Fuel Systems Solutions, Inc. ("Fuel Systems") (Nasdaq: FSYS)
today announced that it has signed an Amendment (the "Amendment")
to its previously announced Agreement and Plan of Merger dated as of
September 1, 2015 (the “Merger Agreement”) relating to the
proposed business combination (the "Merger") between Fuel
Systems and Westport Innovations Inc. ("Westport") (TSX: WPT
/ Nasdaq: WPRT). All figures are in U.S. dollars unless otherwise stated.
The Amendment includes several updated changes to the Merger Agreement.
The Amendment has been approved by the Boards of Directors of both
companies. Highlights of the Amendment include:
Collar-based exchange ratio: In light of current market
volatility, the exchange ratio of the Merger Agreement has been amended
to include a collar mechanism in order to provide Fuel Systems
stockholders with greater certainty regarding the consideration they
will receive upon closing of the Merger. In the event that the NASDAQ
volume weighted average price of Westport common shares during a
specified measuring period (“VWAP”) is equal to or greater than
$2.37, then Fuel Systems stockholders will receive 2.129 Westport common
shares per Fuel Systems share on closing of the Merger and through the
exchange process. In the event Westport’s VWAP is equal to or less than
$1.64, Fuel Systems stockholders would receive approximately 3.08
Westport common shares per Fuel Systems share on closing of the merger
and through the exchange process. In the event that Westport’s VWAP is
greater than $1.64 and less than $2.37, then Fuel Systems stockholders
would receive a number of Westport common shares per Fuel Systems share
equal to dividing $5.05 by Westport’s VWAP, rounded to four decimal
places. The measuring period will be the ten consecutive trading days
ending on and including the trading day five business days prior to the
anticipated closing date. The Merger currently is anticipated to close
in late March 2016.
Additional Board Member: Under the Merger Agreement, as amended,
the combined company’s Board of Directors will consist of nine
directors, down from ten currently at Westport. Three current directors
of the Fuel Systems board will be nominated to join the combined
company’s Board (the "Fuel Systems Nominees"). Once the Fuel
Systems Nominees have been confirmed, four of Westport’s existing
directors will resign. Under the Amendment, the three Fuel Systems
Nominees will nominate one additional new director. The new director
will be a Canadian citizen and an “Independent Director” whose
nomination for the Westport Board shall be subject to the approval of
the Nominating and Corporate Governance Committee of Westport, which
shall not be unreasonably withheld. Once determined, the new director
nominee shall take the place of an existing Westport director, who shall
resign.
Cartesian Financing Agreement: Concurrently with execution of the
Amendment, Westport has also entered into an amendment to the previously
announced Investment Agreement dated as of January 11, 2016 between
Westport and an affiliate of Cartesian Capital Group. Under the terms of
the amendment to the Cartesian Investment Agreement, the second tranche
of financing to be provided by an affiliate of Cartesian, an investment
of $17.5 million in cash in exchange for a Westport convertible note,
will now close simultaneously with the closing of the Merger. Reflective
of the potentially new percentage of shares outstanding in the Merger,
as a result of the amendment of the Cartesian Investment Agreement, the
convertible note valuation price will be equal to such amount as would
provide the same percentage of fully diluted ownership in Westport
common shares as Cartesian would have been entitled to prior to the
Amendment of the Merger Agreement, which utilized a 2.129 conversion
ratio and a $2.31 previous valuation price. Under the amended Cartesian
agreement, Cartesian must maintain at least 80% of its Westport shares
represented under the convertible note as a ‘minimum threshold’ to
maintain certain rights and provisions. In addition, the amended
Investment Agreement modified, among other things, certain covenants
relating to the amount of indebtedness that the combined company may
incur and the permitted sale of certain assets following the Merger to
provide additional flexibility to Westport.
Impact on Third Party Proposal
As previously announced, on January 27, 2016, Fuel Systems received a
written proposal from a third party expressing interest in acquiring all
of the outstanding shares of the Company's common stock for a purchase
price of $4.50 per share in cash. In connection with entering into the
Amendment, Fuel Systems' Board of Directors has rejected the third party
proposal and recommends that stockholders vote in favor of the amended
Merger Agreement and the approval of the Merger.
Special Meeting of Stockholders
The special meeting of stockholders to consider the amended Merger
Agreement and the Merger is currently scheduled for March 22, 2016. In
order to allow reasonable additional time for the filing, mailing and
review by the Company’s stockholders of amended disclosure reflecting,
among other things, the matters described in this release prior to the
stockholders’ meeting, Fuel Systems may be required to adjourn the
meeting after calling it to order on March 22, 2016, in which case Fuel
Systems will publicly announce the date to which the meeting is
adjourned.
No Offer or Solicitation
This communication is not intended to and does not constitute an offer
to sell or the solicitation of an offer to subscribe for or buy or an
invitation to purchase or subscribe for any securities or the
solicitation of any vote in any jurisdiction pursuant to the proposed
transactions or otherwise, nor shall there be any sale, issuance or
transfer of securities in any jurisdiction in contravention of
applicable law. No offer of securities shall be made except by means of
a prospectus meeting the requirements of Section 10 of the United States
Securities Act of 1933, as amended. Subject to certain exceptions to be
approved by the relevant regulators or certain facts to be ascertained,
the public offer will not be made directly or indirectly, in or into any
jurisdiction where to do so would constitute a violation of the laws of
such jurisdiction, or by use of the mails or by any means or
instrumentality (including without limitation, facsimile transmission,
telephone and the internet) of interstate or foreign commerce, or any
facility of a national securities exchange, of any such jurisdiction.
Additional Information and Where to Find It
Westport will file with the Securities and Exchange Commission (the “SEC”)
an amendment to its registration statement on Form F-4, which will
include an amended proxy statement of Fuel Systems that also constitutes
an amended prospectus (the “amended proxy statement/prospectus”). INVESTORS
AND STOCKHOLDERS ARE URGED TO READ THE AMENDED PROXY
STATEMENT/PROSPECTUS, AND OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE
SEC, IN THEIR ENTIRETY CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT WESTPORT, FUEL SYSTEMS, THE
PROPOSED TRANSACTIONS AND RELATED MATTERS. Investors and
stockholders will be able to obtain free copies of the amended proxy
statement/prospectus and other documents filed with the SEC by the
parties through the website maintained by the SEC at www.sec.gov. In
addition, investors and stockholders will be able to obtain free copies
of the amended proxy statement/prospectus and other documents filed with
the SEC by the parties by contacting Westport Investor Relations at
1-604-718-2046 or invest@westport.com
(for documents filed with the SEC by Westport) or Fuel Systems Investor
Relations advisors, LHA, at 1-415-433-3777 or fuel@lhai.com
(for documents filed with the SEC by Fuel Systems).
Participants in the Solicitation
Westport, Fuel Systems and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies
from the stockholders of Fuel Systems in respect of the proposed
transactions contemplated by the amended proxy
statement/prospectus. Information regarding the persons who are, under
the rules of the SEC, participants in the solicitation of the
stockholders of Fuel Systems in connection with the proposed
transactions, including a description of their direct or indirect
interests, by security holdings or otherwise, will be set forth in the
amended proxy statement/prospectus when it is filed with the
SEC. Information regarding Westport’s directors and executive officers
is contained in Westport’s Annual Report on Form 40-F for the year ended
December 31, 2014, as amended, and its Management Information Circular,
dated March 11, 2015, which is filed with, in the case of the Annual
Report on Form 40-F, and furnished to, in the case of the Management
Information Circular, the SEC and can be obtained free of charge from
the sources indicated above. Information regarding Fuel System’s
directors and executive officers is contained in Fuel System’s Annual
Report on Form 10-K for the year ended December 31, 2014 and its Proxy
Statement on Schedule 14A, dated April 14, 2015, each of which are filed
with the SEC and can be obtained free of charge from the sources
indicated above.
Cautionary Note Regarding Forward Looking Statements
This press release contains forward-looking statements, including
statements regarding the anticipated timing for and ultimate completion
of the Merger, the timing of the Fuel Systems’ stockholders meeting, the
exchange ratio and related matters. These statements are neither
promises nor guarantees, but involve known and unknown risks and
uncertainties and are based on both the views of management and
assumptions that may cause our actual results, levels of activity,
performance or achievements and ability to complete the proposed Merger
to be materially different from any future results, levels of
activities, performance or achievements expressed in or implied by these
forward looking statements. These risks and uncertainties include risks
and assumptions related to our revenue growth, operating results,
industry and products, the general economy, conditions of and access to
the capital and debt markets, governmental policies, regulation and
approvals, technology innovations, fluctuations in foreign exchange
rates, operating expenses, the availability and price of natural gas,
global government stimulus packages, the acceptance of and shift to
natural gas vehicles, the relaxation or waiver of fuel emission
standards, the inability of fleets to access capital or government
funding to purchase natural gas vehicles, the development of competing
technologies, our ability to adequately develop and deploy our
technology, the actions and determinations of our joint venture and
development partners, as well as other risk factors and assumptions that
may affect our actual results, performance or achievements or financial
position discussed in Westport’s Annual Report on Form 40-F for the year
ended December 31, 2014, as amended and Fuel System’s Annual Report on
Form 10-K for the year ended December 31, 2014, and other filings made
by the companies with securities regulators. Readers should not place
undue reliance on any such forward-looking statements, which speak only
as of the date they were made. We disclaim any obligation to publicly
update or revise such statements to reflect any change in their
expectations or in events, conditions or circumstances on which any such
statements may be based, or that may affect the likelihood that actual
results will differ from those set forth in these forward looking
statements except as required by National Instrument 51-102. The
contents of any website, RSS feed or twitter account referenced in this
press release are not incorporated by reference herein.
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