As filed with the Securities and Exchange Commission on February 28, 2005
Registration No. 333-122249
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
PRE-EFFECTIVE AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
KRONOS WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
Delaware 76-029459
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Three Lincoln Centre
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240-2697
(972) 233-1700
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Robert D. Graham
Vice President and General Counsel
Kronos Worldwide, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240-2697
(972) 233-1700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Don M. Glendenning
Toni Weinstein
Locke Liddell & Sapp LLP
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
(214) 740-8000
(214) 740-8800 (facsimile)
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this form are being offered
pursuant to divided or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
-------------------------- ----------------- -------------------------- ----------------------- -------------------
Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities to be Amount to be Offering Price per Unit Aggregate Offering Registration Fee
Registered Registered (1) (2) Price (3) (4)
-------------------------- ----------------- -------------------------- ----------------------- -------------------
Preferred Stock
Common Stock $100,000,000 n/a $100,000,000 $11,770
Securities Warrants
========================== ================= ========================== ======================= ===================
(1) The amount to be registered consists of up to $100,000,000 of an
indeterminate amount of shares of preferred stock, shares of common stock
and/or securities warrants as may be sold from time to time by the
Registrant. There is also being registered hereunder such currently
indeterminable number of shares of common and preferred stock issuable upon
the conversion of preferred stock or exercise of securities warrants.
(2) The proposed maximum offering price per unit has been omitted pursuant to
Securities Act Release No. 6964.
(3) Estimated solely for the purpose of computing the registration fee. No
separate consideration will be received for common or preferred stock that
is issued upon conversion of preferred stock or exercise of securities
warrants.
(4) Calculated pursuant to Rule 457(o) under the Securities Act. The filing fee
was paid on January 24, 2005 in connection with the original filing of the
Registration Statement.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Subject to completion, dated February 28, 2005
PROSPECTUS
[LOGO GOES HERE]
KRONOS WORLDWIDE, INC.
By this prospectus, we may offer up to $100,000,000 of shares of preferred
stock, shares of common stock and warrants. We will provide the specific terms
of these securities in supplements to this prospectus. You should read this
prospectus and the supplements carefully before you invest.
You should carefully consider the risks set forth under "Risk Factors"
starting on page 1 of this prospectus.
These securities have not been approved or disapproved by the Securities
and Exchange Commission or any state securities commission. None of those
authorities has determined that this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
We may offer the securities directly or through underwriters, agents or
dealers. The supplement will describe the terms of that plan of distribution.
The section entitled "Plan of Distribution" below also provides more information
on this topic.
The date of this prospectus is ------- --, 2005.
TABLE OF CONTENTS
Page
THE COMPANY .............................................................1
RISK FACTORS ............................................................1
USE OF PROCEEDS .........................................................7
DESCRIPTION OF CAPITAL STOCK ............................................7
DESCRIPTION OF WARRANTS .................................................10
PLAN OF DISTRIBUTION ....................................................11
WHERE YOU CAN FIND MORE INFORMATION .....................................11
LEGAL MATTERS ...........................................................12
EXPERTS .................................................................12
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THE COMPANY
We are one of the leading global producers and marketers of value-added
titanium dioxide pigments ("TiO2"). Our TiO2 products are sold under the widely
recognized Kronos brand name and are utilized in a diverse range of customer
applications and end-use markets, including coatings, plastics, paper and other
industrial and consumer markets. Our broad range of over 40 TiO2 pigment
products are "quality-of-life" products that significantly enhance the key
characteristics of our customers' end-products by imparting whiteness,
brightness and opacity. We serve over 4,000 customers located in over 400
countries from our production facilities located in Europe and North America.
Our executive offices are located at Three Lincoln Centre, 5430 LBJ
Freeway, Suite 1700, Dallas, Texas 75240-2697, and our telephone number is (972)
233-1700.
RISK FACTORS
The following sets forth the most significant factors that make an
investment in our securities speculative or risky. You should carefully consider
the following information in conjunction with the other information contained or
incorporated by reference in this prospectus or any prospectus supplement before
making a decision to invest in our securities.
Demand for, and prices of, our products are cyclical and we may experience
prolonged depressed market conditions for our products, which may result in
reduced earnings and/or operating losses.
Substantially all of our revenue is attributable to sales of TiO2 pigments.
Pricing within the global TiO2 industry over the long term is cyclical, and
changes in industry economic conditions, especially in Western industrialized
nations, can significantly impact our earnings and operating cash flows. During
periods when prices are declining for TiO2, we may experience reduced earnings
and/or generate operating losses, which may in turn adversely affect our ability
to pay dividends on our securities and may also reduce the prices of our
securities.
Historically, the markets for many of our products have experienced
alternating periods of tight supply, causing prices and profit margins to
increase, followed by periods of lower demand and/or capacity additions,
resulting in oversupply and declining prices and profit margins. Our average
TiO2 selling prices were generally: (i) decreasing during all of 2001 and the
first quarter of 2002, (ii) flat during the second quarter of 2002, (iii)
increasing during the last half of 2002 and the first quarter of 2003, (iv) flat
during the second quarter of 2003, (v) decreasing during the second half of 2003
and the first quarter of 2004, (vi) flat during the second quarter of 2004 and
(vii) increasing during the third quarter of 2004. Our overall average TiO2
selling prices in billing currencies:
o decreased by 9% during 2002 as compared to 2001;
o increased by 3% in 2003 as compared to 2002; and
o decreased by 3% in the first nine months of 2004 as compared to the
same period in 2003.
Future growth in the worldwide supply for TiO2 could exceed growth in
worldwide demand for TiO2., and downward pressures on selling prices could
result during such periods of excess supply.
The demand for TiO2 during a given year is also subject to annual seasonal
fluctuations. TiO2 sales are generally higher in the first half of the year than
in the second half of the year due in part to the increase in paint production
in the spring to meet the spring and summer painting season demand.
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As a global business, we are exposed to local business risks in different
countries, which could result in operating losses.
We conduct a substantial portion of our business in several jurisdictions
outside of the United States and are subject to risks normally associated with
international operations. Risks of international operations include trade
barriers, tariffs, exchange controls, national and regional labor strikes,
social and political risks, general economic risks, seizures, nationalizations,
compliance with a variety of foreign laws, including tax laws, and the
difficulty in enforcing agreements and collecting receivables through foreign
legal systems, all of which may expose us to risk of loss, which may in turn
adversely affect our ability to pay dividends on our securities and may also
reduce the prices of our securities.
We may incur losses from fluctuations in currency exchange rates.
We are exposed to risks related to the prices that we receive for our
products and the need to convert currencies that we may receive for some of our
products into currencies required to pay some of our debt, or into currencies in
which we purchase certain raw materials or pay for certain services and other
liabilities, all of which could result in future foreign currency transaction
gains or losses depending on fluctuations in exchange rates. These losses may
reduce our ability to pay dividends on our securities and may also reduce the
prices of our securities.
We sell our products in a mature and highly competitive industry and face price
pressures in the markets in which we operate, which may result in reduced
earnings or operating losses.
The global markets in which we operate our business are highly competitive.
Competition is based on a number of factors, such as price, product quality and
service. Some of our competitors may be able to drive down prices for our
products because their costs are lower than ours. In addition, some of our
competitors' financial, technological and other resources may be greater than
ours, and such competitors may be better able to withstand changes in market
conditions. Our competitors may be able to respond more quickly than we can to
new or emerging technologies and changes in customer requirements. Further,
consolidation of our competitors or customers in any of the industries in which
we compete may result in reduced demand for our products. The recurrence of any
of these events could have a material adverse effect on our results of
operations, which may in turn adversely affect our ability to pay dividends on
our securities and may also reduce the prices of our securities.
We have substantial debt that we may be unable to service and that restricts our
activities, which could adversely affect our ability to meet our obligations or
to pay dividends on our securities.
As of September 30, 2004, our total consolidated debt was approximately
$550.5 million, consisting of (i) $350.2 million of Senior Secured Notes
(equivalent to euro 285 million) issued by Kronos International, Inc. ("KII"),
our wholly-owned subsidiary that conducts our operations in Europe, (ii) $200
million of notes payable to affiliates and (iii) $348,000 of other indebtedness.
During October and November 2004, we repaid our $200 million of notes payable to
affiliates, primarily using available funds on hand and funds obtained from
KII's issuance of an additional euro 90 million of its Senior Secured Notes.
Also as of September 30, 2004, we could incur additional debt of approximately
$144 million under our subsidiaries' credit facilities, subject to certain
limitations. Our current and future level of debt could have important
consequences to you that may result in reducing our ability to pay dividends on
our securities and reducing the prices of our securities, including:
o increasing our vulnerability to adverse general economic and industry
conditions;
o requiring that a substantial portion of our cash flow from operations
be used for the payment of interest on our debt, therefore reducing
our ability to use our cash flow to fund working capital, capital
expenditures, acquisitions and general corporate requirements;
o limiting our ability to obtain additional financing to fund future
working capital, capital expenditures, acquisitions and general
corporate requirements;
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o limiting our flexibility in planning for, or reacting to, changes in
our business and the industry in which we operate; and
o placing us at a competitive disadvantage relative to other less
leveraged competitors.
Higher costs or limited availability of our raw materials may decrease our
liquidity, which may decrease our ability to pay dividends on our securities.
The number of sources for, and availability of, certain raw materials is
specific to the particular geographical region in which a facility is located.
We purchase titanium-bearing ores from three suppliers in different countries
under multiple-year agreements. Political and economic instability in the
countries from which we purchase our raw material supplies could adversely
affect the availability of such feedstock. Should our vendors not be able to
meet their contractual obligations or should we be otherwise unable to obtain
necessary raw materials, we may incur higher costs for raw materials or may be
required to reduce production levels, either of which may decrease our
liquidity, which may in turn adversely affect our ability to pay dividends on
our securities and may also reduce the prices of our securities.
Our principal stockholder is in a position to affect our ongoing operations,
corporate transactions and other matters, which could reduce the prices of our
securities.
As of February 15, 2005, Valhi, Inc. ("Valhi"), Tremont LLC, a wholly-owned
subsidiary of Valhi, and NL Industries, Inc. ("NL"), a majority-owned subsidiary
of Valhi, owned a total of approximately 93% of the voting power of our common
stock. Each of Valhi, Tremont and NL may be deemed to be controlled by Mr.
Harold C. Simmons. As a result, Mr. Simmons may be able to determine the outcome
of all corporate actions requiring stockholder approval. Any exercise by Mr.
Simmons of his control rights may be in his own best interest but may not be in
the best interest of us and our other stockholders, although, as a director, Mr.
Simmons owes fiduciary duties of good faith and fair dealing to all of our
stockholders.
Mr. Simmons' ability to control us may also make investing in our
securities less attractive. These factors in turn may reduce the prices of our
securities.
For example, Mr. Simmons may control decisions with respect to:
o the election and removal of our directors;
o mergers or other business combinations involving us;
o future issuances of our securities; and
o amendments to our certificate of incorporation and by-laws.
Our interests may conflict with those of Mr. Simmons and our other affiliates
with respect to past and ongoing business relationships, and because of our
affiliates' controlling ownership, we may not be able to resolve these conflicts
on terms commensurate with those possible in arms-length transactions.
We may not be able to resolve any potential conflicts with our affiliates
and, even if we do, the resolution may be less favorable than if we were dealing
with an unaffiliated party. Although we have independent non-employee directors
serving on our board of directors, a majority of the members of our board of
directors also serve on the board of directors of certain of our affiliates.
Currently, two of our non-employee directors do not serve on the board of
directors of our affiliates, and these non-employee directors will generally
resolve any conflicts of interests that may arise between us, on one hand, and
our affiliates, on the other hand. Certain of our executive officers also serve
as executive officers of certain of our affiliates.
Furthermore, under intercorporate service agreements between our affiliates
and us, such affiliates provide certain management, financial and administrative
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services to us on a fee basis. These fees were $3.5 million in 2001 and $3.7
million in each of 2002 and 2003, and $4.4 million in 2004. These circumstances
could create potential conflicts of interest when our directors and management
are faced with decisions that could have different implications for us, on one
hand, and our affiliates, on the other hand. Examples of these types of
decisions might include the resolution of disputes arising out of the agreements
governing the provision of services to us, our issuance of additional
securities, our payment of dividends, the pursuit of specific business
opportunities available to us or other circumstances in which there are adverse
interests.
Also, the appearance of conflicts, even if such conflicts do not
materialize, might adversely affect the public's perception of us. No specific
procedures are in place that govern the treatment of transactions among us and
related entities, although such entities may implement specific procedures as
appropriate for particular transactions. In addition, under applicable
principles of law, in the absence of stockholder ratification or approval by
directors who may be deemed disinterested, transactions involving contracts
among companies under common control must be fair to all companies involved.
Furthermore, directors of companies owe fiduciary duties of good faith and fair
dealing to all stockholders of the companies for which they serve.
We are subject to many environmental and safety regulations that may result in
unanticipated costs or liabilities. If these costs or liabilities are
significant, our ability to pay dividends on our securities and the prices of
our securities may decrease.
We are subject to extensive laws, regulations, rules and ordinances
relating to the protection of the environment, including those governing the
discharge of pollutants in the air and water and the generation, management and
disposal of hazardous substances and wastes or other materials. We may incur
substantial costs, including fines, damages and criminal penalties or civil
sanctions, or experience interruptions in our operations for actual or alleged
violations or compliance requirements arising under environmental laws. Our
operations could result in violations under environmental laws, including spills
or other releases of hazardous substances to the environment. Some of our
operating facilities are in densely populated urban areas or in industrial areas
adjacent to other operating facilities. In the event of an accidental release or
catastrophic incident, we could incur material costs as a result of addressing
such an event and in implementing measures to prevent such incidents. Given the
nature of our business, violations of environmental laws may result in
restrictions imposed on our operating activities or substantial fines,
penalties, damages or other costs, including as a result of private litigation.
Our production facilities have been used for a number of years to
manufacture products or conduct mining operations. We may incur additional costs
related to compliance with environmental laws applicable to our historic
operations and these facilities. In addition, we may incur significant
expenditures to comply with existing or future environmental laws. Costs
relating to environmental matters will be subject to evolving regulatory
requirements and will depend on the timing of promulgation and enforcement of
specific standards that impose requirements on our operations. Costs beyond
those currently anticipated may be required under existing and future
environmental laws.
Covenant restrictions may prevent us from capitalizing on business opportunities
and taking some actions that otherwise might be in the best interests of our
securityholders.
Compliance by our subsidiaries' with their obligations under various
financing arrangements, or a breach of these obligations, may reduce our ability
to pay dividends on our securities and may also reduce the prices of our
securities. The financing arrangements contain, among other things, covenants
that may restrict our ability to finance future operations or capital needs or
to engage in other business activities. In addition, these financing
arrangements may require our subsidiaries to maintain specified financial ratios
and satisfy certain financial tests, which may require that action be taken to
reduce debt or to act in a manner contrary to our long-term business objectives.
Events beyond our control, including changes in general business and economic
conditions, may affect our ability to meet those financial ratios and satisfy
certain financial covenants. A breach of any of these covenants would result in
a default under one or more of these financing arrangements, in which event the
lenders could elect to declare all amounts outstanding thereunder, together with
accrued interest, to be immediately due and payable.
These covenants, among other things, restrict our subsidiaries' ability to:
o borrow money, pay dividends or interest or make distributions;
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o purchase or redeem stock;
o make investments and extend credit;
o engage in transactions with affiliates;
o engage in sale-leaseback transactions;
o freely distribute the proceeds from certain asset sales;
o effect a consolidation or merger or sell, transfer, lease or otherwise
dispose of all or substantially all of our assets; and
o create liens on our assets.
Our business may not generate cash flow from operations or have adequate access
to credit facilities in amounts sufficient to enable us to pay dividends on our
securities or to fund other liquidity needs.
We may not be able to make dividend payments on our securities, to make
payments on and refinance our debt or to fund planned capital expenditures if we
do not generate adequate cash flow, all of which may in turn reduce the prices
of our securities. To some extent, our ability to generate cash flow from
operations is subject to general economic, financial, competitive, legislative
and regulatory and other factors that are beyond our control. In addition, our
ability to borrow funds under our subsidiaries' credit facilities in the future
will depend on these subsidiaries' ability to maintain specified financial
ratios and satisfy certain financial covenants contained in the credit
agreements. Also, we may need to refinance all or a portion of our debt before
maturity, and it is likely that we will need to refinance all or a portion of
our debt on maturity. The European revolving credit facility and our U.S.
subsidiaries' credit facility both mature in 2005, while the Canadian credit
facility matures in 2009. We may not be able to refinance any of our debt on
favorable terms, if at all, which would increase the risk that we may not have
sufficient cash to pay dividends on our securities.
If our patents are declared invalid or our trade secrets become known to
competitors, our ability to compete may be adversely affected.
Protection of our proprietary processes and other technology is important
to our competitive position. Consequently, we rely on judicial enforcement for
protection of our patents, and our patents may be challenged, invalidated,
circumvented or rendered unenforceable. Furthermore, if any pending patent
application filed by us does not result in an issued patent, or if patents are
issued to us but such patents do not provide meaningful protection of our
intellectual property, then the use of any such intellectual property by our
competitors could result in decreasing our cash flows, which could adversely
affect our ability to pay dividends on our securities and the prices of our
securities. Additionally, our competitors or other third parties may obtain
patents that restrict or preclude our ability to lawfully produce or sell our
products in a competitive manner, which could have the same effects.
We also rely on unpatented proprietary know-how and continuing
technological innovation and other trade secrets to develop and maintain our
competitive position. Although it is our practice to enter into confidentiality
agreements to protect our intellectual property, because these confidentiality
agreements may be breached, such agreements may not provide sufficient
protection for our trade secrets or proprietary know-how, or adequate remedies
may not be available in the event of an unauthorized use or disclosure of such
trade secrets and know-how. In addition, others could obtain knowledge of such
trade secrets through independent development or other access by legal means.
5
Loss of key personnel or our ability to attract and retain new qualified
personnel could hurt our business and inhibit our ability to operate and grow
successfully.
Our success in the highly competitive markets in which we operate will
continue to depend to a significant extent on our leadership team and other key
management personnel. We generally do not have binding employment agreements
with any of these managers. This increases the risks that we may not be able to
retain our current management personnel and we may not be able to recruit
qualified individuals to join our management team, including recruiting
qualified individuals to replace any of our current personnel that may leave in
the future.
Our relationships with our union employees could deteriorate, which could
adversely impact our operations, which may in turn adversely impact our ability
to pay dividends on our securities and the prices of our securities.
As of September 30, 2004, we employed approximately 2,370 full-time
persons. A significant number of our non-U.S. employees are subject to
arrangements similar to collective bargaining arrangements. We may not be able
to negotiate labor agreements with respect to these employees on satisfactory
terms or at all. If our employees were to engage in a strike, work stoppage or
other slowdown, we could experience a significant disruption of our operations
or higher ongoing labor costs, which could adversely affect our ability to pay
dividends on our securities and the prices of our securities. In addition, if
our other employees were to become unionized, we could experience a disruption
of our operations and incur higher ongoing labor costs, which could have similar
adverse affects.
It may be difficult for a third party to acquire us, which could discourage or
prevent a change of control or merger transaction.
As of February 15, 2005, parties related to us owned approximately 93% of
the voting power of our common stock. For as long as our affiliates own a
majority of our common stock, a takeover of our company will require their
approval.
In addition, provisions of our certificate of incorporation and bylaws may
discourage, delay or prevent a merger or other change in control that a
stockholder may consider favorable.
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USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities for
general corporate purposes. Those purposes include, but are not limited to, the
repayment or refinancing of debt, capital expenditures, working capital and
other acquisition of assets.
Other than for general corporate purposes, we will describe any proposed
use of proceeds in a supplement to this prospectus.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 60,000,000 shares of common stock,
par value $.01 per share, and 100,000 shares of preferred stock, par value $.01
per share. At January 1, 2005, 48,946,049 shares of our common stock were
outstanding and held by approximately 5,300 holders of record.
The following description of our capital stock is intended as a summary and
is qualified in its entirety by reference to our First Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation") and our
Amended and Restated Bylaws (the "Bylaws") and to Delaware corporate law.
Common Stock
Voting Rights
The holders of our common stock are entitled to one vote per share on all
matters to be voted on by stockholders. Holders of our common stock are not
entitled to cumulate their votes in the election of directors. Generally, at a
meeting at which a quorum is present, all matters on which stockholders vote
must be approved by a majority of the votes entitled to be cast by all shares of
common stock present in person or represented by proxy, subject to any voting
rights granted to holders of any preferred stock. Except as otherwise provided
by law, and subject to any voting rights granted to holders of any outstanding
preferred stock, amendments to the Certificate of Incorporation must be approved
by holders of a majority of all outstanding shares of common stock.
Dividends
Holders of common stock will share ratably in any dividend declared by our
board of directors, subject to any preferential rights of any outstanding
preferred stock.
Other Rights
In the event of any merger or consolidation of us with or into another
company in connection with which shares of common stock are converted into or
exchangeable for shares of stock, other securities or property (including cash),
all holders of common stock will be entitled to receive the same kind and amount
of shares of stock and other securities and property (including cash).
If we are liquidated, dissolved or wound up after payment to creditors, we
will pay the full amounts required to be paid to holders of shares of any
outstanding preferred stock before we make any payments to holders of shares of
our common stock. All holders of shares of our common stock are entitled to
share ratably in any assets available for distribution to these holders, after
all of our other creditors and preferred stockholders have been satisfied.
No shares of our common stock may be redeemed. Holders of shares of our
common stock do not have any preemptive rights to purchase additional shares of
our common stock.
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Preferred Stock
We may issue up to 100,000 shares of preferred stock in one or more classes
or series and with the terms of each class or series stated in the board of
director's resolutions providing for the designation and issuance of that class
or series. The Certificate of Incorporation authorizes our board of directors to
determine the designations, preferences and relative, participating, optional or
other special rights, and such qualifications, limitations or restrictions
pertaining to each class or series of preferred stock that we issue.
We believe that the ability of our board of directors to issue one or more
series of preferred stock will provide us with flexibility in structuring
possible future financings and acquisitions, and in meeting other corporate
needs which might arise. The authorized shares of our preferred stock, as well
as authorized shares of our common stock, are available for issuance without
further action by our stockholders, unless such action is required by applicable
law or the rules of any stock exchange or automated quotation system on which
our securities may be listed or traded. The New York Stock Exchange currently
requires shareholder approval in several instances, including where the present
or potential issuance of shares could result in an increase in the number of
shares of common stock, or in the amount of voting securities, outstanding of at
least 20%. If stockholder approval is not required for the issuance of shares of
preferred or common stock, our board of directors may determine not to seek
stockholder approval.
Provisions That May Have an Anti-Takeover Effect
Some provisions of the Certificate of Incorporation and the Bylaws
summarized below may be deemed to have an anti-takeover effect and may delay,
deter or prevent a tender offer or takeover attempt that some, or a majority, of
our stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then-current
market price of such stock.
Board of Directors
The Bylaws provide that, subject to any rights of holders of preferred
stock to elect additional directors under specified circumstances, the number of
directors will be fixed from time to time by resolution adopted by the
affirmative vote of a majority of the board of directors or pursuant to the
action of the stockholders. In addition, the Certificate of Incorporation and
the Bylaws provide that newly created directorships resulting from any increase
in the authorized number of directors or any vacancies in the board of directors
resulting from death, resignation, disqualification or removal may be filled
only by a majority vote of the directors then in office.
Amendments to the Certificate of Incorporation and Bylaws
The Certificate of Incorporation generally provides that the Bylaws and
certain provisions of the Certificate of Incorporation may be altered, amended
or repealed by the affirmative vote of the holders of at least a majority of our
securities entitled to vote in the election of directors. The Bylaws may be
altered, amended or repealed by a majority vote of our board of directors or our
stockholders.
Preferred Stock
Our board of directors could issue a series of preferred stock that could,
depending on the terms of such series, delay, defer or prevent a change in
control of us. Our board of directors will make any determination to issue such
shares based on its judgment as to the best interests of us and our
stockholders. Our board of directors, in so acting, could issue preferred stock
having terms that could discourage an acquisition attempt through which an
acquiror may be able to change the composition of our board of directors,
including a tender offer or other transaction that some, or a majority, of our
stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then-current
market price of such stock.
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Advance Notice Provisions for Stockholder Proposals or Director Nominations
For stockholder proposals or director nominations to be brought before an
annual meeting of stockholders, the Bylaws require that the proposal or
nomination must be delivered or mailed to our principal executive offices no
later than 45 days prior to the earlier of the date (as if in the current year)
on which notice of the date of the last annual meeting was mailed or public
disclosure of the date the meeting was made. If we did not mail or publicly
disclose the date of the last annual meeting or we have moved the date of the
annual meeting by 30 days from the date of the last annual meeting (as if in the
current year), the stockholder proposal or nomination must be delivered or
mailed to our principal executive offices no later than 120 days prior to the
meeting. With respect to an election of directors to be held at a special
meeting of stockholders, stockholder director nominations must be delivered or
mailed to our principal executive offices no later than the tenth day following
the date on which notice of such meeting is first given to stockholders.
Liability and Indemnification of Directors and Officers
Delaware General Corporation Law, the Certificate of Incorporation and the
Bylaws contain provisions relating to the limitation of liability and
indemnification of our directors and officers.
The Certificate of Incorporation provides that our directors are not
personally liable to us or our stockholders for monetary damages for breach of
their fiduciary duties as directors, except for such liability as is expressly
not subject to limitation under Delaware corporate law, as the same exists or
may be amended to further limit or eliminate such liability. Existing Delaware
law permits the elimination or limitation of directors' personal liability to us
or our stockholders for monetary damages for breach of their fiduciary duties as
directors, except liability for:
o any breach of a director's duty of loyalty to us or our stockholders;
o acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law;
o any transaction from which a director derived improper personal
benefit;
o the unlawful payment of dividends; and
o unlawful stock repurchases or redemptions.
Because of these exculpation provisions, stockholders may be unable to
recover monetary damages against directors for actions taken by them that
constitute negligence or that otherwise violate their fiduciary duties as
directors, although it may be possible to obtain injunctive or other equitable
relief with respect to such actions. If equitable remedies are not available to
stockholders, stockholders may not have an effective remedy against a director
in connection with the director's conduct.
The Certificate of Incorporation provides as follows:
o we must, to the fullest extent permitted by law, indemnify any and all
of our officers and directors;
o we may, to the fullest extent permitted by law or to such lesser
extent as is determined in the discretion of the board of directors,
indemnify all other persons; and
o we may advance expenses to all persons to whom we have the power to
indemnify.
The Bylaws provide as follows:
o we must indemnify our directors and officers to the fullest extent
permitted under Delaware law;
9
o we must advance reasonable expenses (including attorneys' fees) of a
director or officer for an indemnifiable claim upon receipt of a
written affirmation by the director or officer of his or her good
faith belief that he or she has met the standard of conduct necessary
for indemnification and a written undertaking by or on behalf of the
director or officer to repay such amount if it is ultimately
determined that he or she is not entitled to be indemnified by us as
authorized in the Bylaws;
o if we receive a claim for indemnification of expenses of an
indemnifiable claim and do not pay the claim within 30 days of its
receipt, the claimant may bring suit to recover the unpaid amount and,
if successful in whole or in part, the claimant will also be entitled
to be paid the expenses of prosecuting such claim; and
o we may grant rights of indemnification and advancement of expenses to
any person who is not at the time our current director or officer.
Additionally, we have in effect directors and officers liability insurance.
Stockholder Approval of Certain Business Combinations
In the Certificate of Incorporation, we have expressly elected not to be
governed by Section 203 of the Delaware General Corporation Law. Section 203
prohibits a Delaware corporation from engaging in certain business combinations
with an "interested stockholder" for three years following the date that such
person becomes an interested stockholder. With certain exceptions, an interested
stockholder is a person or entity who or which owns 15% or more of a
corporation's outstanding voting stock or is an affiliate or associate of the
corporation and was the owner of 15% or more of such voting stock at any time
within the previous three years. Because we have elected not to be governed by
Section 203, Section 203 will not apply to us.
Transfer Agent
The transfer agent and registrar for our common stock is EquiServe Trust
Co., N.A.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of preferred stock or common stock.
We may issue warrants independently or together with preferred stock or common
stock or attached to or separate from the offered securities. We may issue each
series of warrants under a separate warrant agreement between us and a bank or
trust company as warrant agent. The warrant agent would act solely as our agent
in connection with the warrants and will not act for or on behalf of warrant
holders.
This summary of some of the provisions of the warrants is not complete. You
should refer to the provisions of any warrant agreement that will be filed with
the SEC as part of the offering of any warrants. We may also describe the
provisions of any warrant agreement in a supplement to this prospectus. To
obtain a copy of such document, see "Where You Can Find More Information"
beginning on page 11.
10
PLAN OF DISTRIBUTION
We may offer securities directly or through underwriters, dealers or
agents. A supplement to this prospectus would identify those underwriters,
dealers or agents and describe the plan of distribution, including commissions
to be paid. If we do not name a firm in such supplement, the firm may not
directly or indirectly participate in any underwriting of those securities,
although it may participate in the distribution of securities under
circumstances entitling it to a dealer's allowance or agent's commission.
An underwriting agreement will entitle the underwriters to indemnification
against specified civil liabilities under the federal securities laws and other
laws. The underwriters' obligations to purchase securities may be subject to
specified conditions and generally would require them to purchase all of the
securities if any are purchased. Unless otherwise noted in a supplement to this
prospectus, the securities would be offered by the underwriters, if any, when,
as and if issued by us, delivered to and accepted by the underwriters and
subject to their right to reject orders in whole or in part.
We may sell securities to dealers, as principals. Those dealers then may
resell the securities to the public at varying prices set by those dealers from
time to time. We may also offer securities through agents. Agents generally act
on a "best efforts" basis during their appointment, meaning that they are not
obligated to purchase securities. Dealers and agents may be entitled to
indemnification as underwriters by us against some liabilities under the federal
securities laws and other laws.
We or the underwriters or the agent may solicit offers by institutions
approved by us to purchase securities under contracts providing for further
payment. Permitted institutions include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others. Certain conditions apply to those purchases.
An underwriter may engage in over-allotment, stabilizing transactions,
short covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934. Over-allotment involves sales in
excess of the offering size, which creates a short position. Stabilizing
transactions permit bidders to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Short covering transactions
involve purchases of the securities in the open market after the distribution is
completed to cover short positions. Penalty bids permit the underwriters to
reclaim a selling concession from a dealer when the securities originally sold
by the dealer are purchased in a covering transaction to cover short positions.
Those activities may cause the price of the securities to be higher than it
would otherwise be. The underwriters may engage in any activities on any
exchange or other market in which the securities may be traded. If commenced,
the underwriters may discontinue those activities at any time.
A supplement or pricing supplement, as applicable, will generally set forth
the anticipated delivery date of the securities being sold at that time.
WHERE YOU CAN FIND MORE INFORMATION
We are a public company and file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy any
document we file at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can request copies of these documents by writing to
the SEC and paying a fee for the copying cost. Please call the SEC at
1-800-SEC-0330 for more information about the operation of the public reference
room. Our SEC filings are also available to the public at the SEC's web site at
www.sec.gov. In addition, you may read and copy our SEC filings at the office of
the New York Stock Exchange at 20 Broad Street, New York, New York 10005.
We maintain a website on the Internet with the address of
www.kronostio2.com. Copies of our Annual Reports on Form 10-K and Quarterly
Reports on Form 10-Q and any Current Reports on Form 8-K, and any amendments
thereto, are or will be available free of charge at such website as soon as
11
reasonably practical after they are filed with the SEC. Additional information
regarding us, including our audit committee charter, our code of business
conduct and ethics and our corporate governance guidelines, can also be found at
this website as required. Information contained on our website is not part of
this prospectus.
This prospectus is only part of a registration statement on Form S-3 that
we have filed with the SEC under the Securities Act of 1933 and therefore omits
some of the information contained in the registration statement. We have also
filed exhibits and schedules to the registration statement that are excluded
from this prospectus, and you should refer to the applicable exhibit or schedule
for a complete description of any statement referring to any contract or other
document. You may inspect or obtain a copy of the registration statement,
including the exhibits and schedules, as described in the previous paragraph.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus and the information we file later with
the SEC will automatically update and supersede this information.
We incorporate by reference the documents listed below and any future
filings made with the SEC (File No. 001-31763) under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until this offering is
completed:
o Annual Report on Form 10-K for the year ended December 31, 2003;
o Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004,
June 30, 2004 and September 30, 2004; and
o Current Reports on Form 8-K filed on August 6, 2004, September 7,
2004, November 9, 2004, November 18, 2004, November 19, 2004 and
November 24, 2004.
You may request a copy of these filings at no cost by writing or
telephoning Robert D. Graham, Vice President and General Counsel, at the
following address and telephone number:
Kronos Worldwide, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240-2697
(972) 233-1700
You should rely only on the information incorporated by reference or
provided in this prospectus or in the supplement. We have not authorized anyone
else to provide you with different information. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of those documents.
LEGAL MATTERS
Unless otherwise noted in a supplement, Locke Liddell & Sapp LLP, Dallas,
Texas, will pass on the legality of the securities offered through this
prospectus.
EXPERTS
The consolidated financial statements as of December 31, 2002 and 2003 and
for each of the three years in the period ended December 31, 2003 incorporated
by reference in this prospectus have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, an independent registered public
accounting firm, given on the authority of said firm as experts in auditing and
accounting.
12
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the offering contemplated by this Registration Statement:
SEC Registration Fee.......................................... $ 11,770
Printing and Engraving Costs.................................. 10,000
Accounting Fees and Expenses.................................. 10,000
Legal Fees and Expenses....................................... 10,000
Miscellaneous................................................. 8,230
-----------
Total......................................................... $50,000
===========
ITEM 15..INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the Delaware General Corporate Law (the "DGCL")
permits a Delaware corporation to limit the personal liability of its directors
in accordance with the provisions set forth therein. The Registrant's First
Amended and Restated Certificate of Incorporation provides that the personal
liability of its directors shall be limited to the fullest extent permitted by
applicable law.
Section 145 of the DGCL contains provisions permitting Delaware
corporations to indemnify their directors, officers, employees or agents against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person was or
is a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, provided that (i) such person acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and (ii) in the case of a criminal action or proceeding, such
person had no reasonable cause to believe his or her conduct was unlawful. In
the case of actions or suits by or in the right of the corporation, no
indemnification shall be made in a case in which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
have determined upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such court shall deem proper. Indemnification as described above shall only
be granted in a specific case upon a determination that indemnification is
proper in the circumstances because the indemnified person has met the
applicable standard of conduct. Such determination shall be made, with respect
to a person who is a director or officer at the time of such determination, (a)
by a majority vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, (b) by a committee of such directors
designated by a majority vote of such directors, even though less than a quorum,
(c) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion or (d) by the stockholders of the
corporation. To the extent that a director or officer of the corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) or (b) of Section 145, or in defense
of any claim, issue or matter therein, he or she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection therewith.
The amended and restated bylaws (the "Bylaws") of the Registrant provide
for indemnification of its directors and officers to the fullest extent
permitted by the DGCL from and against all expenses (including attorneys' fees),
liabilities or other matters arising out of their status as such or their acts,
omissions or services rendered by such persons in such capacities or otherwise
II-1
while serving at the request of the registrant. The Bylaws also provide that the
registrant may indemnify any person who is not at the time a current director or
officer of the registrant to the fullest extent permitted by the DGCL. As
provided in the Bylaws, reasonable expenses (including attorneys' fees) incurred
by a director or officer who was, is or is threatened to be made a named
defendant or respondent in a proceeding by reason of his or her status as a
director or officer of the registrant or services rendered by such persons in
such capacities or otherwise at the request of the registrant shall be paid by
the registrant in advance of the final disposition of such proceeding upon
receipt of a written affirmation by the director or officer of his or her good
faith belief that he or she has met the standard of conduct necessary for
indemnification and a written undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the registrant as authorized in the Bylaws.
ITEM 16..EXHIBITS.
1.1* Form of Underwriting Agreement for Equity Securities
3.1 First Amended and Restated Certificate of Incorporation of Kronos
Worldwide, Inc. - incorporated by reference to Exhibit 3.1 of the
Registration Statement on Form 10 of the Registrant (File No.
001-31763)
3.2 Amended and Restated Bylaws of Kronos Worldwide, Inc. - incorporated
by reference to Exhibit 3.2 of the Registration Statement on Form 10
of the Registrant (File No. 001-31763)
4.1 Form of common stock certificate - incorporated by reference to
Exhibit 4.1 of the Registration Statement on Form 10 of the Registrant
(File No. 001-31763)
4.2* Form of Certificate of Designation of Preferred Stock
4.3* Form of preferred stock certificate
4.4* Form of Securities Warrant Agreement
5.1** Opinion of Locke Liddell & Sapp LLP as to the legality of the
securities being registered
23.1** Consent of PricewaterhouseCoopers LLP
23.2 Consent of Locke Liddell & Sapp LLP (included in Exhibit 5.1 hereto)
24.1** Power of Attorney (included on signature page)
---------------
* To be filed by amendment or incorporated by reference in connection with
the offering of the securities.
** Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that are incorporated by reference in the Registration
Statement.
II-2
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) The undersigned Registrant hereby further undertakes to supplement the
applicable prospectus supplement, after the expiration of the subscription
period, to set forth the results of the subscription offer, the transactions by
the underwriters during the subscription period, the amount of unsubscribed
securities to be purchased by the underwriters, and the terms of any subsequent
reoffering thereof. If any public offering by the underwriters is to be made on
terms differing from those set forth on the cover page of the prospectus, a
post-effective amendment will be filed to set forth the terms of such offering.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to trust managers, directors, officers and controlling
persons of the registrant pursuant to the provisions described in Item 15 of
this Registration Statement or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than in payment by the registrant of expenses incurred or
paid by a trust manager, director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted against the
registrant by such trust manager, director, officer or controlling person in
connection with the securities being registered hereby, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on the 28th day of February,
2005.
KRONOS WORLDWIDE, INC.
By:/s/ Gregory M. Swalwell
---------------------------------------
Gregory M. Swalwell
Vice President, Finance and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title and Capacity Date
*
------------------------------------
Harold C. Simmons Chairman of the Board and Chief Executive February 28, 2005
Officer
(Principal Executive Officer)
*
------------------------------------
Steven L. Watson Vice Chairman of the Board February 28, 2005
* Director February 28, 2005
------------------------------------
Keith R. Coogan
* Director February 28, 2005
------------------------------------
C. H. Moore, Jr.
* Director February 28, 2005
------------------------------------
George E. Poston
* Director February 28, 2005
------------------------------------
Glenn R. Simmons
* Director February 28, 2005
------------------------------------
R. Gerald Turner
/s/ Gregory M. Swalwell Vice President, Finance and Chief Financial February 28, 2005
------------------------------------
Gregory M. Swalwell Officer
(Principal Financial Officer)
/s/ James W. Brown Vice President and Controller February 28, 2005
------------------------------------
James W. Brown (Principal Accounting Officer)
*By: /s/ Gregory M. Swalwell
---------------------------
Attorney-in-Fact
II-4
EXHIBIT INDEX
Exhibit
Number Exhibit
1.1* Form of Underwriting Agreement for Equity Securities
3.1 First Amended and Restated Certificate of Incorporation of Kronos
Worldwide, Inc. - incorporated by reference to Exhibit 3.1 of the
Registration Statement on Form 10 of the Registrant (File No.
001-31763)
3.2 Amended and Restated Bylaws of Kronos Worldwide, Inc. - incorporated
by reference to Exhibit 3.2 of the Registration Statement on Form 10
of the Registrant (File No. 001-31763)
4.1 Form of common stock certificate - incorporated by reference to
Exhibit 4.1 of the Registration Statement on Form 10 of the Registrant
(File No. 001-31763)
4.2* Form of Certificate of Designation of Preferred Stock
4.3* Form of preferred stock certificate
4.4* Form of Securities Warrant Agreement
5.1** Opinion of Locke Liddell & Sapp LLP as to the legality of the
securities being registered
23.1** Consent of PricewaterhouseCoopers LLP
23.2 Consent of Locke Liddell & Sapp LLP (included in Exhibit 5.1 hereto)
24.1** Power of Attorney (included on signature page)
---------------
* To be filed by amendment or incorporated by reference in connection with
the offering of the securities.
** Previously filed.
.