potential superior offer and the effect of the option proposed to be provided to Platinum Equity and the related lower price GVI Stockholders would receive from Platinum Equity were close to resolution but significant differences remained to be resolved. Also at this meeting, BofA Merrill Lynch reviewed with the Special Committee its financial analysis of the per share merger consideration of $33.00 and delivered to the Special Committee an oral opinion, which was confirmed by delivery of a written opinion dated October 18, 2010, to the effect that, as of that date and based on and subject to various assumptions and limitations described in its written opinion, the per share merger consideration of $33.00 to be received in the merger by holders of the Company’s common stock, was fair, from a financial point of view, to such holders (other than the Excluded Holders). The Special Committee also received advice from its counsel regarding its fiduciary duties and other matters. Because certain issues regarding the proposed agreement between GVI Stockholders and Platinum Equity and their effect on the provisions in the merger agreement regarding a superior offer remained unresolved, the Special Committee agreed to reconvene at 7:00 a.m. Eastern Time on October 18, 2010, and requested that the Special Committee’s financial and legal advisors convey the Special Committee’s views regarding these matters to Platinum Equity.

 

Prior to the Special Committee meeting on October 18, 2010, the representatives of Hogan Lovells and Latham negotiated final terms of the merger agreement and related documents. Separately, Platinum Equity and GVI Stockholders discussed a proposed arrangement regarding the circumstances under which the voting agreement might be terminated, the option granted thereunder exercised, and the $1.75 differential in merger consideration provided to a person making a superior offer who consummates a transaction prior to December 31, 2010, as well as certain other matters consistent with the requests made by the Special

Committee to address its concerns regarding the effects on an alternative bidder of the proposed arrangements between Platinum Equity and GVI Stockholders.

 

Accordingly, following discussion, the Special Committee unanimously determined that it was advisable and in the best interests of the Company and its stockholders to approve the voting agreement and to approve, enter into and effect the merger agreement, including the merger, and resolved to recommend that the board of directors approve the voting agreement and approve, enter into and effect the merger agreement, including the merger and recommend that the stockholders of the Company adopt the merger agreement. The full board of directors thereafter convened and (with Mr. Ryan abstaining) determined that it was advisable and in the best interests of the Company and its stockholders to approve the voting agreement and to approve, enter into and effect the merger agreement, including the merger, and resolved to recommend that the stockholders of the Company adopt the merger agreement.

 

Shortly thereafter on the morning of October 18, 2010, the merger agreement and the voting agreement were executed. Also that morning, the Company issued a press release announcing the execution of the merger agreement and voting agreement and the commencement of the “go-shop” period.

 

Beginning later on the morning of October 18, 2010, at the direction of the Special Committee and under the supervision of the Company’s executive officers, representatives of BofA Merrill Lynch began the “go shop” process of contacting parties to determine whether they might be interested in pursuing a transaction that would be superior to the proposed transaction with Platinum Equity. As of November 12, 2010, representatives of BofA Merrill Lynch had contacted 86 parties, consisting of 28 potential strategic buyers and 58 potential financial sponsor buyers.

 

On October 18, 2010, GVI Stockholders delivered a letter to the Company requesting that the Company file a resale registration statement for their shares pursuant to a registration rights agreement entered into in 2005 during the course of the Company’s reorganization that year. Under the voting agreement, GVI Stockholders are not permitted to sell their shares to any party whether or not registered, except to Parent, before the termination of the voting agreement. See the section entitled “The Voting Agreement,” beginning on p. 74. The Company expects to prepare and file a resale registration on Form S-3 promptly following the date of this proxy statement but does not expect sales to be made thereunder unless the merger agreement is terminated.

 

As of November 12, 2010, none of the parties contacted during the go-shop process by BofA Merrill Lynch had submitted an acquisition proposal for the Company. The process for the solicitation of other third party interest is ongoing during the go-shop process, although there can be no assurance that such efforts will result in an alternative transaction being proposed or in a definitive agreement for such a transaction being entered into.

 

The Special Committee of the board of directors, consisting solely of independent directors, and acting with the advice and assistance of independent legal and financial advisors, evaluated and participated in the negotiation of the merger, including the terms and conditions of the merger agreement, with Parent and Merger Sub. At the meeting held on October 18, 2010 described above, the Special Committee unanimously recommended the approval of the merger agreement and the voting agreement to the board of directors.

 

In reaching their decision to approve the merger and the merger agreement and the voting agreement, and to recommend that our stockholders vote “ FOR ” adoption of the merger agreement, the directors, in addition to drawing on their own experience, expertise and knowledge of the Company and its business, consulted with senior management, outside legal counsel and a financial advisor. The following discussion includes the

material reasons and factors considered by the board of directors, in connection with the recommendation of the Special Committee, in making its recommendation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Special Committee and the board of directors, at the recommendation of the Special Committee, also considered a variety of potentially negative factors in its deliberations concerning the merger agreement and the merger, including the following (not in any relative order of importance):

 

 

 

The foregoing discussion of the information and factors considered by the Special Committee and by the board of directors, at the recommendation of the Special Committee, is not intended to be exhaustive, but includes the material factors considered by the Special Committee and by the board of directors. In view of the variety of factors considered in connection with its evaluation of the merger, the directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. Neither the Special Committee nor the board of directors made any specific determination as to whether any factor, or any particular aspect of any factor, supported or did not support its ultimate determination. The Special Committee and the board of directors based its recommendation, respectively, on the totality of the information presented.

 

The board of directors recommends that you vote “FOR” the proposal to adopt the merger agreement and “FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

In considering the recommendation of the board of directors with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, yours. The board of directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of the Company. See the section entitled “The Merger — Interests of Certain Persons in the Merger” beginning on page 48.

 

The Company has retained BofA Merrill Lynch to act as the financial advisor to the Special Committee in connection with the merger. BofA Merrill Lynch is an internationally recognized investment banking firm which is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. The Company selected BofA Merrill Lynch to act as the financial advisor to the Special Committee in connection with the merger on the basis of BofA Merrill Lynch’s experience in transactions similar to the merger, its reputation in the investment community and its familiarity with the Company and its business.

 

On October 17, 2010, at a meeting of the Special Committee held to evaluate the merger, BofA Merrill Lynch delivered to the Special Committee an oral opinion, which was confirmed by delivery of a written opinion dated October 18, 2010, to the effect that, as of that date and based on and subject to various assumptions and limitations described in its written opinion, the per share merger consideration of $33.00 to be received in the merger by holders of the Company’s common stock, was fair, from a financial point of view, to such holders (other than the Excluded Holders).

 

The full text of BofA Merrill Lynch’s written opinion to the Special Committee, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex B to this proxy statement and is incorporated by reference herein in its entirety. The following summary of BofA Merrill Lynch’s opinion is qualified in its entirety by reference to the full text of the opinion. BofA Merrill Lynch delivered its opinion to the Special Committee for the benefit and use of the Special Committee (in its capacity as such) in connection with and for purposes of its evaluation of the per share merger consideration of $33.00 from a financial point of view. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and does not constitute a recommendation to any stockholder as to how to vote or act in connection with the merger.

 

In connection with rendering its opinion, BofA Merrill Lynch:

 

 

 

In arriving at its opinion, BofA Merrill Lynch assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with it and relied upon the assurances of the management of the Company that they were not aware of any facts or circumstances that would make such information or data inaccurate or misleading in any material respect. With respect to the Company forecasts, BofA Merrill Lynch was advised by the Company, and assumed, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of the Company as to the future financial performance of the Company under the alternative scenarios reflected therein. BofA Merrill Lynch did not make or was not provided with any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of the Company, other than a third-party appraisal of the Company’s fleet of barges, nor did it make any physical inspection of the properties or assets of the Company. BofA Merrill Lynch did not evaluate the solvency or fair value of the Company or Parent under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. BofA Merrill Lynch assumed, at the direction of the Company, that the merger would be consummated in accordance with its terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the merger, no delay, limitation, restriction or condition, including any divestiture requirements or amendments or modifications, would be imposed that would have an adverse effect on the Company or the contemplated benefits of the merger.

 

BofA Merrill Lynch expressed no view or opinion as to any terms or other aspects of the merger (other than the per share merger consideration to the extent expressly specified in its opinion), including, without limitation, the form or structure of the merger. Prior to the date of its opinion, BofA Merrill Lynch was not requested to, and it did not, solicit indications of interest or proposals from third parties regarding a possible acquisition of all or any part of the Company or any alternative transaction. BofA Merrill Lynch’s opinion was limited to the fairness, from a financial point of view, of the per share merger consideration to be received by the holders of the Company’s common stock (other than the Excluded Holders) and no opinion or view was expressed with respect to any consideration received in connection with the merger by the holders of any other class of securities, creditors or other constituencies of any party or in connection with the voting agreement by GVI Stockholders. In addition, no opinion or view was expressed with respect to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to any of the officers, directors or employees of any party to the merger, or class of such persons, relative to the per share merger consideration. Furthermore, no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to the Company or in which the Company might engage or as to the underlying business decision of the Company to proceed with or effect the merger. In addition, BofA Merrill Lynch expressed no opinion or recommendation as to how any stockholder should vote or act in connection with the merger or any related matter. Except as described above, neither the Company nor the Special Committee imposed other limitations on the investigations made or procedures followed by BofA Merrill Lynch in rendering its opinion.

 

BofA Merrill Lynch’s opinion was necessarily based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to BofA Merrill Lynch as of, the date of its opinion. It should be understood that subsequent developments may affect its opinion, and BofA Merrill Lynch does not have any obligation to update, revise or reaffirm its opinion. The issuance of BofA Merrill Lynch’s opinion was approved by BofA Merrill Lynch’s Americas Fairness Opinion Review Committee.

The following represents a brief summary of the material financial analyses presented by BofA Merrill Lynch to the Special Committee in connection with its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses performed by BofA Merrill Lynch, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses performed by BofA Merrill Lynch. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by BofA Merrill Lynch.

 

Selected Publicly Traded Companies Analysis.   BofA Merrill Lynch reviewed publicly available financial and stock market information for the Company and the following five publicly traded marine companies operating under the Jones Act in the barge, container and other marine transportation, distribution and logistics services industries:

 

 

BofA Merrill Lynch reviewed, among other things, per share equity values, based on closing stock prices on October 15, 2010, of the selected publicly traded companies as a multiple of calendar years 2010 and 2011 estimated earnings per share, commonly referred to as EPS. BofA Merrill Lynch also reviewed enterprise values of the selected publicly traded companies, calculated as equity values based on closing stock prices on October 15, 2010, plus debt, less cash, as a multiple of calendar years 2010 and 2011 estimated earnings before interest, taxes, depreciation and amortization, commonly referred to as EBITDA. BofA Merrill Lynch then applied a multiple range of 15.0x — 18.0x of calendar year 2011 estimated EPS derived from the selected publicly traded companies to corresponding estimated EPS of the Company based on consensus estimates of recently released research analysts’ reports on the Company, which we refer to as the Wall Street Case. Estimated financial data of the selected publicly traded companies were based on publicly available consensus estimates of research analysts’ reports. This analysis indicated the following implied per share equity value reference range for the Company (rounded to the nearest $0.25), as compared to the per share merger consideration of $33.00:

 

 

No company used in this analysis is identical or directly comparable to the Company. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which the Company was compared.

Selected Precedent Transactions Analysis.   BofA Merrill Lynch reviewed, to the extent publicly available, financial information relating to the following thirteen selected transactions involving companies in the barge, container and other marine transportation, distribution and logistics services industries:

 

 

BofA Merrill Lynch reviewed transaction values, calculated as the equity value implied for the target company based on the consideration payable in the selected transaction, as a multiple of the target company’s last twelve-month, commonly referred to as LTM EBITDA. BofA Merrill Lynch then applied a multiple range of 6.0x — 9.0x of LTM EBITDA derived from the selected transactions to the Company’s LTM EBITDA. This analysis indicated the following implied per share equity value reference range for the Company (rounded to the nearest $0.25), as compared to the per share merger consideration of $33.00:

 

Implied per Share Equity
Value Reference Range for
the Company		Consideration
$21.25 - $44.75		$33.00

 

No company, business or transaction used in this analysis is identical or directly comparable to the Company or the merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which the Company and the merger were compared.

 

Discounted Cash Flow Analysis.   BofA Merrill Lynch performed a discounted cash flow analysis of the Company to calculate the estimated present value of the standalone unlevered, after-tax free cash flows that the Company could generate during the Company’s fiscal years 2010 through 2014 based on two sets of forecasts relating to the Company prepared by the management of the Company under various scenarios reflecting varying assumptions of the management of the Company, including, without limitation, with respect to the timing and amount of the Company’s estimated capital expenditures, which we refer to as the Cash Flow Neutral Case and the Deferred Investment Case. For illustrative purposes, BofA Merrill Lynch also performed a discounted cash flow analysis of the Company based on the Wall Street Case. BofA Merrill Lynch calculated terminal values for the Company by applying to the Company’s mid-cycle EBITDA a terminal multiple of 7.0x for the Cash Flow Neutral Case and the Wall Street Case, and a terminal multiple of 6.0x for the Deferred Investment Case. For the purposes of this analysis, mid-cycle EBITDA means the Company’s normalized EBITDA over the period covered by the Company forecasts, which was utilized to account for future cyclicality consistent with historical fluctuations in the Company’s financial

performance. The cash flows and terminal values were then discounted to present value using discount rates ranging from 8.5% to 10.5%, which were chosen based upon a weighted average cost of capital, commonly referred to as WACC, calculation for the Company. This analysis indicated the following implied per share equity value reference ranges for the Company (rounded to the nearest $0.25), as compared to the per share merger consideration of $33.00:

 

 

BofA Merrill Lynch also performed a discounted cash flow analysis of the Company based on the Cash Flow Neutral Case, with the Company’s EBITDA and capital expenditures adjusted to reflect returns on invested capital, commonly referred to as ROIC, ranging from 7% to 12%. BofA Merrill Lynch noted the Company’s historical median ROIC from 1995 to 2009 was 8.5%. BofA Merrill Lynch calculated terminal values for the Company by applying to the Company’s EBITDA, adjusted as described above, a terminal multiple of 7.0x. The cash flows and terminal values were then discounted to present value using discount rates ranging from 8.5% to 10.5%, which were chosen based upon a WACC calculation for the Company. This analysis indicated the following implied per share equity value reference ranges for the Company (rounded to the nearest $0.25), as compared to the per share merger consideration of $33.00:

 

 

In rendering its opinion, BofA Merrill Lynch also reviewed and considered other factors, including:

 

 

 

 

As noted above, the discussion set forth above is a summary of the material financial analyses presented by BofA Merrill Lynch to the Company’s board of directors in connection with its opinion and is not a comprehensive description of all analyses undertaken by BofA Merrill Lynch in connection with its opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to partial analysis or summary description. BofA Merrill Lynch believes that its analyses summarized above must be considered as a whole. BofA Merrill Lynch further believes that selecting portions of its analyses and the factors considered or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying BofA Merrill Lynch’s analyses and opinion. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.

 

In performing its analyses, BofA Merrill Lynch considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company and BofA Merrill Lynch. The estimates of the future performance of the Company in or underlying BofA Merrill Lynch’s analyses are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those estimates or those suggested by BofA Merrill Lynch’s analyses. These analyses were prepared solely as part of BofA Merrill Lynch’s analysis of the fairness, from a financial point of view, of the per share merger consideration and were provided to the Special Committee in connection with the delivery of BofA Merrill Lynch’s opinion. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or the prices at which any securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the ranges of valuations resulting from, any particular analysis described above are inherently subject to substantial uncertainty and should not be taken to be BofA Merrill Lynch’s view of the actual values of the Company.

 

The type and amount of consideration payable in the merger was determined through negotiations between the Company and Parent, rather than by any financial advisor, and was approved by the Special Committee. The decision to enter into the merger agreement was solely that of the Special Committee and the board of directors. As described above, BofA Merrill Lynch’s opinion and analyses were only one of many factors considered by the Special Committee in its evaluation of the merger and should not be viewed as determinative of the views of the Special Committee or management with respect to the merger or the per share merger consideration.

 

The Company has agreed to pay BofA Merrill Lynch for its services in connection with the merger an aggregate fee currently estimated to be approximately $8.3 million, a portion of which was payable in connection with its opinion and a significant portion of which is contingent upon the completion of the merger. The Company also has agreed to reimburse BofA Merrill Lynch for its expenses incurred in connection with BofA Merrill Lynch’s engagement and to indemnify BofA Merrill Lynch, any controlling person of BofA Merrill Lynch and each of their respective directors, officers, employees, agents and affiliates against specified liabilities, including liabilities under the federal securities laws.

 

BofA Merrill Lynch and its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of their businesses, BofA Merrill Lynch and its affiliates may invest on a principal basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in the equity, debt or other securities or financial instruments (including derivatives, bank loans or other obligations) of the Company, Parent and certain of their respective affiliates.

BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to the Company and have received or in the future may receive compensation for the rendering of these services, including having acted or acting as (i) administrative agent, arranger and book-running manager for, and lender under, one of the Company’s existing credit facilities as well as a lender under other credit and leasing facilities for the Company and (ii) book-running manager for a certain debt offering for the Company.

 

In addition, BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to Parent and certain of its affiliates and portfolio companies and have received or in the future may receive compensation for the rendering of these services, including having acted or acting as an underwriter or manager for certain equity and debt offerings for certain of Parent’s portfolio companies.

 

In addition, BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to GVI and have received or in the future may receive compensation for the rendering of these services, including having acted or acting as a lender under various credit and leasing facilities for GVI.

 

Below are two sets of financial forecasts of our financial performance for the fiscal years of 2010 through 2014 provided by our senior management. Our senior management provided both sets of financial forecasts to BofA Merrill Lynch for purposes of the opinion described above and provided the Cash Flow Neutral Case projections to Platinum Equity. The tables below set forth such forecasts, and set forth forecasts of free cash flow derived by BofA Merrill Lynch, based on information provided by the Company, and used by BofA Merrill Lynch in preparing its opinion.

 

The first set of projections, the Cash Flow Neutral Case, reflects a capital expenditures plan funded through cash flow from operations, not from further indebtedness. The Cash Flow Neutral Case was provided to Platinum Equity in connection with its consideration of the merger.

 

Cash Flow Neutral Case

 

 

 

 

The second set of projections, the Deferred Investment Case, assumes a prolonged period of economic stagnation whereby fleet renewal is delayed and certain strategic initiatives have approximately a third of the effect as in the Cash Flow Neutral Case. The Deferred Investment Case was not provided to Platinum Equity.

 

Deferred Investment Case

 

 

 

 

Each of EBITDA and Free Cash Flow is a non-GAAP measure. Non-GAAP financial measures are not intended to be a substitute for any GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of the performance of other companies.

 

The financial forecasts are included in this proxy statement solely because, in the case of the Cash Flow Neutral Case, they were provided to Platinum Equity in connection with its consideration of the merger and, in the case of the Cash Flow Neutral Case and the Deferred Investment Case, they were provided to BofA Merrill Lynch in connection with its opinion to the Special Committee described above. The inclusion of this information should not be regarded as an indication to any stockholder that the board of directors or any other recipient of this information considered, or now considers, it to be predictive of actual future results, and they should not be relied on as such.

 

At the time the financial forecasts set forth above were prepared, the forecasts contained in each of the Cash Flow Neutral Case and the Deferred Investment Case represented the best estimates and judgments of the Company’s management and, to the best of management’s knowledge and belief, the future financial performance of the Company under each of those scenarios. While the financial projections set forth above were prepared in good faith, no assurance can be given regarding future events. The financial forecasts also reflect numerous estimates and assumptions with respect to industry performance, general business, economic, regulatory, market and financial conditions, as well as matters specific to the Company’s business, all of which are difficult to predict and many of which are beyond the Company’s control. As a result, there can be no assurance that the forecasted results will be realized or that actual results will not be significantly higher or lower than forecasted. Since the financial forecasts cover multiple years, such information by its nature becomes less predictive with each successive year. Also, the economic and business environments can and do change quickly, which adds a significant level of unpredictability, unreliability and execution risk. These factors create significant doubt as to whether the forecasts for fiscal years 2010 and beyond are likely to be achieved. As a result, the financial forecasts are not necessarily indicative of future results. In addition, the Company prepared the financial forecasts prior to the board of directors’ approval of the merger agreement and, accordingly, the financial forecasts do not reflect the effects of the merger or the merger agreement, which may cause results to differ materially. Although presented with numeric specificity, the financial forecasts reflect numerous estimates and assumptions that may not be realized and are subject to significant uncertainties and contingencies, many of which are beyond the Company’s control. Accordingly, readers of this proxy statement are cautioned not to place undue reliance on the financial forecasts.

The financial forecasts were prepared for internal use and not with a view toward public disclosure or toward complying with GAAP, the published guidelines of the SEC regarding forecasts or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The financial forecasts included in this proxy statement were prepared by, and are the responsibility of, our management. We do not assume any responsibility to update these financial forecasts. Neither our independent registered public accounting firm, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the financial forecasts contained herein, nor have they expressed any opinion or any other form of assurance on such financial forecasts or their achievability, and assume no responsibility for, and disclaim any association with, the financial forecasts. Furthermore, the financial forecasts do not take into account any circumstances or events occurring after the date the financial forecasts were prepared that were unforeseen by our management at the time of preparation. We have made publicly available our actual results of operations for the quarter ended June 30, 2010. Our stockholders should review our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 to obtain this information. See the section entitled “Where You Can Find More Information” beginning on page 85.

 

None of the Company or our affiliates, advisors, officers, directors or representatives has made or makes any representation to any stockholder or other person regarding the ultimate performance of the Company compared to the information contained in the financial forecasts or that forecasted results will be achieved.

 

We anticipate that the total funds needed to complete the merger, including the funds needed to:

 

 

will be approximately $798 million.

 

We expect this amount to be funded through a combination of:

 

 

ACL intends to keep the Company’s existing senior secured notes outstanding and will comply with the indenture governing the notes, including making any required offer to purchase the notes upon a change of control, subject to Parent’s right to require us prior to closing to make an offer to purchase the notes.

 

Parent and Merger Sub have received an equity commitment for an aggregate investment of up to $500 million from the guarantor, as described below.

 

Intermediate Holdco has obtained the debt financing commitment described below. The funding under that commitment is subject to certain conditions precedent, including conditions that do not relate directly to the merger agreement. Intermediate Holdco has obtained a binding commitment letter from Wells Fargo Capital Finance, LLC, which we refer to as Wells Fargo, whereby Wells Fargo has agreed to provide in the aggregate up to $550 million in debt financing to Intermediate Holdco, which we refer to as the debt commitment letter. Parent and Merger Sub also entered into a binding commitment letter with Platinum Equity Capital Partners II, L.P., an affiliate of Parent which we refer to as the guarantor, to receive an equity commitment for an aggregate investment of up to $500 million, which we refer to as the equity financing letter, which in and of itself is sufficient to pay the merger consideration to stockholders. The financings contemplated by the debt commitment letter and the equity financing letter are subject to certain conditions, as described elsewhere in the proxy statement. We believe the committed amounts will be sufficient to complete the transaction. Those amounts might be insufficient if, among other things, the Company realizes substantially less net proceeds from the debt financing than we currently expect. Although obtaining the debt financing is

not a condition to the completion of the merger, the failure of Intermediate Holdco to obtain sufficient financing is likely to result in the failure of the merger to be completed. In that case, Parent may be obligated to pay the Company the Parent termination fee, as described under the section entitled “The Merger Agreement — Fees and Expenses” beginning on page 72. That obligation is guaranteed by the guarantor.

 

Parent and Merger Sub have received an equity commitment letter for an aggregate investment at closing of up to $500 million, which will constitute the equity portion of the merger financing. The guarantor has agreed to cause up to $500 million of cash to be contributed to Parent and Merger Sub at closing. Subject to certain conditions, the guarantor may assign all or a portion of its equity commitment obligations to other affiliates of the guarantor, provided that the guarantor will not be released from its commitment until such affiliate actually contributes the commitment assigned to such affiliate.

 

The equity commitment is generally subject to the satisfaction of the conditions to closing under the merger agreement. The obligations of the guarantor under the equity commitment letter will terminate upon the earlier to occur of (i) the termination of the merger agreement or (ii) the assertion by the Company of certain claims and (iii) the consummation of the merger.

 

In connection with entering into the merger agreement, Intermediate Holdco received a debt commitment letter, dated October 18 2010, from Wells Fargo to provide in the aggregate up to $550 million in debt financing to Intermediate Holdco, subject to certain availability limitations described below, consisting of a senior secured asset-based revolving credit facility in an aggregate principal amount of up to $550 million; subject to (x) a $160 million availability block so long as the Company’s indenture governing its senior secured second lien notes is in effect, (y) a $150 million availability block, which will initially be available solely to finance any obligation of the Company to repurchase such second lien notes on account of a change of control under the applicable indenture, and (z) adequate capacity under the borrowing base (which includes accounts receivable, fuel inventory, raw steel inventory and vessels, in each case, subject to certain limitations including advance rates, eligibility criteria and reserves).

 

The facilities contemplated by the debt financing commitments are subject to customary closing conditions, including without limitation:

 

 

 

In the event that all the conditions to the closing of the merger are satisfied (or upon funding will be satisfied), Parent and Merger Sub have agreed to use their reasonable best efforts to cause the lenders and any other person providing debt financing to fund on the closing date of the merger the debt financing required to complete the merger and the other transactions contemplated by the merger agreement. Parent and Merger Sub acknowledge in the merger agreement that the obtaining of the equity and debt financing is not a condition to the consummation of the merger, such that if the equity or debt financing has not been obtained, Parent and Merger Sub will continue to be obligated, subject to the satisfaction or waiver of the closing conditions in the merger agreement, to consummate the merger.

 

We have agreed to use our reasonable best efforts to cooperate with Parent and Merger Sub in connection with obtaining the equity and debt financing including by providing financial and other pertinent information regarding the Company as may be reasonably requested by Parent; provided that the Company shall not be required to pay any commitment or other similar fee or to incur any other liability in connection with the financing, and such cooperation shall not be required if it would require the Company or any of its subsidiaries or representatives to waive or amend any terms of the merger agreement.

 

Although the debt financing described in this proxy statement is not subject to due diligence or a so called “market out” provision, which allows lenders not to fund their commitments if certain conditions in the financial markets prevail, there is still a risk that such financing may not be funded when required. As of the date of this proxy statement, Parent has not informed us of any alternative financing arrangements or alternative financing plans that have been made in the event the debt financing described in this proxy statement is not available as anticipated.

 

Pursuant to a limited guarantee delivered by the guarantor in favor of the Company, dated October 18, 2010, the guarantor has agreed to guarantee the payment obligations of Parent relating to the Parent termination fee and certain costs associated therewith, if and when payable. The guarantor’s maximum liability under the limited guarantee is limited to the amount of the Parent termination fee, which will be $16,000,000 or $20,000,000, plus enforcement costs and interest payable in the event of a suit that results in a judgment against Parent for payment of the Parent termination fee.

 

The closing of the merger will take place on the third business day following the later of (x) the date on which the conditions to closing of the merger (described under the section entitled “The Merger Agreement — Conditions to the Merger” beginning on page 69) have been satisfied or waived (other than the conditions that by their terms are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of those conditions) and (y) the final day of the marketing period or such earlier date as may be specified by Parent by

written notice to the Company, or in any case at such other location, date and time as Parent, Merger Sub and the Company shall mutually agree upon in writing. What we refer to as the marketing period, means the period beginning on the date of the merger agreement and ending on (i) December 21, 2010 if the requisite stockholder approval shall have been obtained on or before December 20, 2010, and (ii) if the requisite stockholder approval shall not have been obtained by December 20, 2010, five business days after the date on which the requisite stockholder approval is obtained.

 

The effective time will occur on the date of the closing of the merger upon the filing of a certificate of merger with the Secretary of State of the State of Delaware (or at such later date as we and Parent may agree and specify in the certificate of merger).

 

Each record holder of shares of the common stock (other than holders of solely the excluded shares) will be sent a letter of transmittal describing how such holder may exchange his or her shares of common stock for the per share merger consideration promptly after the completion of the merger.

 

You should not return your stock certificates with the enclosed proxy card, and you should not forward your stock certificates to the paying agent without a letter of transmittal.

 

You will not be entitled to receive the per share merger consideration until you deliver a duly completed and executed letter of transmittal to the paying agent. If your shares are certificated, you must also surrender your stock certificate or certificates to the paying agent. If ownership of your shares is not registered in the transfer records of the Company, a check for any cash to be delivered will only be issued if the applicable letter of transmittal is accompanied by all documents reasonably required to evidence and effect transfer and to evidence that any applicable stock transfer taxes have been paid or are not applicable.

 

In considering the recommendation of our board of directors that you vote to approve the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, those of our stockholders generally. The board of directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by the stockholders of the Company.

 

Under the merger agreement, all outstanding vested stock options (and for our directors and our employees below the vice president level, unvested stock options) will be cancelled and converted into the right to receive cash, in an amount equal to the product of (x) the total number of shares of common stock subject to such option immediately prior to the effective time and (y) the excess, if any, of the per share merger consideration over the exercise price per share of such option, less any applicable withholding taxes.

 

Under the merger agreement, at the effective time and without any action on the part of the holders thereof, each unvested option held by an employee at or above our vice president level that is outstanding immediately prior to the effective time and set forth on the disclosure schedule relating to the merger agreement will, unless Parent elects to cash-out such awards on the terms of the preceding paragraph, be assumed or substituted by Parent, each such award we refer to as an assumed award, and converted automatically at the effective time into an option denominated in shares of Parent common stock and with other terms and conditions substantially similar to those of the related options, except that (i) the number of shares of Parent common stock subject to each such assumed award shall be determined by multiplying the number of shares of our common stock subject to such assumed award immediately prior to the effective time by the exchange ratio (rounded down to the nearest whole share) and (ii) if applicable, the exercise price per share of Parent common stock (rounded upwards to the nearest whole cent) shall equal (x) the per share

exercise price for the shares of our common stock otherwise purchasable pursuant to such assumed award immediately prior to the effective time divided by (y) the exchange ratio. The exchange ratio will be equal to the quotient of (1) the per share merger consideration, divided by (2) the fair market value of a share of Parent common stock immediately following the effective time as determined by Parent consistent with the price paid by the affiliates of Parent for (including contributions by such affiliates with respect to) a share of Parent common stock.

 

Restricted Stock Units

 

Under the merger agreement, each outstanding vested restricted stock unit, and each outstanding restricted stock unit held by our directors or by an employee below the vice president level, whether or not vested, and without regard to any performance criteria set forth in therein, will be cancelled and converted into the right to receive cash in an amount equal to the product of (x) the total number of shares of common stock subject to such restricted stock unit immediately prior to the effective time and (y) the per share merger consideration, less any applicable withholding taxes.

 

Each unvested restricted stock unit held by an employee at or above the vice president level that is outstanding immediately prior to the effective time and set forth on the disclosure schedule relating to the merger agreement, or an assumed RSU award, will, unless Parent elects to cash-out such awards on the terms of the preceding paragraph, be assumed or substituted by Parent and converted automatically at the effective time into a restricted stock unit denominated in Parent common stock and with other terms and conditions substantially similar to those of the related restricted stock unit awards, except that the number of shares of Parent common stock subject to each such assumed RSU award shall be determined by multiplying the number of shares of our common stock subject to such assumed RSU award immediately prior to the effective time by the exchange ratio (rounded down to the nearest whole share).

 

The table below provides detail as to the value of the outstanding options and restricted stock units and performance stock units held by our directors which at the effective time, whether or not vested, will become fully vested and cancelled and converted into the right to receive the per share merger consideration. The table below also provides detail as to the value of the outstanding vested options and restricted stock units held by our executive officers that will be cancelled and converted into the right to receive the per share merger consideration and the value of the outstanding unvested options and restricted stock units held by our executive officers that will be assumed by Parent unless Parent elects to cash them out.

 

 

 

 

 

On March 12, 2008, the Company entered into an employment letter agreement with Michael P. Ryan, the President and Chief Executive Officer of ACL. Pursuant to the terms of Mr. Ryan’s employment letter agreement, if his employment is terminated after a change-in-control, as defined in the stock option agreement, certain options granted to Mr. Ryan pursuant to the offer letter become 100 percent vested and exercisable. The employment letter agreement also provides that Mr. Ryan will be entitled to twelve months severance as well as a pro-rated annual bonus paid in one lump sum, not to exceed 100 percent of the payout, in the year of termination if his employment is involuntarily terminated without cause or if Mr. Ryan terminates his employment for good reason (as defined in the employment letter agreement). Mr. Ryan is not entitled to severance pay for separations that are the result of voluntary termination, discharge for performance, death, retirement or permanent disability.

 

On March 18, 2008, the Company entered into an employment letter agreement with Thomas R. Pilholski, the Senior Vice President and Chief Financial Officer of ACL. Pursuant to the terms of Mr. Pilholski’s employment letter agreement, if his employment is terminated involuntarily without cause or if he terminates employment for good reason (as defined in the stock option agreement), certain options granted to Mr. Pilholski pursuant to the offer letter become 100 percent vested and exercisable. The employment letter agreement also provides Mr. Pilholski will be entitled to twelve months severance as well as a pro-rata annual bonus paid in one lump sum, not to exceed 100 percent of the payout, in the year of termination (based on Company performance achievement at that time) if his employment is involuntarily terminated without cause or if Mr. Pilholski terminates his employment for good reason (as defined in the employment letter agreement). Mr. Pilholski is not entitled to severance pay for separations that are the result of voluntary termination, discharge for cause, death, retirement or permanent disability.

 

On October 28, 2008, the Company entered into an employment letter agreement with Richard W. Spriggle, the Senior Vice President, Human Resources of ACL. Pursuant to the terms of Mr. Spriggle’s employment letter agreement, if his employment is terminated involuntarily without cause or if he terminates employment for good reason (as defined in the employment letter agreement), Mr. Spriggle will be entitled to twelve months severance. Mr. Spriggle is not entitled to severance pay for separations that are the result of voluntary termination, discharge for cause, death, retirement or permanent disability.

 

Upon a change in control (as defined in the applicable nonqualified stock option agreement, incentive stock option agreement, restricted stock award agreement and restricted stock unit award agreement), any outstanding options granted prior to 2009 will immediately become fully vested and restricted stock units granted prior to 2008 will fully lapse for each of the Company’s named executive officers.

 

Upon a termination without cause within one year of a change in control (as defined in the applicable nonqualified stock option agreement, incentive stock option agreement, restricted stock award agreement and restricted stock unit award agreement), any outstanding options, restricted stock and restricted stock units granted during or after 2009 will immediately become fully vested for each of the Company’s named executive officers.

 

As of the date of this proxy statement except as described above with respect to the possible assumption of unvested equity awards held by certain of our officers, no members of our current management have entered into any agreement, arrangement or understanding with Parent or its affiliates regarding employment with, or the right to convert into or reinvest or participate in the equity of, the surviving corporation or Parent or its affiliates. Although it would not be unexpected that some members of our current management team will enter into arrangements, agreements or understandings with Parent or its affiliates regarding employment (and severance arrangements) with, and the right to purchase or participate in the equity of, Parent (and/or a subsidiary of Parent), as of the date of this proxy statement except as described above with respect to the possible assumption of unvested equity awards held by certain of our officers, no such agreements, arrangements or understandings have been reached between members of our current management and representatives of Parent, and there can be

no assurance that any parties will reach an agreement, arrangement or understanding. New arrangements, agreements or understandings, if any, are currently expected to be entered into at or prior to completion of the merger and would not become effective until after the merger is completed.

 

Except as disclosed in this proxy statement, there is no present or proposed material agreement, arrangement, understanding or relationship between Parent, Merger Sub, the guarantor or any of their respective executive officers, directors, controlling persons or subsidiaries, on the one hand, and the Company or any of its executive officers, directors, controlling persons or subsidiaries, on the other hand.

 

The merger will be accounted for as a “purchase transaction” for financial accounting purposes.

 

The following is a summary of the material U.S. federal income tax consequences of the merger to U.S. holders (as defined below) whose shares of common stock are converted into the right to receive cash in the merger. This summary does not purport to consider all aspects of U.S. federal income taxation that might be relevant to our stockholders. For purposes of this discussion, we use the term “U.S. holder” to mean a beneficial owner of shares of common stock that is, for U.S. federal income tax purposes:

 

 

If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds common stock, the tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. A partner of a partnership holding common stock should consult the partner’s tax advisor regarding the U.S. federal income tax consequences of the merger to such partner.

 

This discussion is based on current law, which is subject to change, possibly with retroactive effect. The discussion applies only to beneficial owners who hold shares of common stock as capital assets, and does not apply to shares of common stock received in connection with the exercise of employee stock options or otherwise as compensation, stockholders who hold an equity interest, actually or constructively, in Parent or the surviving corporation after the merger, stockholders who validly exercise their rights under the DGCL to object to the merger or to certain types of beneficial owners who may be subject to special rules (such as insurance companies, banks, tax-exempt organizations, financial institutions, broker-dealers, partnerships, S corporations or other pass-through entities, mutual funds, traders in securities who elect the mark-to-market method of accounting, stockholders subject to the alternative minimum tax, stockholders that have a functional currency other than the U.S. dollar or stockholders who hold common stock as part of a hedge, straddle, constructive sale or conversion transaction). This discussion also does not address the U.S. tax consequences to any stockholder who, for U.S. federal income tax purposes, is a non-resident alien individual, foreign corporation, foreign partnership or foreign estate or trust, and does not address the receipt of cash in connection with the cancellation of shares of stock appreciation rights, restricted stock units or options to purchase shares of common stock, or any other matters relating to equity compensation or employee benefit plans. This discussion does not address any aspect of state, local or foreign tax laws.

 

The exchange of shares of common stock for cash in the merger will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder whose shares of common stock are converted into the right to receive cash in the merger will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received with respect to such shares (determined before the deduction of any applicable withholding taxes) and the U.S. holder’s adjusted tax basis in such shares. Gain or loss will be determined separately for each block of shares of common stock (i.e., shares of common stock acquired at the same cost in a single transaction). Such gain or loss will be long-term capital gain or loss provided that the U.S. holder’s holding period for such shares of common stock is more than one year at the time of the completion of the merger. Long-term capital gains of non-corporate U.S. holders are eligible for reduced rates of taxation. There are limitations on the deductibility of capital losses.

 

Backup withholding of tax (at the rate of 28%) may apply to cash payments to which a U.S. holder is entitled under the merger agreement, unless the U.S. holder or other payee provides a taxpayer identification number, certifies that such number is correct, and otherwise complies with the backup withholding rules. Each of our U.S. holders should complete and sign, under penalty of perjury, a Form W-9 included as part of the letter of transmittal and return it to the paying agent, in order to provide the information and certification necessary to avoid backup withholding, unless an exemption applies and is established in a manner satisfactory to the paying agent.

 

Backup withholding is not an additional tax. Any amounts withheld from cash payments to a U.S. holder pursuant to the merger under the backup withholding rules will be allowable as a refund or a credit against such U.S. holder’s U.S. federal income tax liability provided the required information is timely furnished to the Internal Revenue Service.

 

Cash payments made pursuant to the merger will also be subject to information reporting unless an exemption applies.

 

The U.S. federal income tax consequences described above are not intended to constitute a complete description of all tax consequences relating to the merger. Because individual circumstances may differ, each stockholder should consult the stockholder’s tax advisor regarding the applicability of the rules discussed above to the stockholder and the particular tax effects to the stockholder of the merger in light of such stockholder’s particular circumstances, the application of state, local and foreign tax laws, and, if applicable, the tax consequences of the receipt of cash in connection with the cancellation of options to purchase shares of common stock, stock appreciation rights or restricted stock units, including the transactions described in this proxy statement relating to our other equity compensation and benefit plans.

 

Under the terms of the merger agreement, the merger cannot be completed until the waiting period applicable to the consummation of the merger under the HSR Act has expired or been earlier terminated.

 

Under the HSR Act, and the rules promulgated thereunder by the FTC, the merger cannot be completed until each of the Company and Parent file a notification and report form with the FTC and the Antitrust Division of the DOJ under the HSR Act and the applicable waiting period has expired or been terminated. Each of the Company and Parent filed such a notification and report form on November 1, 2010 and November 5, 2010, respectively, and requested early termination of the waiting period. At any time before or after consummation of the merger, notwithstanding the termination of the waiting period under the HSR Act, the Antitrust Division of the DOJ or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the merger or seeking divestiture of substantial assets of the Company or Parent. At any time before or after the completion of the merger, and notwithstanding the termination of the waiting period under the HSR Act, any state could

take such action under the antitrust laws as it deems necessary or desirable in the public interest. Such action could include seeking to enjoin the completion of the merger or seeking divestiture of substantial assets of the Company or Parent. Private parties may also seek to take legal action under the antitrust laws under certain circumstances.

 

There can be no assurance that the regulatory approvals described above will be sought or obtained and, if obtained, there can be no assurance as to the timing of any approvals, ability to obtain the approvals on satisfactory terms or the absence of any litigation challenging such approvals. There can also be no assurance that the DOJ, the FTC or any other governmental entity or any private party will not attempt to challenge the merger on antitrust grounds, and, if such a challenge is made, there can be no assurance as to its result.

 

On October 22, 2010, a putative class action lawsuit was commenced against us, our directors, Platinum Equity, Parent and Merger Sub in the Court of Chancery of the State of Delaware. The lawsuit is captioned Leonard Becker v. American Commercial Lines Inc., et al, Civil Action No. 5919-VCL. Plaintiff amended his complaint on November 5, 2010, prior to a formal response from any defendant. On November 9, 2010, a second putative class action lawsuit was commenced against us, our directors, Platinum Equity, Parent and Merger Sub in the Superior/Circuit Court for Clark County in the State of Indiana. The lawsuit is captioned Michael Eakman v. American Commercial Lines Inc., et al., Case No. 1002-1011-CT-1344. In both actions, plaintiffs allege generally that our directors breached their fiduciary duties in connection with the transaction by, among other things, carrying out a process that they allege did not ensure adequate and fair consideration to our stockholders. They also allege that various disclosures concerning the transaction included in this proxy statement are inadequate. They further allege that Platinum Equity aided and abetted the alleged breaches of duties. Plaintiffs purport to bring the lawsuits on behalf of the public stockholders of the Company and seek equitable relief to enjoin consummation of the merger, rescission of the merger and/or rescissory damages, and attorneys fees and costs, among other relief. The Company believes the lawsuits are without merit.

 

This section describes the material terms of the merger agreement. The description in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the merger agreement, a copy of which is attached as Annex A and is incorporated by reference into this proxy statement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. We encourage you to read the merger agreement carefully and in its entirety. This section is not intended to provide you with any factual information about us. Such information can be found elsewhere in this proxy statement and in the public filings we make with the SEC, as described in the section entitled “Where You Can Find More Information” beginning on page 85.

 

The merger agreement is included to provide you with information regarding its terms. Factual disclosures about the Company contained in this proxy statement or in the Company’s public reports filed with the SEC may supplement, update or modify the factual disclosures about the Company contained in the merger agreement. The representations, warranties and covenants contained in the merger agreement were made only for purposes of the merger agreement and were made as of specified dates, were solely for the benefit of the parties to the merger agreement, and are qualified by information in confidential disclosure schedules that the Company exchanged with Parent and Merger Sub in connection with the execution of the merger agreement. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the merger agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to your investment decision. In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the circumstances in which a party to

the merger agreement may have the right not to close the merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the merger agreement, rather than establishing matters as facts. Although these representations and warranties may not constitute the actual state of facts about the parties to the agreements as of a specific date, any specific material facts that qualify the representations and warranties in the merger agreement have been disclosed in this proxy statement or in the information incorporated by reference herein, as applicable. Accordingly, the representations and warranties and other provisions of the merger agreement should not be read alone, but instead should be read only in conjunction with the other information provided elsewhere in this proxy statement or incorporated by reference into this proxy statement. None of the representations and warranties of the parties to the merger agreement will survive the effective time of the merger.

 

The merger agreement provides for the merger of Merger Sub with and into the Company upon the terms, and subject to the conditions, set forth in the merger agreement. As the surviving corporation, the Company will continue to exist following the merger.

 

Following the completion of the merger, we expect the common stock to be delisted from Nasdaq and deregistered under the Exchange Act, and to cease to be publicly traded.

 

The closing of the merger will take place on the third business day following the later of (x) the date on which the conditions to closing of the merger (described under the section entitled “The Merger Agreement — Conditions to the Merger” beginning on page 69) have been satisfied or waived (other than the conditions that by their terms are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of those conditions) and (y) the final day of the marketing period or such earlier date as may be specified by Parent by written notice to the Company, or in any case at such other location, date and time as Parent, Merger Sub and the Company shall mutually agree upon in writing. Marketing period means the period beginning on October 18, 2010, the date of the merger agreement, and ending on (i) December 21, 2010 if the requisite stockholder approval shall have been obtained on or before December 20, 2010, and (ii) if the requisite stockholder approval shall not have been obtained by December 20, 2010, five business days after the date on which the requisite stockholder approval is obtained.

 

The effective time will occur on the date of the closing of the merger upon the filing of a certificate of merger with the Secretary of State of the State of Delaware (or at such later date as we and Parent may agree and specify in the certificate of merger).

 

The board of directors of the surviving corporation will, from and after the effective time, consist of the directors of Merger Sub until their successors have been duly appointed and qualified, or until their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the surviving corporation. The officers of Merger Sub at the effective time will, from and after the effective time, be the officers of the surviving corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the surviving corporation.

 

The certificate of incorporation of the surviving corporation will be in the form attached as Exhibit B to the merger agreement, until amended in accordance with applicable law and its terms. The bylaws of the Company immediately prior to the effective time will, from and after the effective time, be amended in their entirety in the form of the bylaws of Merger Sub as in effect immediately prior to the effective time, until amended in accordance with applicable law, its terms and the certificate of incorporation of the surviving corporation.

Treatment of Common Stock, Options and Other Equity Awards

 

Common Stock

 

In the merger, each outstanding share of Company common stock (except for certain shares owned, if any, by the Company, Parent, Merger Sub, and their direct and indirect wholly owned subsidiaries, GVI Stockholders, and shares owned by stockholders who have properly exercised their appraisal rights) will be converted into the right to receive $33.00 in cash, without interest, which amount we refer to as the per share merger consideration, less any applicable withholding taxes. GVI Stockholders will be entitled to receive for each share of Company common stock they hold $31.25 in cash, without interest, less applicable withholding taxes, if the transaction closes on or before December 31, 2010 and $33.00 in cash, without interest, less applicable withholding taxes, if the transaction closes thereafter.

 

Common stock owned by Parent, Merger Sub or any other direct or indirect wholly owned subsidiary of Parent or Merger Sub will be cancelled without payment of consideration. Each share of our common stock that is held by any of our direct or indirect wholly owned subsidiaries shall remain outstanding and will become that number of shares of the surviving corporation that bears the same ratio to the aggregate number of outstanding shares of the surviving corporation as the number of shares of our common stock held by any one of our subsidiaries bore to the aggregate number of outstanding shares of our common stock immediately prior to the effective time. Common stock owned by stockholders who have properly exercised, and not effectively withdrawn or lost or failed to perfect, appraisal rights under the DGCL will be not be entitled to receive the per share merger consideration. Such stockholders will instead be entitled to the appraisal rights provided under the DGCL as described under the section entitled “Appraisal Rights” beginning on page 81.

 

Under the merger agreement, all outstanding vested stock options (and for our directors and our employees below the vice president level, unvested stock options) will be cancelled and converted into the right to receive cash, in an amount equal to the product of (x) the total number of shares of common stock subject to such option immediately prior to the effective time and (y) the excess, if any, of the per share merger consideration over the exercise price per share of such option, less any applicable withholding taxes.

 

Under the merger agreement, at the effective time and without any action on the part of the holders thereof, each unvested option held by an employee at or above the vice president level that is outstanding immediately prior to the effective time and set forth on the disclosure schedule relating to the merger agreement will, unless Parent elects to cash-out such awards on the terms of the preceding paragraph, be assumed or substituted by Parent, each such award we refer to as an assumed award, and converted automatically at the effective time into an option denominated in shares of Parent common stock and with other terms and conditions substantially similar to those of the related options, except that (i) the number of shares of Parent common stock subject to each such assumed award shall be determined by multiplying the number of shares of our common stock subject to such assumed award immediately prior to the effective time by the exchange ratio (rounded down to the nearest whole share) and (ii) if applicable, the exercise price per share of Parent common stock (rounded upwards to the nearest whole cent) shall equal (x) the per share exercise price for the shares of our common stock otherwise purchasable pursuant to such assumed award immediately prior to the effective time divided by (y) the exchange ratio. The exchange ratio will be equal to the quotient of (1) the per share merger consideration, divided by (2) the fair market value of a share of Parent common stock immediately following the effective time as determined by Parent consistent with the price paid by the affiliates of Parent for (including contributions by such affiliates with respect to) a share of Parent common stock.

 

Under the merger agreement, each outstanding vested restricted stock unit, and each outstanding restricted stock unit held by an employee below the vice president level or by our directors whether or not vested and without regard to any performance criteria set forth therein, will be cancelled and converted into the right to receive cash in an amount equal to the product of (x) the total number of shares of common stock subject to

such restricted stock unit immediately prior to the effective time and (y) the per share merger consideration, less any applicable withholding taxes.

 

Each unvested restricted stock unit held by an employee at or above the vice president level that is outstanding immediately prior to the effective time and set forth on the disclosure schedule relating to the merger agreement, or an assumed RSU award will, unless Parent elects to cash-out such award on the terms of the preceding paragraph, be assumed or substituted by Parent and converted automatically at the effective time into a restricted stock unit denominated in Parent common stock and with other terms and conditions substantially similar to those of the related restricted stock unit awards, except that the number of shares of Parent common stock subject to each such assumed RSU award shall be determined by multiplying the number of shares of our common stock subject to such assumed RSU award immediately prior to the effective time by the exchange ratio (rounded down to the nearest whole share).

 

At the effective time, Parent has agreed to deposit, or cause to be deposited, with the paying agent a cash amount in immediately available funds necessary for the paying agent to make payment of the aggregate per share merger consideration to the holders of shares of our common stock (other than holders of dissenting shares, who shall have such rights as described in greater detail in the merger agreement and discussed under the section entitled “Appraisal Rights” beginning on page 81).

 

Promptly following the consummation of the merger (but in no event more than three business days thereafter), Parent and the surviving corporation have agreed to cause the paying agent to send each record holder of shares of common stock a letter of transmittal and / or instructions advising you how to surrender your certificates and uncertificated shares in exchange for an amount in cash equal to the product obtained by multiplying the aggregate number of shares of the common stock represented by your certificate(s) or the uncertificated shares, as the case may be, and the per share merger consideration (less any applicable withholding taxes payable in respect thereof). The merger agreement contemplates that the paying agent will pay you your merger consideration after you have surrendered your certificates for cancellation to the payment agent together with the letter of transmittal duly completed and validly executed, or upon receipt of an “agent’s message” by the paying agent in the case of a book-entry transfer or uncertificated shares. You should not return your stock certificates with the enclosed proxy card, and you should not forward your stock certificates to the paying agent without a letter of transmittal.

 

No interest will be paid or accrued on the per share merger consideration. Parent, the surviving corporation and the paying agent will be entitled to deduct and withhold any applicable taxes from the per share merger consideration. Any sum that is withheld will be deemed to have been paid to the person with regard to whom it is withheld.

 

From and after the effective time, there will be no transfers on our stock transfer books of shares of common stock that were outstanding immediately prior to the effective time. If, after the effective time, any person presents to the surviving corporation, Parent or the paying agent any certificates or any transfer instructions relating to shares cancelled in the merger, such person will be given a copy of the letter of transmittal and told to comply with the instructions in that letter of transmittal in order to receive the cash to which such person is entitled.

 

Any portion of the per share merger consideration deposited with the paying agent that remains unclaimed by former record holders of common stock for twelve months after the effective time will be delivered to the surviving corporation. Holders of common stock who have not surrendered their certificates or uncertificated shares by that time will thereafter only look to the surviving corporation for payment of the per share merger consideration. None of the surviving corporation, Parent, the paying agent or any other person will be liable to any former holders of common stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar laws.

 

If you have lost a certificate, or if it has been stolen or destroyed, then before you will be entitled to receive the per share merger consideration, you will have to make an affidavit of the loss, theft or

destruction, and if required by Parent, post a bond in a customary amount as indemnity against any claim that may be made against it, the paying agent or the surviving corporation with respect to such certificate. These procedures will be described in the letter of transmittal that you will receive, which you should read carefully in its entirety.

 

The guarantor, pursuant to an equity financing letter, has committed to contribute to Parent and Merger Sub up to $500 million, which will constitute the equity portion of the merger financing.

 

Parent and Merger Sub have agreed to use their reasonable best efforts to obtain debt financing for the merger on the terms and conditions described in the debt commitment letter from Wells Fargo Capital Finance, LLC, including:

 

 

Parent and Merger Sub have agreed not to amend or waive any provision under the debt commitment letter without the prior written consent of the Company if such amendment or waiver (i) reduces the aggregate amount of the financing, or (ii) amends any of the conditions precedent to the receipt to the financing in a manner that would reasonably be expected to delay or prevent the closing of the merger or make the funding of the financing less likely to occur.

 

In the event that all the conditions to the closing of the merger are satisfied (or upon funding will be satisfied), Parent and Merger Sub have agreed to use their reasonable best efforts to cause the lenders and any other person providing debt financing to fund on the closing date of the merger the debt financing required to complete the merger and the other transactions contemplated by the merger agreement, but not before the end of the marketing period. Parent and Merger Sub acknowledge in the merger agreement that the obtaining of the equity and debt financing is not a condition to the consummation of the merger, such that if the equity or debt financing has not been obtained, Parent and Merger Sub will continue to be obligated, subject to the satisfaction or waiver of the closing conditions in the merger agreement, to consummate the merger.

 

We have agreed to use our reasonable best efforts to cooperate with Parent and Merger Sub in connection with obtaining the equity and debt financing including by providing financial and other pertinent information regarding the Company as may be reasonably requested by Parent; provided that the Company shall not be required to pay any commitment or other similar fee or to incur any other liability in connection with the financing, and such cooperation shall not be required if it would require the Company or any of its subsidiaries or representatives to waive or amend any terms of the merger agreement.

 

We made customary representations and warranties in the merger agreement that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement, in the disclosure schedule the Company delivered in connection therewith, or in the public filings we have made with the SEC. These representations and warranties relate to, among other things:

 

 

 

 

Many of our representations and warranties are qualified by, among other things, exceptions relating to the absence of a Company material adverse effect, which is defined to mean any change, occurrence, event, violation, inaccuracy, effect or circumstance (each of which we refer to as an effect) that, individually or taken together with all other effects is or would reasonably be expected to be materially adverse to (A) the business, assets, liabilities, condition (financial or otherwise) or results of operations of the Company and our subsidiaries, taken as a whole, or (B) the ability of the Company to consummate the merger or otherwise perform our obligations under the merger agreement other than:

 

 

 

except, in the case of the first six bullets above, to the extent such effect has not had a disproportionate effect on the Company and our subsidiaries, taken as a whole, relative to other companies in our industry.

 

The merger agreement also contains customary representations and warranties made by Parent and Merger Sub that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement. The representations and warranties of Parent and Merger Sub relate to, among other things:

 

 

The representations and warranties in the merger agreement of each of the Company, Parent and Merger Sub will terminate upon the consummation of the merger or the termination of the merger agreement pursuant to its terms. The Guarantee will survive the termination of the merger agreement pursuant to its terms.

 

Under the merger agreement, we have agreed that, subject to certain exceptions in the merger agreement and disclosure schedules we delivered in connection with the merger agreement, between the date of the merger agreement and the effective time, unless Parent gives its prior written approval (which cannot be unreasonably withheld, delayed or conditioned) or as otherwise required by law, we and our subsidiaries will cause our businesses to be conducted in the ordinary course consistent with past practice and will use our commercially reasonable efforts to preserve our business organizations intact, and preserve current relationships with significant customers, suppliers and employees and executive officers.

 

Subject to certain exceptions set forth in the merger agreement and disclosure schedules we delivered in connection with the merger agreement, we will not, and we will not permit our subsidiaries to, take any of the following actions without Parent’s approval (which cannot be unreasonably withheld, delayed or conditioned):

 

 

 

 

 

The merger agreement provides that, until 11:59 p.m., Eastern Time, on November 27, 2010, which we refer to as the no-shop period start date, we, our subsidiaries and our representatives are permitted to:

 

 

On the no-shop period start date the Company must cease and cause to be terminated any discussions or negotiations it is engaged in with any person (other than any excluded party) that would otherwise be prohibited by the merger agreement provisions summarized below.

 

From and after the no-shop period start date we have agreed that, until the effective time or, if earlier, the termination of the merger agreement, we, our subsidiaries and our representatives may not:

 

 

 

At any time prior to obtaining the requisite stockholder approval, the board of directors and/or any authorized committee thereof may, directly or indirectly through one or more representatives, participate or engage in discussions or negotiations with, furnish any non-public information relating to the Company or any of its subsidiaries to, and/or afford access to the business, properties, assets, books, records or other non-public information, or to the personnel, of the Company or any of its subsidiaries, in each case, pursuant to an acceptable confidentiality agreement to:

 

 

In addition, at any time prior to obtaining the requisite stockholder approval, (i) the board of directors may (whether or not it has received a superior proposal) effect a board recommendation change or (ii) after effecting a board recommendation change, if the Company has received a bona fide written acquisition proposal from any person that the board of directors concludes in good faith constitutes a superior proposal, the board of directors may authorize the Company to terminate the merger agreement to enter into an alternative acquisition agreement with respect to such superior proposal, if and only if:

 

 

 

 

Nothing in the merger agreement prevents the board of directors or any authorized committee thereof from taking and disclosing to our stockholders a position contemplated by Rule 14d-9 or 14e-2(a) under the Exchange Act or making any “stop-look-and-listen” or similar communication of the type contemplated by Rule 14d-9(f) under the Exchange Act in which the Company indicates that it has not changed the company board recommendation; provided that the foregoing does not permit the board of directors to make a board recommendation change in respect of the merger agreement except in conformity with the merger agreement.

 

In this proxy statement an acceptable confidentiality agreement means an agreement with respect to the confidentiality of the Company’s material non-public information that is either: (i) in effect as of the execution and delivery of the merger agreement; or (ii) executed, delivered and effective after the execution, delivery and effectiveness of the merger agreement and that contains provisions that require any counter-party(ies) thereto that receive material non-public information of or with respect to the Company to keep such information confidential, provided that (x) such confidentiality provisions are no less restrictive in the aggregate to such counter-party(ies) than the terms of the confidentiality agreement executed in connection with the merger agreement and (y) such confidentiality agreement does not prohibit the Company from providing to Parent the documents or other information that the merger agreement contemplates the Company providing to Parent. For the avoidance of doubt, an acceptable confidentiality agreement need not contain any standstill or other similar provisions.

 

In this proxy statement an acquisition proposal means any offer or proposal (other than an offer or proposal by Parent or Merger Sub) to engage in an acquisition transaction.

 

In this proxy statement, an acquisition transaction means any transaction or series of related transactions (other than the merger) involving:

 

 

 

In this proxy statement, an excluded party means any person that has made or delivered to us (or any of our representatives in their capacity as such) a bona fide written acquisition proposal on or prior to the no-shop period start date which did not result from a breach of the solicitation provisions of the merger agreement and which the board of directors shall have determined in good faith (after consultation with its outside legal counsel and financial advisor) either constitutes a superior proposal or is reasonably likely to lead to a superior proposal.

 

In this proxy statement an intervening event means any material development (other than an acquisition proposal) after the date of the merger agreement that was not known or reasonably foreseeable by the board of directors on the date of the merger agreement (or, if known, the material consequences of which could not reasonably have been known to or understood by the board of directors as of the date of the merger agreement).

 

In this proxy statement, a superior proposal means any written acquisition proposal for an acquisition transaction (with the percentages set forth in the definition of such term changed from fifteen percent to fifty percent) on terms that the board of directors shall have determined in good faith (after consultation with its outside legal counsel and financial advisor) (i) is reasonably likely to be consummated in accordance with its terms on a timely basis, taking into account all legal and financial, antitrust and other regulatory aspects of the proposal and the person making the proposal, including the financing thereof and any conditions thereto and (ii) would be more favorable to the Company’s stockholders (in their capacity as such) from a financial point of view than the merger (taking into account (A) any amendments to the merger agreement made or proposed by Parent to be made in accordance with the terms of the merger agreement and (B) any amounts payable by the Company or any of its subsidiaries as a result of the termination of the merger agreement, including the Company termination fee).

 

During the period beginning on the date of the merger agreement and ending upon consummation of the merger, we have agreed to, and have agreed to cause each of our subsidiaries that owns and/or operates any vessels in the U.S. coastwise trade to, remain a U.S. citizen.

 

In addition, during the period beginning on the date of the merger agreement and ending upon consummation of the merger, other than such noncompliance that is not material with respect to the vessels taken as a whole, (i) we will, and we will cause our subsidiaries to, maintain the eligibility of the vessels owned by us or our subsidiaries to operate in the U.S. coastwise trade, including maintaining valid certificates of documentation with coastwise endorsements for such vessels that are currently documented under the U.S. flag, and (ii) we will not, and we will cause our subsidiaries not to, sell or demise or sub-demise charter or lease any such vessel to any person, that does not qualify as a U.S. citizen, in each case except where the failure to do so (x) would be permitted under applicable law and (y) would not result in the permanent loss of the eligibility of any such vessels to operate in the U.S. coastwise trade.

 

We have agreed to hold a meeting of our stockholders as promptly as reasonably practicable, and to use our best efforts to hold such meeting within 20 business days following dissemination of this proxy statement, subject to our right to postpone or adjourn the meeting if (i) Parent has consented to such postponement or adjournment; (ii) there are holders of insufficient shares of the common stock present or represented by a proxy to constitute a quorum, (iii) the Company is required to postpone or adjourn the meeting by applicable law, or an order or written request with respect to such postponement or adjournment from the SEC, or (iv) the

Company has provided written notice to Parent in accordance with merger agreement that it intends to effect a company board recommendation change in connection with a superior proposal and the notice period required by the merger agreement has not yet lapsed.

 

We, Parent and Merger Sub have agreed to take, or cause to be taken, all actions reasonably necessary, and to do, or cause to be done, and assist and cooperate with the other party or parties in doing, all things reasonably necessary, proper or advisable under applicable law to consummate the merger in the most expeditious manner reasonably practicable, including using reasonable best efforts to cause the conditions of the merger to be satisfied.

 

We, Parent and Merger Sub have also agreed to file with the FTC and the Antitrust Division of the DOJ a notification and report form relating to the merger agreement as required by the HSR Act within fourteen calendar days following the execution and delivery of the merger agreement, and to file comparable pre-merger or post-merger notification filings, forms and submissions with any foreign governmental authority that are required by the other applicable antitrust laws in connection with the merger provided, however , notwithstanding anything in the merger agreement to the contrary, in no event shall Parent or Merger Sub (or any of their respective affiliates) be required to offer or agree to sell or otherwise dispose of, or hold separate, agree to conduct, license or otherwise limit the use of any of the assets, categories of asset or businesses or other segments of the Company or Parent or either’s respective subsidiaries or affiliates or to agree to any other restriction or condition with respect thereto required or requested by a governmental authority, in each case to the extent that doing so would reasonably be expected to materially and adversely affect the operation of the business of the Company, Parent or either’s respective subsidiaries or affiliates. Each of the Company and the Parent filed a notification and report form on November 1, 2010 and November 5, 2010, respectively.

 

Following the consummation of the merger, Parent has agreed to cause the surviving corporation to honor the employee plans included in the disclosure schedule to the merger agreement, which we refer to as continuing plans, in accordance with their terms as in effect immediately prior to the effective time provided that the surviving corporation may amend or terminate any such employee plans, arrangements or agreements in accordance with their terms or if otherwise required by applicable law.

 

Parent has agreed to cause the surviving corporation or one of its subsidiaries to continue employment immediately following the effective time by the surviving corporation or one of its subsidiaries of all employees of the Company and its subsidiaries as of the effective time, subject to the terms of the merger agreement. From the effective time until December 31, 2011, Parent has agreed to cause the surviving corporation to either, at the option of the surviving corporation, (i) maintain for the benefit of each continuing employee the continuing plans (but excluding equity based benefits, pensions and retiree medical, life and disability) at benefit levels that are substantially comparable in the aggregate to those in effect at the Company or its subsidiaries on the date of the merger agreement (other than equity based benefits, pensions and retiree medical, life and disability) and provide to each continuing employee compensation substantially comparable in the aggregate to the compensation provided to such continuing employee immediately prior to the effective time; or (ii) provide compensation, and benefits (other than equity based benefits, pensions and retiree medical, life and disability) to each continuing employee that, taken as a whole, are substantially comparable in the aggregate to the compensation and benefits (other than equity based benefits, pensions and retiree medical, life and disability) provided to such continuing employee immediately prior to the effective time; or (iii) provide some combination of (i) and (ii) above such that each continuing employee receives compensation and benefits (other than equity based benefits, pensions and retiree medical, life and disability) that, taken as a whole, are substantially comparable in the aggregate to the compensation and benefits (other than equity based benefits, pensions and retiree medical, life and disability) provided to such continuing employee immediately prior to the effective time.

 

Parent has also agreed to cause the surviving corporation to cause to be granted to any continuing employee credit for all service with the Company and its subsidiaries prior to the consummation of the merger

for purposes of eligibility to participate, vesting and, solely for purposes of vacation accrual and severance pay, or benefit entitlement prior to the consummation of the merger, except that such service need not be credited under any equity-based or non-qualified deferred compensation plan or arrangement or to the extent that it would result in duplication of coverage or benefits. In addition, (i) each continuing employee shall be immediately eligible to participate, without any waiting time, in any and all new employee benefit plans sponsored by the surviving corporation and its subsidiaries to the extent coverage under any such new plan replaces coverage in the plan year in which the merger occurs under a continuing plan in which such continuing employee participates immediately before the merger; and (ii) for purposes of each new plan providing medical, dental, pharmaceutical, or vision benefits to any continuing employee, the surviving corporation shall cause all waiting periods, pre-existing condition exclusions, evidence of insurability requirements and actively-at-work or similar requirements of such new plan to be waived in the plan year in which the merger occurs for such continuing employee and his or her covered dependents to the extent waived or satisfied under the corresponding old plan as of the consummation of the merger, and the surviving corporation shall cause any eligible expenses incurred by such continuing employee and his or her covered dependents during the portion of the plan year of the old plan ending on the date such employee’s participation in the corresponding new plan begins in the plan year in which the consummation of the merger occurs to be given full credit under such new plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such continuing employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such new plan. Any vacation or paid time off accrued but unused by a continuing employee as of immediately prior to the consummation of the merger shall be credited to such continuing employee following the consummation of the merger to the extent reflected as a working capital liability on the Company’s balance sheet.

 

Parent has also agreed to cause the surviving corporation to provide compensation and benefits to applicable continuing employees under the terms set forth in any collective bargaining agreements to which the Company or any of its subsidiaries is a party and to which, under the terms of such agreements, the surviving corporation or its applicable subsidiaries shall be bound.

 

The Company has agreed that, Parent may, at its option, direct the Company to direct its wholly owned subsidiary, Commercial Barge Line Company, which we refer to as Commercial Barge Line, to (x) commence a tender offer for any and all of Commercial Barge Line’s 12 1 / 2 % Senior Secured Notes due 2017, which we refer to as the 2017 Notes, issued under the indenture, dated as of July 7, 2009, by and among Commercial Barge Line, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee, which, as supplemented from time to time, we refer to as the Indenture, and/or (y) subject to the terms and conditions of the Indenture, seek consents to amendment or waiver of one or more covenants and other provisions in the 2017 Notes and the Indenture, in each case, on such terms and conditions as specified by Parent from time to time, and Parent and Merger Sub shall provide such assistance as may be reasonably requested by the Company and Commercial Barge Line in connection therewith.

 

In the event that any stockholder litigation related to the merger agreement, the merger or the other transactions contemplated by the merger agreement is brought, or, to the knowledge of the Company, threatened in writing, against Parent, Merger Sub, the Company and/or the members of the board of directors of the Company prior to the effective time, the Company is required to promptly notify Parent of any such stockholder litigation and the Company will keep Parent, and Parent will keep the Company, reasonably informed with respect to the status thereof.

 

The respective obligations of the Company, Parent and Merger Sub to consummate the merger are subject to the satisfaction or waiver of the following conditions:

 

 

The obligations of Parent and Merger Sub to effect the merger are also subject to the satisfaction or waiver by Parent at or prior to the effective time of the following additional conditions: