SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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Filed by a party other than the Registrant |_|
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|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as Permitted by Rule
14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|X| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
QUANTA SERVICES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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EXPLANATORY NOTE
Quanta Services, Inc., a Delaware corporation ("Quanta
Services"), is filing the materials contained in this Schedule 14A with the
Securities and Exchange Commission on March 19, 2002 in connection with the
solicitation of proxies for electing the board of directors of Quanta Services
at the 2002 annual meeting of Quanta Services' stockholders.
###
[LOGO OF QUANTA SERVICES, INC.] PRESS RELEASE
FOR IMMEDIATE RELEASE
Contacts: James Haddox, CFO Jonathan Gasthalter Ken Dennard / kdennard@easterly.com
Reba Reid Jonas Leddington Lisa Elliott / lisae@easterly.com
Quanta Services, Inc. Citigate Sard Verbinnen Easterly Investor Relations
713-629-7600 212-687-8080 713-529-6600
QUANTA SENDS LETTER TO STOCKHOLDERS
HOUSTON - MARCH 19, 2002 - Quanta Services, Inc. (NYSE:PWR), a leading
provider of specialized contracting services to the electric power, gas,
telecommunications and cable television industries, today sent a letter to its
stockholders detailing the value-enhancing initiatives authorized by the Special
Committee of Quanta's Board of Directors, which consists of all directors not
designated by Aquila Inc. (NYSE: ILA), and further describing why it believes
stockholders should resist Aquila's hostile proxy contest.
The text of the letter follows:
March 19, 2002
Dear Quanta Stockholder:
AQUILA IS TRYING TO TAKE CONTROL OF QUANTA WITHOUT
OFFERING YOU ANYTHING
Without making a formal offer to Quanta's other stockholders, Aquila Inc., known
until March 18 as UtiliCorp United Inc., is trying to muscle control of your
Company in order to achieve its own financial objectives. The QUANTA BOARD IS
DETERMINED TO PROTECT YOUR INTERESTS, and will soon mail proxy materials asking
formally for your support at our 2002 annual meeting.
In the meantime, and until we set a date for the meeting, we want to update you
on several important developments. The Quanta Board, acting through the Special
Committee consisting of all directors not designated by Aquila ("the Board"),
approved concrete actions designed to ensure that:
>> All stockholders are treated equally in the event of a change of
control;
>> We properly explore and consider all value creation avenues for Quanta
and its stockholders;
>> The Company's most vital assets are protected from the risks posed by
Aquila's actions; and
>> The interests of our employees are appropriately aligned with those of
investors.
QUANTA'S REVISED RIGHTS PLAN IS STOCKHOLDER FRIENDLY AND WON'T STOP A
BID FOR THE WHOLE COMPANY
One of the most important actions your Board took was to amend Quanta's
stockholder rights plan, which is designed to protect the Company against
creeping, partial or coercive takeover attempts. The amended plan - known in the
financial community as a "chewable pill" - would not stand in the way of Aquila,
or any other bidder, if they:
>> Make a tender or exchange offer for all of Quanta's shares and, upon
completion of that offer, own Quanta shares representing 75% or more of
Quanta's voting power; and
>> Commit irrevocably to purchase all of the other shares at the same
price.
TO PUT A FINE POINT ON THIS IN THE CURRENT SITUATION, IF AQUILA OR ANYONE ELSE
MAKES A SERIOUS OFFER TO ACQUIRE ALL OF QUANTA'S SHARES, OUR RIGHTS PLAN WILL
NOT STOP THEM.
QUANTA'S BOARD IS
EXPLORING ALL VALUE CREATION ALTERNATIVES
Quanta's Board has authorized Goldman, Sachs & Co., our financial adviser, to
explore a complete range of strategic options including potential acquisitions,
recapitalizations and other transactions that could create value for you.
Included under consideration is a stock repurchase program that would be
conditional on the pro-rata participation of Aquila. The Quanta Board is willing
to consider any transaction - including any that Aquila would propose - but only
if it is fair to all Quanta stockholders and provides stockholders appropriate
value and protections.
WE HAVE ALSO TAKEN STEPS TO ALIGN EMPLOYEE AND STOCKHOLDER
INTERESTS AND IMPROVE CREDIT RATIOS
Reflecting our commitment to stock-based compensation to align the interests of
our employees with those of investors, we have authorized the creation of a
Stock Employee Compensation Trust (SECT). The SECT, which holds 8 million shares
of Quanta stock to fund future obligations under employee benefit plans, affords
the Company significant tax and legal advantages over alternative payment
methods. Furthermore, the SECT:
>> PROVIDES A PRE-DETERMINED MEANS TO PAY FOR EMPLOYEE BENEFITS WITH STOCK
RATHER THAN CASH, THEREBY CONSERVING CORPORATE CASH;
>> HELPS INCREASE STOCK OWNERSHIP AMONG EMPLOYEES;
>> INCREASES THE COMPANY'S EQUITY BASE OVER TIME, IMPROVING CREDIT RATIOS;
AND
>> HAS NO EPS IMPACT UNTIL SHARES ARE ISSUED BY THE TRUST TO FUND THE
COMPANY'S BENEFIT PLANS.
The benefits of the SECT are compelling, and such companies as American Express,
DuPont, Pfizer, Corning, and Tenneco have adopted them. While there is voting
dilution from the SECT, as there would be with any new issuance, we believe the
aforementioned advantages to the Company and its stockholders far outweigh this
impact. Contrary to the disingenuous assertions by Aquila, shares held by the
SECT are not voted by management, but are voted according to the instructions of
a broad-based group of Company employees.
WHY IS AQUILA TRYING TO HIDE ITS TRUE MOTIVES?
Aquila has said over and over again in SEC filings and in presentations to its
own investors that earnings consolidation with Quanta was a main priority:
>> Aquila is "considering whether to pursue a transaction with [Quanta]
that would enable [Aquila] to ENJOY THE BENEFIT OF FINANCIAL STATEMENT
CONSOLIDATION for accounting purposes."
- Amendment No. 8 to UtiliCorp (Aquila) Schedule 13D, dated May 25,
2000.
>> "[Aquila] intends to increase its percentage of ownership of [Quanta]
to...ENJOY THE BENEFITS OF FINANCIAL STATEMENT CONSOLIDATION for
accounting purposes."
- Amendment No. 12 to UtiliCorp (Aquila) Schedule 13D, dated
September 28, 2001.
>> "With regard to Quanta, WE VERY MUCH WANT TO ACHIEVE CONSOLIDATION."
- Aquila chief financial officer Daniel J. Streek during
UtiliCorp's February 7, 2002 Fourth Quarter 2001 Earnings
Conference Call.
Yet, after we refused to hand over the Company for nothing - and challenged
their ability to consolidate under accounting rules - Aquila turned around and
said to the Wall Street Journal, "Consolidation is not our primary objective."
(1)
WHAT IS AQUILA REALLY UP TO? CONSIDER THE FOLLOWING VIEW:
"[Aquila] doesn't want to buy Quanta, and they don't really want to control
and run it, they just want to own enough to consolidate it with their own
earnings."
- Evan Smith, Sanders Morris Harris - Houston Chronicle, February
12, 2002
WE URGE YOU: DON'T LET AQUILA TAKE CONTROL OF QUANTA
TO ACHIEVE ITS OWN ACCOUNTING GIMMICKRY
QUANTA HAS CONSISTENTLY DELIVERED STRONG FINANCIAL AND OPERATIONAL RESULTS
RELATIVE TO ITS PEERS
WE CATEGORICALLY REJECT THE PUBLIC STATEMENTS BY AQUILA ABOUT QUANTA'S
PERFORMANCE, which don't square with what Aquila has said to its own
stockholders or what they've said to us privately. IN 2001, WE ACHIEVED RECORD
REVENUES AND FOURTH QUARTER CASH FLOW - despite what The Wall Street Journal
termed as "a perfect storm" (2) for companies with exposure to the telecom
business. Consider what some analysts have to say about Quanta:
>> "QUANTA TURNED IN A SOLID OVERALL PERFORMANCE [IN THE FOURTH QUARTER]."
- Mark Hughes, Suntrust Robinson Humphrey Equity Research Report,
February 14, 2002(3)
>> "WE WOULD BE BUYERS OF PWR, AS THE COMPANY IS WELL POSITIONED TO
BENEFIT FROM INCREASED OUTSOURCING AND NEW CUSTOMER ACQUISITIONS IN ITS
ELECTRIC POWER BUSINESS."
-------------------
1 Aquila spokesman Ethan Hirsh, the Wall Street Journal, "UtiliCorp Launches a
Proxy Fight To Gain Control of Quanta's Board", February 22, 2002.
2 Wall Street Journal, "Telecom Industry Leaders Struggle With Growing Debt,
Overcapacity", March 13, 2002.
3 Consent of author or publication for inclusion in proxy solicitation
materials was neither sought nor obtained.
- Carl Palitti, Gerard Klauer Mattison Equity Research Report,
February 15, 2002(3)
>> "WE THINK CURRENT MANAGEMENT IS BEST SUITED TO RUN QUANTA AND BELIEVE
STOCKHOLDERS SHOULD SUPPORT THEM IN THE UPCOMING PROXY BATTLE [WITH
AQUILA.]"
- Carl Palitti, Gerard Klauer Mattison Equity Research Report,
February 15, 2002(3)
>> "QUALITY 4Q RESULTS AND IMPROVING BALANCE SHEET STRENGTHEN MANAGEMENT'S
CASE FOR INDEPENDENCE IN THE IMMINENT PROXY FIGHT WITH [AQUILA]."
- Evan Smith, Sanders Morris Harris Equity Research Report,
February 14, 2002(3)
>> "WE LIKE [QUANTA] MANAGEMENT'S FOCUS ON 1) CASH GENERATION 2) GROSS
MARGIN IMPROVEMENT/STABILIZATION, 3) BETTER PRODUCTIVITY."
- Chris Gutek, Morgan Stanley Equity Research Report, February 15,
2002(3)
>> "WE ARE IMPRESSED WITH IMPROVEMENTS ON THE BALANCE SHEET... WE BELIEVE
PWR'S ENHANCED BALANCE SHEET PROVIDES THE COMPANY MORE FLEXIBILITY AND
BETTER POSITIONS IT FOR A RECOVERY."
- Evan Smith, Sanders Morris Harris Equity Research Report,
February 14, 2002(3)
And, truth be told, when AQUILA IS COMMUNICATING WITH ITS OWN STOCKHOLDERS, it
seems to agree: "WE BELIEVE [THE PWR STOCK PRICE DECLINE] IS TEMPORARY AND ARE
CONFIDENT IN THE LONG-TERM POTENTIAL OF OUR INVESTMENT IN QUANTA."(4)
QUANTA'S BOARD IS WORKING FOR YOU
>> Collectively, the Quanta directors who are not designated by Aquila own
3,159,724 shares, or 5.27% of Quanta's stock, and their interests are
aligned with yours.
>> Three of these directors came to Quanta when we acquired their
companies.
>> Two of these directors still supervise and were PERSONALLY RESPONSIBLE
FOR ALMOST $700 MILLION, OR APPROXIMATELY 34.7%, OF QUANTA'S 2001
REVENUES.
>> Three of these directors are not affiliated with Quanta.
>> Together, these directors represent more than 84 years of experience in
our business.
AQUILA'S HAND-PICKED NOMINEES ARE PLEDGED TO
AQUILA'S SELF SERVING AGENDA
>> Six of Aquila's nine proposed nominees are current executives of Aquila
or an entity it controls. All six are currently on Aquila's payroll.
>> Two of the nine - including Aquila's president and CEO - are already
designated by Aquila to Quanta's Board. Another of the nominees is a
partner in a law firm that does work for Aquila.
>> Seven of the proposed nominees don't own any Quanta stock.
>> Two of the nominees were named defendants along with Aquila in a
stockholder lawsuit involving a company that Aquila recently took
public and then repurchased at a lower price.
QUANTA'S BOARD INTENDS TO FIGHT FOR YOUR RIGHTS
-------------------
4 UtiliCorp (Aquila) Form 8-K filed with the SEC on February 25, 2002, pg. 12.
We will soon set the date for our annual stockholders meeting and send out our
proxy materials seeking your vote. These materials contain important information
for you to consider. In the meantime, if you have any questions about this
process, you can call MacKenzie Partners, Inc., our proxy solicitor, toll free
at 800-322-2885, or us.
Our goal in the coming months is to continue Quanta's good performance and to
get out the vote against Aquila. We hope that we will be able to count on your
support.
Very truly yours,
By: /s/ Vincent D. Foster By: /s/ John R. Colson
Vincent D. Foster John R. Colson
Chairman Chief Executive Officer
Quanta Services, Inc. is a leading provider of specialized contracting
services, delivering end-to-end network solutions for electric power, gas,
telecommunications and cable television industries. The company's comprehensive
services include designing, installing, repairing and maintaining network
infrastructure nationwide.
Important Information
Quanta Services, Inc. plans to file a proxy statement with the Securities and
Exchange Commission relating to Quanta's solicitation of proxies from its
stockholders with respect to the Quanta Services, Inc. 2002 annual meeting of
stockholders. QUANTA SERVICES, INC. ADVISES SECURITY HOLDERS TO READ ITS PROXY
STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION. Quanta's proxy statement and other relevant documents will be
available for free at www.sec.gov. You may also obtain a free copy of Quanta's
proxy statement, when it becomes available, by writing to Quanta Services, Inc.
at 1360 Post Oak Boulevard, Suite 2100, Houston, Texas 77056 or by contacting
MacKenzie Partners, Inc., toll free at 1-800-322-2885. Detailed information
regarding the names, affiliation and interests of individuals who may be deemed
participants in the solicitation of proxies of Quanta's stockholders is
available in the soliciting materials on Schedule 14A filed by Quanta with the
SEC.
This letter contains various forward-looking statements and information,
including management's expectations of the impact of new branding and marketing
initiatives. Although the company believes that the expectations reflected in
such forward-looking statements are reasonable; it can give no assurance that
such expectations will prove to have been correct. Such statements are subject
to certain risks, uncertainties and assumptions including, among other matters,
future growth in the electric utility and telecommunications outsourcing
industry, the ability of Quanta to complete acquisitions and to effectively
integrate the operations of acquired companies, and uncertainties relating to
UtiliCorp's hostile proxy fight for the Company, as well as general risks
related to the industries in which Quanta operates. Should one or more of these
risks materialize, or should underlying assumptions prove incorrect, actual
results may vary materially from those expected. For a discussion of the risks,
investors are urged to refer to the Company's reports filed under the Securities
Exchange Act of 1934.
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