UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14D-9
(Rule 14d-101)
Solicitation/Recommendation Statement
Under Section 14(d)(4) of the Securities Exchange Act of 1934
Amendment No. 7
OUTERWALL
INC.
(Name of Subject Company)
OUTERWALL
INC.
(Names of Persons Filing Statement)
Common Stock,
par value $0.001 per share
(Title of Class of Securities)
690070107
(CUSIP Number
of Class of Securities)
Donald R. Rench
Chief Legal Officer, General Counsel and Corporate Secretary
Outerwall Inc.
1800
114th Avenue S.E.
Bellevue, Washington 98004
(425) 943-8000
(Name,
address and telephone numbers of person authorized to receive notices and communications
on behalf of the persons filing statement)
With copies to:
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Jens M. Fischer
Lance W. Bass
Perkins
Coie LLP
1201 Third Avenue, Suite 4900
Seattle, Washington 98101-3099
(206) 359-8000
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Matthew M. Guest, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New
York, New York 10019
(212) 403-1000
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¨
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Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
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This Amendment No. 7 (
Amendment No. 7
) amends and supplements
the Solicitation/Recommendation Statement on Schedule 14D-9 filed by Outerwall Inc. (the
Company
) with the Securities and Exchange Commission on August 5, 2016 (as amended and supplemented from time to time, and including the
documents annexed thereto or incorporated therein, the
Schedule 14D-9
). The Schedule 14D-9 relates to the tender offer by Aspen Merger Sub, Inc. (
Outerwall Merger Sub
), a wholly owned subsidiary of Aspen Parent,
Inc. (
Parent
), to purchase all of the issued and outstanding shares of the Companys common stock, par value of $0.001 per share (the
Shares
), at a purchase price equal to $52.00 per Share, net to the
seller in cash, without interest and less any applicable taxes required to be withheld, upon the terms and subject to the conditions set forth in the Offer to Purchase of Parent and Outerwall Merger Sub dated August 5, 2016, and in the related
Letter of Transmittal, as each may be amended or supplemented from time to time.
Except as otherwise set forth below, the
information set forth in the Schedule 14D-9 remains unchanged and is incorporated herein by reference as relevant to items in this Amendment No. 7. Capitalized terms used but not otherwise defined herein have the meanings ascribed to such terms
in the Schedule 14D-9.
Explanatory Note
:
As contemplated by the proposed settlement of certain litigation described in Item 8 of the Schedule 14D-9 under the heading
Litigation Related to the Transaction
s, as further described below and as previously disclosed on August 15, 2016 and August 24, 2016, the Company is providing certain additional disclosures that are supplemental to
those contained in the Schedule 14D-9. This supplemental information should be read in conjunction with the Schedule 14D-9, which we urge you to read in its entirety. With respect to the litigation, the defendants deny that any further supplemental
disclosure was required under any applicable rule, statute, regulation or law but have agreed to provide these additional disclosures as part of the proposed settlement in order to avoid the costs, disruption and distraction of further litigation.
As noted below, none of the defendants has admitted wrongdoing of any kind, including but not limited to inadequacies in any disclosure, the materiality of any disclosure that the plaintiffs contend should have been made, or any violation of any
federal or state law. The additional Company disclosures are as follows:
Item 3. Past Contacts, Transactions, Negotiations and
Agreements.
(a) Item 3 of the Schedule 14D-9 is hereby amended and supplemented by adding the following paragraph as
the fourth paragraph under the heading
Arrangements between the Company and its Executive Officers, Directors and AffiliatesChange of Control Agreements
:
Neither Management VIII nor any other potential bidder engaged in any discussions regarding the retention of the Companys
executive officers and/or directors during the negotiation and bid submission process discussed under Item 4 of the Schedule 14D-9 under the heading
Background of the Offer; Reasons for the Recommendation of the BoardBackground
of the Offer.
Except with respect to Mr. Pruschs agreement to be bound by non-compete provisions for a period of two years following the closing of the Outerwall Merger as described in further detail below and preliminary
discussions with certain of the executive officers of the Company about the possible continued employment of those individuals and potential changes to the management of the Company and its affiliates following the closing of the Mergers, which
preliminary discussions took place following the announcement of the Transactions and the commencement of the Offer, there have been no other material discussions or negotiations involving retention and/or any continuing relationship between
Management VIII, Parent, Outerwall Merger Sub or Redbox Merger Sub, on the one hand, and the Companys executive officers and/or directors, on the other hand. At the current time, there are no agreements, arrangements or understandings by
Management VIII, Parent, Outerwall Merger Sub or Redbox Merger Sub to retain any Company executive officers and/or directors.
(b) Item 3 of the Schedule 14D-9 is hereby amended and supplemented by adding the following sentence as the second sentence to the
existing fourth paragraph (now fifth paragraph) under the heading
Arrangements between the Company and its Executive Officers, Directors and AffiliatesChange of Control Agreements
:
Among other things, Management VIII was focused on ensuring that Mr. Prusch would not compete against the Company should he not be
employed by Management VIII or any of its affiliates following the closing of the Mergers.
Item 4. The Solicitation or Recommendation.
(a) Item 4 of the Schedule 14D-9 under the heading
Background of the Offer; Reasons for the Recommendation of the
BoardBackground of the Offer
is hereby amended and supplemented by adding the following sentences prior to the final sentence of paragraph 9:
Such non-disclosure agreements contained customary standstill provisions, which restricted the ability of the potential bidders to take
certain actions relating to the acquisition of the Companys securities or material assets for a period of one to two years, provided that such standstill restrictions fell away once the Company entered into the Merger Agreement. None of the
non-disclosure agreements entered into by the potential bidders included any provisions that would preclude their ability to make an offer for the Company following the announcement of the Transactions.
(b) Item 4 of the Schedule 14D-9 under the heading
Background of the Offer; Reasons for the Recommendation of the
BoardBackground of the Offer
is hereby amended and supplemented by adding the following sentence to the end of paragraph 20:
The Board also determined that given the significantly lower proposed price range submitted by Company B relative to that of both
Management VIII and Company A, as well as relative to its prior bid submission, Morgan Stanley should inform Company B that it would not be invited to participate in the next stage of the process.
(c) Item 4 of the Schedule 14D-9 under the headings
Opinion of the Companys Financial AdvisorPremia Paid
Analysis
and
Discounted Cash Flow Analysis
is hereby amended and supplemented by replacing the entirety of the existing sections with the following:
Premia Paid Analysis
Using publicly available information relating to (a) all public U.S. target all-cash transactions sized between $1 billion and $2
billion from January 1, 2010 to July 21, 2016 (collectively, the
All Cash Public Transactions
) and (b) all public U.S. target transactions sized between $1 billion and $2 billion from January 1, 2010 to
July 21, 2016 (collectively, the
Public Transactions
), Morgan Stanley reviewed the premia paid in connection with such precedent transactions. Based on the analysis of the premia paid in connection with the selected precedent
transactions, Morgan Stanley formulated a range of premiums and applied these ranges of premiums to the volume weighted average price of $26.56 per Share from February 4, 2016, the Companys 2015 fourth quarter earnings announcement date,
to February 8, 2016, the date Engaged Capital filed its Schedule 13D disclosing its beneficial ownership of over 14% of the outstanding Shares.
Based on the application of such ranges of premiums to the volume weighted average price of $26.56 per Share, Morgan Stanley calculated
(i) based on the 25th and 75th percentile of the All Cash Public Transactions, a range of potential values of $32.25 to $38.25 and (ii) based on the 25th and 75th percentile of the Public Transactions, a range of potential values of $31.25
to $38.25, in each case, per Share, as rounded to the nearest $0.25.
The following is a summary of the information examined by Morgan
Stanley:
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All Cash Public Transactions
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Total Number of Transactions
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101
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Premiums 1-day Prior to Announcement
25
th
Percentile
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21.2
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%
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Premiums 1-day Prior to Announcement
75
th
Percentile
|
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44.4
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%
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2
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|
|
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Public Transactions
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Total Number of Transactions
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141
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Premiums 1-day Prior to Announcement
25
th
Percentile
|
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|
18.1
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%
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Premiums 1-day Prior to Announcement
75
th
Percentile
|
|
|
44.1
|
%
|
Discounted Cash Flow Analysis
Morgan Stanley performed a discounted cash flow analysis to determine a range of potential equity values per Share, using the financial
projections provided by the Companys management in each of the Core Case, the Unrisked Strategic Case and the Downside Case, as provided by the Companys management. Morgan Stanley calculated the present value of estimated future cash
flows and terminal value for the Company for the three and half years from June 30, 2016 through December 31, 2020 from the projections provided by management. Morgan Stanley calculated the Companys annual unlevered free cash flows
by taking the Companys projected Adjusted EBITDA less share-based payments, change in working capital/other, capital expenditures, and tax rate based on assumptions provided by the Company. Morgan Stanley calculated the terminal value for the
Company by applying a range of NTM EBITDA multiples of 4.0x to 4.5x to the Companys estimated calendar year 2020 EBITDA. Morgan Stanley selected a range of multiples of 4.0x to 4.5x based upon its professional judgment and experience. Among
the factors considered by Morgan Stanley in selecting the multiples were the Companys historical multiple for 2016 year to date, market expectations, and management projections. The free cash flows and terminal values were discounted to
present values as of June 30, 2016 using discount rates ranging from 8.6% to 9.7%, which discount rates were selected, upon the application of Morgan Stanleys professional judgment and experience, to reflect an estimate of the
Companys weighted average cost of capital. In particular, Morgan Stanley estimated a range of weighted average cost of capital for Outerwall based on a cost of equity ranging from 11.6% to 13.6%, after-tax cost of debt of 4.8%, and debt /
total capitalization of 44.8%. Morgan Stanley estimated a cost of equity ranging from 11.6% to 13.6% based on the yield-to-worst on the Companys senior notes due 2021 on March 14, 2016 of 11.6% plus the average spread of the
Companys cost of equity to yield-to-worst on the Companys senior notes due 2021 from June 2015 to October 2015. The terminal values calculated by Morgan Stanley implied perpetuity growth rates of (2.2%) (1.9%),
(3.9%) (3.5%) and (1.5%) (1.3%) for the Core Case, Unrisked Strategic Case, and Downside Case, respectively. Based on the Companys net debt balance of $717 million (excluding cash in kiosks, cash in transit
and cash identified for settling accrued payables to retailer partners in relation to Coinstar kiosks) as of June 30, 2016 and the outstanding shares of the common stock of the Company on a fully diluted basis as provided by management, Morgan
Stanley calculated (i) a range of potential equity values of $41.00 to $49.50 based on the Core Case, (ii) a range of potential equity values of $71.00 to $83.75 based on the Unrisked Strategic Case, and (iii) a range of potential
equity values of $27.50 to $34.25, based on the Downside Case, in each case, per Share, as rounded to the nearest $0.25.
(d)
Item 4 of the Schedule 14D-9 under the headings
Opinion of the Companys Financial AdvisorGeneral
is hereby amended and supplemented by replacing the last three sentences of the penultimate paragraph of the section
with the following:
During the same period, Morgan Stanley and its affiliates have received aggregate fees of between $3
million and $4 million for financial advisory and/or financing services provided to Apollo Global Management, LLC (which is an affiliate of Management VIII) and its subsidiaries, and aggregate fees of between $55 million and $65 million for
financial advisory and/or financing services provided to certain entities in which funds affiliated with Apollo Global Management, LLC holds an equity interest. Morgan Stanley also disclosed to the Board that it and its affiliates have current
financial advisory and/or financing services assignments with affiliates of Apollo Global Management, LLC unrelated to the transactions with the Company for which Morgan Stanley expected it might receive customary fees if the transactions related to
such engagements were completed. Morgan Stanley may also seek to provide such services to Parent and the Company in the future and expects to receive fees for the rendering of these services.
3
(e) Item 4 of the Schedule 14D-9 under the heading
Certain Company
ForecastsImportant Information Concerning Company Forecasts
is hereby amended and supplemented by replacing paragraphs 7 through paragraph 12 with the following:
The following is a summary of the Core Case:
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Core Case
($ in millions)
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Fiscal Year
|
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2016E
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|
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2017E
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|
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2018E
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2019E
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|
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2020E
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Revenue
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|
2,015
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|
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|
1,786
|
|
|
|
1,691
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|
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|
1,564
|
|
|
|
1,475
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Adjusted EBITDA
(1)
|
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|
383
|
|
|
|
389
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|
|
|
361
|
|
|
|
316
|
|
|
|
286
|
|
Capital expenditures
|
|
|
56
|
|
|
|
49
|
|
|
|
48
|
|
|
|
47
|
|
|
|
47
|
|
Free cash flow
(2)
|
|
|
192
|
|
|
|
191
|
|
|
|
206
|
|
|
|
173
|
|
|
|
151
|
|
Unlevered free cash flow
(3)
|
|
|
218
|
|
|
|
216
|
|
|
|
231
|
|
|
|
192
|
|
|
|
166
|
|
(1)
|
Adjusted EBITDA is defined as net income plus depreciation and amortization; interest expense, net; income taxes; and share-based payments expense.
|
(2)
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Free cash flow is defined as net income plus depreciation and amortization, share-based payments less change in working capital/other and capital expenditures.
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(3)
|
Unlevered free cash flow is defined as net income plus depreciation and amortization, share-based payments, and tax-effected interest expense less change in working capital/other and capital expenditures.
|
The Core Case projected growth rates for individual years that result in an 8% compound annual decline in revenue from
fiscal year 2015 (actual revenue) through fiscal year 2020, primarily due to secular decline in unit rentals in the Redbox business. The Core Case key assumptions and estimates for fiscal years 2016 through 2020 reflect, among other things, an
annual unit rental decline in the Redbox business of 14-21%, partially offset by product margin improvement in Redbox unit rentals and price increases in the Redbox and Coinstar businesses, increased annual savings in the Coinstar business, and an
increase in electronic devices and aggregate value per device collected in the ecoATM business. The assumed tax rate applied for each of the fiscal years 2016 through 2020 was 35.5%.
The following is a summary of the Unrisked Strategic Case:
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|
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|
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|
|
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Unrisked Strategic Case
($ in millions)
|
|
Fiscal Year
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
Revenue
|
|
|
2,029
|
|
|
|
1,924
|
|
|
|
1,923
|
|
|
|
1,897
|
|
|
|
1,979
|
|
Adjusted EBITDA
(1)
|
|
|
388
|
|
|
|
434
|
|
|
|
434
|
|
|
|
416
|
|
|
|
430
|
|
Capital expenditures
|
|
|
58
|
|
|
|
61
|
|
|
|
67
|
|
|
|
75
|
|
|
|
60
|
|
Unlevered free cash flow
(2)
|
|
|
220
|
|
|
|
237
|
|
|
|
263
|
|
|
|
234
|
|
|
|
253
|
|
(1)
|
Adjusted EBITDA is defined as net income plus depreciation and amortization; interest expense, net; income taxes; and share-based payments expense.
|
(2)
|
Unlevered free cash flow is defined as net income plus depreciation and amortization, share-based payments, and tax-effected interest expense less change in working capital/other and capital expenditures. In the
materials provided in connection with the fireside chats to potential bidders, the Unrisked Strategic Case information was included in those materials except that the unlevered free cash flow amounts included therein were estimated at:
$220 million for fiscal year 2016, $238 million for fiscal year 2017, $268 million for fiscal year 2018, $242 million for fiscal year 2019, and $261 million for fiscal year 2020. The difference between the initial unlevered free cash flow amounts
for the Unrisked Strategic Case and the final unlevered free cash flow amounts for the Unrisked Strategic Case was due to differences in estimates of cash in system in connection with assumptions made relating to future international
expansion in the Coinstar business.
|
The Unrisked Strategic Case projected growth rates for individual years that result in
a 2% compound annual decline in revenue from fiscal year 2015 (actual revenue) through fiscal year 2020, primarily due to secular decline in unit rentals in the Redbox business. The key assumptions and estimates for fiscal years 2016 through 2020
underlying the Unrisked Strategic Case are the same as those underlying the Core Case, except that the Unrisked Strategic Case provided for a slower rate of unit rentals decline in the Redbox business (i.e., 20% decline in fiscal year 2016 and then
11-17% decline for fiscal years 2017 through 2020) and implementation of certain growth initiatives in the Redbox and Coinstar businesses, including provision of a digital sell-through video-on-demand service offering, a closed-loop marketing
solution based on data accumulated through the Companys businesses and international expansion of the Coinstar business, and additional corporate cost savings. The assumed tax rate applied for each of the fiscal years 2016 through 2020 was
35.5%.
4
The following is a summary of the Downside Case:
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|
|
|
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Downside Case
($ in millions)
|
|
Fiscal Year
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
Revenue
|
|
|
1,980
|
|
|
|
1,716
|
|
|
|
1,588
|
|
|
|
1,446
|
|
|
|
1,341
|
|
Adjusted EBITDA
(1)
|
|
|
349
|
|
|
|
342
|
|
|
|
311
|
|
|
|
264
|
|
|
|
232
|
|
Capital expenditures
|
|
|
56
|
|
|
|
48
|
|
|
|
46
|
|
|
|
45
|
|
|
|
44
|
|
Unlevered free cash flow
(2)
|
|
|
205
|
|
|
|
189
|
|
|
|
198
|
|
|
|
160
|
|
|
|
133
|
|
(1)
|
Adjusted EBITDA is defined as net income plus depreciation and amortization; interest expense, net; income taxes; and share-based payments expense.
|
(2)
|
Unlevered free cash flow is defined as net income plus depreciation and amortization, share-based payments, and tax-effected interest expense less change in working capital/other and capital expenditures.
|
The Downside Case projected growth rates for individual years that result in a 9% compound annual decline in revenue from
fiscal year 2015 (actual revenue) through fiscal year 2020, primarily due to secular decline in unit rentals in the Redbox business. The Downside Case key assumptions and estimates are the same as those underlying the Core Case, except that the
Downside Case provided for a higher rate of unit rentals decline in the Redbox business (i.e., 14-22% decline in fiscal years 2016 through 2020), lower margin improvements in the Redbox business due to higher product costs, lower annual savings in
the Coinstar business, and no increase in electronic devices collected per kiosk per day and a lower increase in aggregate value per device collected in the ecoATM business. The assumed tax rate applied for each of the fiscal years 2016 through 2020
was 35.5%.
(f) Item 4 of the Schedule 14D-9 under the heading
Certain Company ForecastsInformation about
the Companys Non-GAAP Financial Measure
is hereby amended and supplemented by replacing the disclosures under the subheading
Free Cash Flow
with the following:
The Company believes free cash flow is an important non-GAAP measure as it provides additional information regarding the Companys
ability to service, incur or pay down indebtedness and repurchase its securities.
A reconciliation of free cash flow and unlevered free
cash flow for the Core Case and unlevered free cash flow for the Unrisked Strategic Case and Downside Case to net income, the most comparable GAAP financial measure, is presented in the following tables (totals may not add due to rounding):
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|
|
|
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|
Core Case
($ in millions)
|
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
Net income
|
|
|
110
|
|
|
|
139
|
|
|
|
136
|
|
|
|
118
|
|
|
|
111
|
|
Depreciation and amortization
|
|
|
151
|
|
|
|
118
|
|
|
|
96
|
|
|
|
87
|
|
|
|
75
|
|
Share-based payments
|
|
|
21
|
|
|
|
16
|
|
|
|
16
|
|
|
|
16
|
|
|
|
16
|
|
Change in working capital/other
|
|
|
(33
|
)
|
|
|
(32
|
)
|
|
|
7
|
|
|
|
(0
|
)
|
|
|
(4
|
)
|
Capital expenditures
|
|
|
(56
|
)
|
|
|
(49
|
)
|
|
|
(48
|
)
|
|
|
(47
|
)
|
|
|
(47
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
|
|
192
|
|
|
|
191
|
|
|
|
206
|
|
|
|
173
|
|
|
|
151
|
|
|
|
|
|
|
|
Net income
|
|
|
110
|
|
|
|
139
|
|
|
|
136
|
|
|
|
118
|
|
|
|
111
|
|
Depreciation and amortization
|
|
|
151
|
|
|
|
118
|
|
|
|
96
|
|
|
|
87
|
|
|
|
75
|
|
Share-based payments
|
|
|
21
|
|
|
|
16
|
|
|
|
16
|
|
|
|
16
|
|
|
|
16
|
|
Tax-effected interest expense
|
|
|
26
|
|
|
|
25
|
|
|
|
25
|
|
|
|
19
|
|
|
|
15
|
|
Change in working capital/other
|
|
|
(33
|
)
|
|
|
(32
|
)
|
|
|
7
|
|
|
|
(0
|
)
|
|
|
(4
|
)
|
Capital expenditures
|
|
|
(56
|
)
|
|
|
(49
|
)
|
|
|
(48
|
)
|
|
|
(47
|
)
|
|
|
(47
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unlevered free cash flow
|
|
|
218
|
|
|
|
216
|
|
|
|
231
|
|
|
|
192
|
|
|
|
166
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrisked Strategic Case
($ in millions)
|
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
Net income
|
|
|
114
|
|
|
|
169
|
|
|
|
181
|
|
|
|
177
|
|
|
|
198
|
|
Depreciation and amortization
|
|
|
151
|
|
|
|
123
|
|
|
|
105
|
|
|
|
102
|
|
|
|
90
|
|
Share-based payments
|
|
|
21
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
Tax-effected interest expense
|
|
|
26
|
|
|
|
25
|
|
|
|
25
|
|
|
|
19
|
|
|
|
15
|
|
Change in working capital/other
|
|
|
(33
|
)
|
|
|
(28
|
)
|
|
|
9
|
|
|
|
0
|
|
|
|
(0
|
)
|
Capital expenditures
|
|
|
(58
|
)
|
|
|
(61
|
)
|
|
|
(67
|
)
|
|
|
(75
|
)
|
|
|
(60
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unlevered free cash flow
|
|
|
220
|
|
|
|
237
|
|
|
|
263
|
|
|
|
234
|
|
|
|
253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Downside Case
($ in millions)
|
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
Net income
|
|
|
89
|
|
|
|
110
|
|
|
|
104
|
|
|
|
86
|
|
|
|
77
|
|
Depreciation and amortization
|
|
|
151
|
|
|
|
118
|
|
|
|
95
|
|
|
|
85
|
|
|
|
73
|
|
Share-based payments
|
|
|
21
|
|
|
|
16
|
|
|
|
16
|
|
|
|
16
|
|
|
|
16
|
|
Tax-effected interest expense
|
|
|
26
|
|
|
|
25
|
|
|
|
25
|
|
|
|
19
|
|
|
|
15
|
|
Change in working capital/other
|
|
|
(24
|
)
|
|
|
(31
|
)
|
|
|
5
|
|
|
|
(2
|
)
|
|
|
(4
|
)
|
Capital expenditures
|
|
|
(56
|
)
|
|
|
(48
|
)
|
|
|
(46
|
)
|
|
|
(45
|
)
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unlevered free cash flow
|
|
|
205
|
|
|
|
189
|
|
|
|
198
|
|
|
|
160
|
|
|
|
133
|
|
Item 8. Additional Information.
Item 8 of the Schedule 14D-9 is hereby amended and supplemented by adding the following paragraphs as the sixth and seventh
paragraphs under the heading
Litigation Related to the Transactions
:
On September 16, 2016,
Outerwall and the individual defendants in the Abbas, Baumgartner, Hunter, Mallinger, and Filippov actions (the
Actions
) entered into a memorandum of understanding (
MOU
) with the plaintiffs in such Actions
regarding the settlement of the Actions. Pursuant to the MOU, Outerwall agreed to make available in an amendment to the Schedule 14D-9 additional information to Outerwall stockholders (the
Supplemental Disclosures
). The
Supplemental Disclosures should be read in conjunction with the Schedule 14D-9, and the documents incorporated by reference therein. Outerwall and the other defendants deny all of the allegations in the Actions, including any allegations asserting a
violation of federal or state law, and believe the disclosures in the Schedule 14D-9 are adequate. Nevertheless, Outerwall and the other defendants have agreed to settle the Actions in order to avoid the costs, disruption, and distraction of further
litigation.
The MOU contemplates that the parties would enter into a stipulation of settlement, which would be subject to
customary conditions, including court approval following notice to Outerwalls former stockholders. It also contemplated that in the event that the parties enter into a stipulation of settlement, a hearing would be scheduled at which a court
overseeing the Actions would consider the fairness, reasonableness and adequacy of the settlement. If the settlement is finally approved by the court, it would resolve and release all claims that were brought or could have been brought in the
Actions, including claims challenging any disclosure made in connection with the Transactions, pursuant to terms that will be disclosed to Outerwalls former stockholders prior to final approval of the settlement. In addition, in connection
with the settlement, the MOU contemplates that counsel for plaintiffs in the Actions will file a petition for an award of attorneys fees and expenses to be paid by Outerwall or its successor.
6
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Amendment is true, complete and
correct.
Dated: September 16, 2016
|
|
|
OUTERWALL INC.
|
|
|
By:
|
|
/s/ Donald R. Rench
|
Name:
|
|
Donald R. Rench
|
Title:
|
|
Chief Legal Officer, General Counsel and Corporate Secretary
|
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