Item 8.01 Other Events.
As previously disclosed and reported in the Current Reports on Form 8-K filed by
Aegion Corporation, a Delaware corporation (the "Company"), on February 16, 2021
and February 17, 2021 with the Securities and Exchange Commission (the "SEC"),
on February 16, 2021 the Company entered into an Agreement and Plan of Merger,
as amended on March 13, 2021 and April 13, 2021 (the "Merger Agreement") with
Carter Intermediate, Inc. ("Parent") and Carter Acquisition, Inc., a
wholly-owned subsidiary of Parent ("Merger Sub"). The Merger Agreement provides,
among other things and subject to the terms and conditions set forth therein,
that Merger Sub will be merged with and into the Company (the "Merger"), with
the Company continuing as the surviving corporation in the Merger and as a
wholly-owned subsidiary of Parent. On March 15, 2021, the Company filed with the
SEC its Preliminary Proxy Statement (the "Preliminary Proxy Statement"). On
April 1, 2021, the Company filed with the SEC its Definitive Proxy Statement (as
supplemented on April 19, 2021, the "Definitive Proxy Statement"), which was
mailed to Company stockholders.
On March 15, 2021, a shareholder complaint relating to the Merger was filed in
the United States District Court for the Southern District of New York,
captioned Stein v. Aegion Corp. et al., Case No. 1:21-cv-2247. On March 19,
2021, a shareholder complaint relating to the merger was filed in the United
States District Court for the Eastern District of New York,
captioned Pallmer v. Aegion Corp. et al., Case No: 1:21-cv-01448. On March 29,
2021, a shareholder complaint relating to the merger was filed in the United
States District Court for the Southern District of New York,
captioned Griffin v. Aegion Corp. et al., Case No. 1:21-cv-02686. Each of the
foregoing complaints alleges that the Preliminary Proxy Statement is false
and/or misleading and asserts claims for violations of Section 14(a) and 20(a)
of the Exchange Act and SEC Rule 14a-9 against the Company and its directors. On
April 23, 2021, a shareholder complaint relating to the Merger was filed in the
Delaware Court of Chancery, captioned Assad v. Aegion Corp. et al., Case No.
2021-0349, which alleges that the Definitive Proxy Statement is materially
incomplete and misleading and asserts breach of fiduciary duty claims against
the Company and its directors. On April 26, 2021, two shareholder complaints
relating to the Merger were filed, one in the United States District Court for
the District of Delaware, captioned Kubicek v. Aegion Corp. et al., Case No.
1:21-cv-579, and one in the United States District Court for the Eastern
District of Pennsylvania, captioned Ciccotelli v. Aegion Corp. et al., Case No.
2:21-cv-01914; each alleges that the Definitive Proxy Statement omits or
misrepresents material information and asserts claims for violations of Section
14(a) and 20(a) of the Exchange Act and SEC Rule 14a-9 against the Company and
its directors. Each of these complaints (collectively, the "Complaints")
purports to seek, among other things, injunctive relief preventing the Merger,
damages and an award of plaintiffs' costs and disbursements, including
reasonable attorneys' and expert fees and expenses. On May 4, 2021, the Company
received a demand letter on behalf of a purported shareholder of the Company
challenging certain disclosures set forth in the Definitive Proxy Statement (the
"Demand Letter").
The Company believes that the claims asserted in the Complaints and Demand
Letter are without merit and no supplemental disclosure is required under
applicable law. However, in order to moot the plaintiffs' unmeritorious
disclosure claims, to avoid the risk of the Complaints or the Demand Letter
delaying or adversely affecting the Merger and to minimize the costs, risks and
uncertainties inherent in litigation, without admitting any liability or
wrongdoing, the Company has determined to voluntarily supplement the Definitive
Proxy Statement as described in this Current Report on Form 8-K to address
claims asserted in the Complaints and Demand Letter, and the plaintiffs in the
Complaints have indicated that they agree to voluntarily dismiss the Complaints
in light of, among other things, the supplemental disclosure.
2
Nothing in this Current Report on Form 8-K shall be deemed an admission of the
legal necessity or materiality under applicable laws of any of the disclosures
set forth herein. To the contrary, the Company specifically denies all
allegations in the Complaints, including that any additional disclosure was or
is required, and believes that the supplemental disclosures contained herein are
immaterial.
These supplemental disclosures will not affect the consideration to be paid in
connection with the Merger or the timing of the special meeting of Company
stockholders to be held at 8:30 a.m., Central Daylight Time, on May 14, 2021,
virtually at www.virtualshareholdermeeting.com/AEGN2021SM.
Supplemental Disclosure to Definitive Proxy Statement in Connection with the
Complaints
The additional disclosures in this Current Report on Form 8-K supplement the
disclosures contained in the Definitive Proxy Statement and should be read in
conjunction with the disclosures contained in the Definitive Proxy Statement,
which in turn should be read in its entirety. To the extent that information in
this Current Report on Form 8-K differs from or updates information contained in
the Definitive Proxy Statement, the information in this Current Report on Form
8-K shall supersede or supplement the information in the Definitive Proxy
Statement. Capitalized terms used herein, but not otherwise defined, shall have
the meanings ascribed to such terms in the Definitive Proxy Statement.
The following disclosure supplements and restates the first paragraph under each
of the headings "Summary-Litigation Relating to the Merger" and "The Merger
(Proposal 1)-Litigation Relating to the Merger", beginning on page 11 and page
72, respectively, of the Definitive Proxy Statement, with the new text presented
in bold, underlined font and deleted text marked as strikethrough font.
On March 15, 2021, a shareholder complaint relating to the merger was filed in
the United States District Court for the Southern District of New York,
captioned Stein v. Aegion Corp. et al., Case No. 1:21-cv-2247. On March 19,
2021, a shareholder complaint relating to the merger was filed in the United
States District Court for the Eastern District of New York,
captioned Pallmer v. Aegion Corp. et al., Case No: 1:21-cv-01448. On MayMarch
29, 2021, a shareholder complaint relating to the merger was filed in the United
States District Court for the Southern District of New York,
captioned Griffin v. Aegion Corp. et al., Case No. 1:21-cv-02686. Each of the
foregoing complaints alleges that the preliminary proxy statement filed by
Aegion with the SEC on March 15, 2021 is false and/or misleading and asserts
claims for violations of Section 14(a) and 20(a) of the Exchange Act and SEC
Rule 14a-9 against Aegion and its directors. On April 23, 2021, a shareholder
complaint relating to the Merger was filed in the Delaware Court of Chancery,
captioned Assad v. Aegion Corp. et al., Case No. 2021-0349, which alleges that
the definitive proxy statement filed by Aegion with the SEC on April 1, 2021 is
materially incomplete and misleading and asserts breach of fiduciary duty claims
against the Company and its directors. On April 26, 2021, two shareholder
complaints relating to the Merger were filed, one in the United States District
Court for the District of Delaware, captioned Kubicek v. Aegion Corp. et al.,
Case No. 1:21-cv-579, and one in the United States District Court for the
Eastern District of Pennsylvania, captioned Ciccotelli v. Aegion Corp. et al.,
Case No. 2:21-cv-01914; each alleges that the definitive proxy statement filed
by Aegion with the SEC on April 1, 2021 omits or misrepresents material
information and asserts claims for violations of Section 14(a) and 20(a) of the
Exchange Act and SEC Rule 14a-9 against the Company and its directors. Each
complaint seeks, among other things, injunctive relief preventing the merger,
damages and an award of plaintiffs' costs and disbursements, including
reasonable attorneys' and expert fees and expenses. On May 4, 2021, the Company
received a demand letter on behalf of a purported shareholder of the Company
challenging certain disclosures set forth in the definitive proxy statement
filed by Aegion with the SEC on April 1, 2021. Aegion believes that these
lawsuits and demands are without merit.
3
The following disclosure supplements and restates the third paragraph on page 34
under the heading "The Merger (Proposal 1)-Background of the Merger", beginning
on page 30 of the Definitive Proxy Statement, with the new text presented in
bold, underlined font and deleted text marked as strikethrough font.
Beginning on September 11, 2019, Aegion negotiated and executed confidentiality
agreements with, ten potentially interested parties, including Party C on
September 18, 2019, Party A on September 24, 2019 and the Party B Group on
September 25, 2019. The draft confidentiality agreement distributed to the
potentially interested parties contained a two year non-solicit provision, a two
year standstill provision, a "don't ask, don't waive" provision prohibiting the
potentially interested parties from requesting that Aegion waive or amend the
standstill restrictions to allow the applicable potentially interested party to
make another proposal during the standstill period and a prohibition on sharing
confidential information with potential financing sources without Aegion's
consent. Negotiations with the potentially interested parties typically included
discussion around the periods applicable to those standstill and non-solicit
provisions, the inclusion of a "don't ask, don't waive" provision and the
ability of the potentially interested parties to share confidential information
with potential financing sources. Of the ten potentially interested parties with
whom Aegion executed confidentiality agreements, twoParty A and another
potentially interested party negotiated for a reduced 12-month standstill
period, seven potentially interested parties (including the Party B Group and
Party C) negotiated for a reduced 18-month standstill period and one potentially
interested party accepted the two-year standstill period proposed in the draft
confidentiality agreement. Additionally, seven of the potentially interested
parties negotiated for an 18-month non-solicit period and three of the
potentially interested parties accepted the two year non-solicit period proposed
in the draft confidentiality agreement. All ten of the potentially interested
parties ultimately accepted the inclusion of a "don't ask, don't waive"
provision as well as the limitations on their ability to share confidential
information with potential financing sources without the prior written consent
of Aegion. The 12-month standstills expired by September 26, 2020, the 18-month
standstills expired by March 24, 2021, and the 24-month standstill was scheduled
to expire according to its terms on September 12, 2021.
The disclosure under the heading "The Merger (Proposal 1)-Background of the
Merger", beginning on page 30 of the Definitive Proxy Statement, is hereby
supplemented by adding the following paragraph after the last paragraph on page
49.
On April 30, 2021, the Company advised the counterparty who agreed to the
two-year standstill that the Company was waiving the standstill provision
(including the "don't ask, don't waive" provision) in the confidentiality
agreement.
The following disclosure supplements and restates the second paragraph under the
heading "The Merger (Proposal 1)--Opinion of Aegion's Financial
Advisor--Discounted Cash Flow Analysis", beginning on page 61 of the Definitive
Proxy Statement, with the new text presented in bold, underlined font.
4
In performing this analysis, Centerview calculated an implied per share equity
range for the shares of Company common stock by discounting to present value as
of December 31, 2020 using discount rates ranging from 10.00% to 11.50%
(reflecting Centerview's analysis of the Company's weighted average cost of
capital using the capital asset pricing model and based on considerations that
Centerview deemed relevant in its professional judgment and experience, taking
into account certain metrics including levered and unlevered betas for the
selected companies) and the mid-year convention, the forecasted unlevered free
cash flows of the Company based on the company projections during the period
beginning the first quarter of 2021, and ending in December 2025. The implied
terminal value of the Company at the end of the forecast period was estimated by
using perpetuity growth rates ranging from 2.0% to 3.0% (which perpetuity growth
rates were based on considerations that Centerview deemed relevant in its
professional judgment and experience).
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