SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 5, 2005
-------------------------------------------------------------------
(December 5, 2005)
TrustCo Bank Corp NY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York
----------------------------------------------
(State or other jurisdiction of incorporation)
0-10592 14-1630287
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
5 Sarnowski Drive, Glenville, New York 12302
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (518) 377-3311
--------------
TrustCo Bank Corp NY
Item 8.01. Other Events
A tender offer document was issued on December 5, 2005 to
all shareholders of record of Ballston Spa Bancorp Inc.
(OTC Bulletin Board "BSPA") detailing the tender offer to
purchase all of the outstanding shares of Ballston Spa
Bancorp Inc. Attached is the tender offer document labeled
as exhibit 99(a).
Item 9.01. Financial Statements & Exhibits
(c) Exhibits
Reg S-K Exhibit No. Description
------------------- -----------
99(a) Tender offer document dated December 5,
2005 describing the terms of the offer to
purchase all of the outstanding shares of
Ballston Spa Bancorp Inc. (OTC Bulletin
Board "BSPA").
-2-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: December 5, 2005
TrustCo Bank Corp NY
(Registrant)
By: /s/ Robert T. Cushing
----------------------------
Robert T. Cushing
Executive Vice President and
Chief Financial Officer
-3-
Exhibits Index
The following exhibits are filed herewith:
Reg S-K Exhibit No. Description Page
------------------ ---------------------------- ------
99(a) Tender offer document dated 5 - 31
December 5, 2005 describing the
terms of the offer to purchase all of the
outstanding shares of Ballston Spa
Bancorp Inc. (OTC Bulletin Board
"BSPA").
-4-
Exhibit 99(a)
TRUSTCO
Bank Corp NY News Release
-----------------------------------------------------------------------------
5 Sarnowski Drive, Glenville, New York, 12302
(518) 377-3311 Fax: (518) 381-3668
Subsidiary: Trustco Bank NASDAQ - TRST
Robert M. Leonard
Administrative Vice President
518-381-3693
FOR IMMEDIATE RELEASE:
-5-
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
BALLSTON SPA BANCORP, INC.
for
$45.50 Net per Share
made by
[LOGO]
TRUSTCO
Bank Corp NY
The Offer and withdrawal rights will expire at 5:00 p.m., New York
time, on Monday, January 9, 2006, unless the Offer is extended.
-----------------------------------------------------------------------------
TrustCo Bank Corp NY, Glenville, New York ("TrustCo"), is offering
to acquire each share of Ballston Spa Bancorp, Inc., Ballston Spa, New York
("Ballston Spa"), common stock held by you for $45.50 net to the seller in
cash. The purpose of this Offer is for TrustCo to acquire control of, and
ultimately the entire common stock equity interest in, Ballston Spa. TrustCo
intends, as soon as possible after consummation of this Offer, to have
Ballston Spa consummate a merger with TrustCo or a wholly owned subsidiary of
TrustCo in which each outstanding share of common stock of Ballston Spa
(except for treasury shares and shares of Ballston Spa common stock
beneficially owned directly or indirectly by TrustCo for its own account,
including those acquired pursuant to this Offer) would be converted into cash
in the amount of $45.50 for each share of Ballston Spa common stock.
TrustCo believes that its Offer represents an opportunity to enhance
value for Ballston Spa stockholders by providing, among other things, a
premium over the price levels at which TrustCo believes Ballston Spa common
stock would be trading in the absence of the Offer. For example, the Offer
represents an 11% premium over the $41.00 per share last reported closing
price of Ballston Spa common stock before TrustCo announced this Offer, and a
42% premium over the $32.00 per share closing price of Ballston Spa common
stock on September 30, 2005, the last day of the third quarter of 2005.
If you tender your shares for cash, you will recognize a per share
gain or loss equal to the difference between the $45.50 offer price and your
income tax basis in the shares tendered pursuant to this Offer. See "THE
OFFER--Material Federal Income Tax Consequences" for a more detailed
discussion of federal income tax matters.
Our obligation to purchase Ballston Spa common stock for cash is
subject to the conditions listed under "THE OFFER--Certain Conditions of the
Offer."
-----------------------------------------------------------------------------
Questions and requests for assistance may be directed to the
Information Agent for TrustCo's Offer:
[LOGO]
R&A REGAN &
ASSOCIATES, INC.
505 EIGHTH AVENUE - SUITE 800 * NEW YORK, NEW YORK 10018
TOLL FREE: (800) 737-3426
The date of this Offer is December 5, 2005.
TABLE OF CONTENTS
Page
QUESTIONS AND ANSWERS ABOUT THE PROPOSED ACQUISITION..............................................................1
WHERE YOU CAN FIND MORE INFORMATION...............................................................................3
OFFER TO PURCHASE SUMMARY.........................................................................................4
Information about TrustCo and Ballston Spa...............................................................4
General Information about the Offer......................................................................4
Reasons for the Offer....................................................................................4
Terms and Conditions of the Offer........................................................................5
BACKGROUND OF THE OFFER...........................................................................................7
Purpose of the Offer.....................................................................................7
Past Contacts............................................................................................7
Ballston Spa Capital Stock...............................................................................8
Shares of Ballston Spa Common Stock Owned by TrustCo and Affiliates......................................9
THE OFFER........................................................................................................10
General.................................................................................................10
Extension, Termination and Amendment....................................................................11
Acceptance and Payment for Ballston Spa Common Stock....................................................11
Withdrawal Rights.......................................................................................12
Procedure for Tendering Shares..........................................................................13
Material Federal Income Tax Consequences................................................................15
Effect of Offer on Market for Shares....................................................................16
Certain Legal Matters...................................................................................17
Certain Conditions of the Offer.........................................................................19
Dividends and Distributions.............................................................................20
Fees and Expenses.......................................................................................21
Accounting Treatment....................................................................................21
Source of Funds.........................................................................................21
TRUSTCO'S DIRECTORS AND EXECUTIVE OFFICERS.......................................................................22
MISCELLANEOUS....................................................................................................23
QUESTIONS AND ANSWERS ABOUT THE PROPOSED ACQUISITION
Q: What is TrustCo proposing?
A: We are proposing to purchase control of, and ultimately to own 100% of,
Ballston Spa by first offering to purchase all outstanding shares of
Ballston Spa common stock for cash. We intend, as soon as possible after
completion of the Offer, to merge Ballston Spa with us or with a wholly
owned subsidiary of us. As a result of the TrustCo-Ballston Spa merger,
each share of Ballston Spa common stock that has not been purchased or
accepted for purchase would be converted into the right to receive the
same amount of cash as is paid in this Offer. We may delay completion of
this Offer if the delay will allow us the legal flexibility to complete
the TrustCo-Ballston Spa merger within a short time after completion of
the Offer. We cannot, however, provide you with any assurances that
there will not be any delays in completion of the TrustCo-Ballston Spa
merger or that we will be able to complete the merger within a short
period of time after completion of the Offer.
Q: What will I receive in payment for my shares?
A: For each share of the common stock of Ballston Spa validly tendered by
you, you will receive cash in the amount of $45.50.
Q: Why should I participate in your Offer?
A: We believe that our Offer represents an immediate opportunity to enhance
value for Ballston Spa stockholders by providing a significant premium
over the price levels at which we believe Ballston Spa common stock
would be trading in the absence of our Offer. For example, the Offer
represents an 11% premium over the $41.00 per share last reported
closing price of Ballston Spa common stock before TrustCo announced this
Offer, and a 42% premium over the $32.00 per share closing price of
Ballston Spa common stock on September 30, 2005, the last day of the
third quarter of 2005.
Q: How do I participate in your Offer?
A: To tender your shares of Ballston Spa common stock, you should do the
following.
* If you hold shares in your own name, complete and sign the enclosed
Letter of Transmittal and return it with your stock certificate to
Mellon Investors Services, LLC, the depositary for the Offer (the
"Depositary"), at the address specified on the back cover page of
this Offer to Purchase before the Expiration Date (as defined
below) of the Offer.
* If you hold your shares in "street name" through a broker, instruct
your broker to tender your shares before the Expiration Date of the
Offer.
Q: Will I continue to receive dividends and have voting rights with respect
to Ballston Spa common stock that I tender to you?
A: Yes. Until we accept your shares of Ballston Spa common stock for
purchase pursuant to our Offer, you will be entitled to receive any
dividends paid on your tendered shares of Ballston Spa common stock, and
you will continue to have the right to vote your tendered shares. Once
we purchase the shares of Ballston Spa common stock tendered by you in
the Offer and not withdrawn, you will no longer own Ballston Spa common
stock and will no longer have any dividend and voting rights of a
Ballston Spa stockholder.
1
Q: When and how can I withdraw tendered shares?
A: If you change your mind, shares of Ballston Spa common stock tendered in
the Offer may be withdrawn by you at any time prior to the Expiration
Date and also after February 3, 2006 and prior to completion of our
purchase of your shares for cash. Your withdrawal will only be effective
if the Depositary receives a written, telegraphic, telex or facsimile
transmission notice of withdrawal at the address on the back cover of
this Offer to Purchase. The notice must contain your name, number of
shares of Ballston Spa common stock to be withdrawn, the certificate
number or numbers for such shares and the name of the registered holder
of the shares, if different from the person who tendered the shares. All
signatures on the notice of withdrawal must be guaranteed by a financial
institution in accordance with the procedures set forth in this Offer to
Purchase under "THE OFFER--Withdrawal Rights."
Q: How would you go about completing your proposed acquisition?
A: In furtherance of our Offer, we have taken several steps including
commencing our Offer by mailing this Offer to Purchase and the enclosed
Letter of Transmittal to all Ballston Spa stockholders of record. We
will file as soon as possible an application with the Board of Governors
of the Federal Reserve System (which we may also refer to in this Offer
to Purchase as the "Federal Reserve") to obtain the regulatory approvals
necessary to complete the Offer and the TrustCo-Ballston Spa merger.
Q: How long will it take to complete your proposed Offer?
A: We believe that the Offer could close in the first or second quarter of
2006. This schedule assumes that the conditions to our Offer
(principally, the need for regulatory approvals) are satisfied in a
timely manner. Due to the potential for regulatory delays, we may be
required to extend the time period during which our Offer is open and
delay completion of the Offer.
Q: What are the conditions to your Offer?
A: Our Offer is subject to several conditions, including:
* tender of enough shares of Ballston Spa common stock so that, after
completion of our Offer, we own at least 67% of the outstanding
shares of Ballston Spa common stock (on a fully diluted basis);
* the receipt of all required regulatory approvals for our Offer and
the merger of TrustCo (or its subsidiary) and Ballston Spa; and
* the absence of a material adverse change in the financial
condition, business or assets of Ballston Spa that, in our
reasonable judgment, makes it inadvisable to proceed with our
Offer.
The conditions to our Offer are discussed in this Offer to Purchase
under "THE OFFER--Certain Conditions of the Offer" and must be
satisfied or waived on or prior to the expiration of our Offer.
2
Q: Will I be taxed on the cash that I receive?
A: If our $45.50 per share purchase price exceeds your tax basis, then you
will realize a gain on the sale and you will be taxed on such gain in
the amount that the $45.50 per share cash price exceeds your aggregate
tax basis in the shares purchased. See "THE OFFER--Material Federal
Income Tax Consequences" for a more detailed discussion of the federal
income tax consequences of the transactions we propose.
Q: How will TrustCo fund the Offer?
A. Currently, we and our subsidiary Trustco Bank have cash assets and
securities available for sale of approximately $1.3 billion on an
consolidated basis, which is more than adequate to pay for the
acquisition of Ballston Spa.
Q: Who can I call with questions about the Offer?
A: You can contact our information agent, Regan & Associates, Inc. at
1-800-737-3426.
WHERE YOU CAN FIND MORE INFORMATION
TrustCo files annual, quarterly and special reports, proxy
statements and other information with the SEC under the Securities Exchange
Act of 1934, as amended. You may read and copy this information at the Public
Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549.
You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like TrustCo,
who file electronically with the SEC. The address of that site is
http://www.sec.gov.
We have not authorized anyone to give any information or make any
representation about our Offer that is different from, or in addition to,
that contained in this Offer to Purchase. Therefore, if anyone does give you
information of this sort, you should not rely on it.
The Offer is being made to all holders of shares of Ballston Spa
common stock. We are not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to a state statute.
If we become aware of any state where the making of the Offer is so
prohibited, we will make a good faith effort to comply with any such statute
or seek to have such statute declared inapplicable to the Offer. If, after
such good faith effort, we cannot comply with any applicable statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
the holders of shares of Ballston Spa common stock in such state. In any
jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer shall be made on
our behalf by one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
The information contained in this document speaks only as of the
date of this document unless the information specifically indicates that
another date applies.
3
OFFER TO PURCHASE SUMMARY
This brief summary does not contain all of the information that
should be important to you. You should carefully read this entire document
and the other documents to which this document refers you to fully understand
the Offer. See "WHERE YOU CAN FIND MORE INFORMATION."
Information about TrustCo and Ballston Spa
TrustCo Bank Corp NY, 5 Sarnowski Drive, Glenville, New York 12302,
(518) 377-3311. TrustCo is a New York corporation and a savings and loan
holding company registered under the Home Owners' Loan Act of 1933. TrustCo
provides a full range of financial and fiduciary services through its
subsidiary, Trustco Bank, which has 77 banking offices in New York, New
Jersey, Vermont and Florida. As of September 30, 2005, TrustCo had, on a
consolidated basis, total assets of approximately $2.8 billion, total
deposits of approximately $2.5 billion and total shareholders' equity of
approximately $229.7 million.
As of December 5, 2005, TrustCo beneficially owned 4,000 shares of
Ballston Spa common stock, which, based upon 742,663 shares issued and
outstanding as disclosed in a list of shareholders dated November 9, 2005
provided by Ballston Spa, would comprise 0.54% of the outstanding shares of
Ballston Spa common stock. None of TrustCo's directors or executive officers
owns any shares of Ballston Spa common stock. Additional information
regarding TrustCo's directors and executive officers is set forth under the
caption "TRUSTCO'S DIRECTORS AND EXECUTIVE OFFICERS."
Ballston Spa Bancorp, Inc., 87 Front Street, Ballston Spa, New York
12020, (518) 885-6781. Ballston Spa is a New York corporation and a bank
holding company whose primary subsidiary is Ballston Spa National Bank, a
national bank that operates nine banking offices in Saratoga County, New
York. At September 30, 2005, Ballston Spa had, on a consolidated basis, total
assets of approximately $310.7 million, total deposits of approximately
$267.8 million and total shareholders' equity of approximately $18.0 million.
General Information about the Offer
We are proposing a business combination of TrustCo and Ballston Spa.
For each share of Ballston Spa common stock tendered and not withdrawn by
you, we are offering $45.50 net in cash. We intend, as soon as possible after
completion of the Offer, to merge Ballston Spa with TrustCo or a wholly owned
subsidiary of TrustCo (the "TrustCo-Ballston Spa Merger"). Each share of
Ballston Spa common stock that has not been purchased or accepted for
purchase in the Offer or with respect to which a Ballston Spa shareholder has
not elected appraisal rights (see THE OFFER--Certain Legal Matters--No
Appraisal Rights in Connection with the Offer) would be converted into the
right to receive the same amount of cash as would be paid in the Offer. We
may delay completion of this Offer if the delay will allow us to complete the
TrustCo-Ballston Spa Merger within a short time after completion of the
Offer. We cannot, however, provide you with any assurances that there will
not be any delays in completion of the TrustCo-Ballston Spa Merger or that we
will be able to complete the TrustCo-Ballston Spa Merger within a short
period of time after completion of the Offer.
Reasons for the Offer
We believe that our acquisition of Ballston Spa represents an
opportunity to enhance value for both Ballston Spa and TrustCo stockholders.
Our Offer represents a significant premium over the market price of Ballston
Spa common stock. For example, our Offer represents an 11% premium over the
$41.00 per share last reported closing price of Ballston Spa common stock
before TrustCo announced this Offer, and a 42% premium over the $32.00 per
share closing price of Ballston Spa common stock on September 30, 2005, the
last day of the third quarter of 2005. We desire to acquire Ballston Spa
because we believe that the acquisition of Ballston Spa will produce
substantial benefits for our shareholders. We expect that an acquisition of
Ballston Spa would enable us to grow our balance sheet, leverage our capital,
increase our market share and add growth branches. In addition, this
transaction would increase TrustCo's presence in markets where its products
and services are both competitive and attractive to customers.
4
Terms and Conditions of the Offer
We Are Offering to Purchase Each Share of Ballston Spa Common Stock
for $45.50 in Cash
We are offering, upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the Letter of Transmittal, to purchase
for cash in the amount of $45.50 each outstanding share of Ballston Spa
common stock that is validly tendered on or before the Expiration Date and
not properly withdrawn. The term "Expiration Date" means 5:00 p.m., New York
time, on January 9, 2006, unless we extend the period of time for which this
Offer is open, in which case the term "Expiration Date" means the latest time
and date on which the Offer, as so extended, expires.
Our Offer is Subject to Certain Conditions
Our Offer to Purchase shares of Ballston Spa common stock for cash
is subject to several conditions referred to under "THE OFFER--Certain
Conditions of the Offer," including the following conditions:
* tender of enough shares of Ballston Spa common stock so that,
after completion of the Offer, we own at least 67% of the
shares of Ballston Spa common stock (on a fully diluted
basis);
* the receipt of all required regulatory approvals for this
Offer and the TrustCo-Ballston Spa Merger; and
* the absence of a material adverse change in the financial
condition, business or assets of Ballston Spa that, in our
reasonable judgment, makes it inadvisable to proceed with our
Offer.
These conditions must be satisfied or waived on or prior to the
expiration of our Offer.
Our Offer is Currently Scheduled to Expire on January 9, 2006
Our Offer is currently scheduled to expire at 5:00 p.m., New York
time, on January 9, 2006. However, we currently intend to extend our Offer
from time to time as necessary until all the conditions to the Offer have
been satisfied or waived. See "THE OFFER--Extension, Termination and
Amendment."
Our Offer May be Extended, Terminated or Amended
We expressly reserve the right, in our sole discretion, at any time
or from time to time, to extend the period of time during which our Offer
remains open, and we can do so by giving oral or written notice of such
extension to the Depositary. If we decide to extend our Offer, we will make
an announcement to that effect no later than 9:00 a.m., New York time, on the
next business day after the previously scheduled Expiration Date. We are not
making any assurance that we will exercise our right to extend our Offer,
although we currently intend to do so until all conditions have been
satisfied or waived. During any such extension, all shares of Ballston Spa
common stock previously tendered and not withdrawn will remain subject to the
Offer, subject to your right to withdraw your shares of Ballston Spa common
stock.
5
Subject to applicable rules and regulations, we also reserve the
right, in our sole discretion:
* to delay our acceptance for purchase or our purchase of any
shares of Ballston Spa common stock pursuant to our Offer, or
to terminate our Offer and not accept for purchase or purchase
any shares of Ballston Spa common stock not previously
accepted for purchase or purchased, upon the failure of any of
the conditions of the Offer to be satisfied on or prior to the
Expiration Date, or upon the failure of the condition relating
to regulatory approvals to be satisfied at any time after the
Expiration Date regardless of whether we previously accepted
for purchase or purchased any shares of Ballston Spa common
stock; and
* to waive any condition (other than the conditions relating to
any required regulatory approvals) or otherwise to amend the
Offer in any respect,
by giving oral or written notice of such delay, termination or amendment to
the Depositary and by making a public announcement.
We will follow any extension, termination, amendment or delay, as
promptly as practicable, with a public announcement. Subject to applicable
law and without limiting the manner in which we may choose to make any public
announcement, we assume no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to
the Dow Jones News Service.
Upon the terms and subject to the conditions of our Offer
(including, if the Offer is extended or amended, the terms and conditions of
any such extension or amendment), we will accept for purchase, and will
purchase, shares of Ballston Spa common stock validly tendered and not
properly withdrawn as promptly as practicable after the Expiration Date, and
promptly after they are tendered during any subsequent offering period.
Tendered Shares May be Withdrawn at any Time Prior to the Purchase
of Such Shares
Shares of Ballston Spa common stock tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and also after
February 3, 2006 and prior to the time that your shares have been purchased
following completion of our Offer.
Procedure for Tendering Shares
For you to validly tender shares of Ballston Spa common stock
pursuant to our Offer:
* a properly completed and duly executed Letter of Transmittal,
along with any required signature guarantees and any other
required documents, must be received by the Depositary at its
address set forth on the back cover of this Offer to Purchase,
and certificates for tendered shares of Ballston Spa common
stock must be received by the Depositary at such address, or
those shares must be tendered pursuant to the procedures for a
book-entry tender set forth in "THE OFFER--Procedure for
Tendering Shares" (and a confirmation of receipt of such
tender received), in each case before the Expiration Date; or
* you must comply with the guaranteed delivery procedures set
forth in "THE OFFER--Procedure for Tendering Shares."
6
BACKGROUND OF THE OFFER
Purpose of the Offer
The purpose of our Offer is to acquire control of, and ultimately
100% ownership of, Ballston Spa and to consolidate the operations of Ballston
Spa and TrustCo to achieve operational efficiencies.
From time to time, TrustCo is involved in due diligence
investigations, discussions and negotiations concerning possible business
combination transactions with other financial institutions. TrustCo generally
seeks to acquire financial institutions that would: (i) complement its
overall strategic focus; (ii) provide opportunities for growth in markets
where the target financial institution conducts business; (iii) improve
TrustCo's retail banking franchise and (iv) create more value for
shareholders.
We expect that an acquisition of Ballston Spa would enable us to
grow our balance sheet, leverage our capital, increase our market share and
add growth branches. In addition, this transaction would introduce TrustCo to
new markets where its products and services would be both competitive and
attractive to customers. As soon as practicable after consummation of the
Offer, TrustCo intends to cause (i) Ballston Spa to be merged with a
subsidiary of TrustCo pursuant to which each outstanding share of Ballston
Spa common stock (except for treasury shares and shares held by TrustCo or
any subsidiary of TrustCo other than in a fiduciary capacity) would be
converted into the right to receive $45.50 in cash and (ii) the combination
of Ballston Spa's subsidiary, Ballston Spa National Bank, with our principal
subsidiary, Trustco Bank.
Past Contacts
In late August 2005, Robert T. Cushing, TrustCo's Executive Vice
President and Chief Financial Officer, made a number of attempts to speak
with Ballston Spa's president, Christopher R. Dowd, for the purpose of
discussing a potential business combination between TrustCo and Ballston Spa.
When Mr. Dowd did not return the telephone calls placed to him, Mr. Cushing
followed up with a letter on August 26, 2005 asking for a meeting. On or
about August 28, 2005, Mr. Dowd contacted Mr. Cushing and agreed to meet with
him and other representatives of TrustCo. Mr. Dowd indicated, though, that
Ballston Spa was not interested in engaging in a transaction with TrustCo and
that he thought that Ballston Spa's board of directors had no interest in
such a transaction.
On September 14, 2005, Mr. Cushing, Robert J. McCormick, TrustCo's
President and Chief Executive Officer, and Scot R. Salvador, TrustCo's
Executive Vice President and Chief Banking Officer, met with Mr. Dowd,
Timothy Blow, Ballston Spa's Chief Executive Officer, and another senior
officer of Ballston Spa. During the meeting, Mr. McCormick described a
potential business combination between TrustCo and Ballston Spa. Mr. Dowd and
Mr. Blow each indicated that Ballston Spa's board of directors was not
interested in a transaction with TrustCo and that Ballston Spa was not
soliciting offers for business combination transactions. The Ballston Spa
representatives also indicated that they were not interested in learning the
amount of the consideration that TrustCo would pay in a business combination
with Ballston Spa.
On September 21, 2005, TrustCo sent a letter to Ballston Spa's board
of directors proposing a business combination of TrustCo and Ballston Spa.
Pursuant to the proposal, TrustCo would acquire Ballston Spa in a merger
transaction in which each share of Ballston Spa common stock would be
converted into $42.50 cash. On or about October 20, 2005, TrustCo received a
response from Mr. Dowd informing TrustCo that a merger with TrustCo was
contrary to Ballston Spa's strategic business plan and declining to have any
discussions with TrustCo.
7
During this period, TrustCo asked for and obtained copies of
Ballston Spa's annual report to shareholders and proxy statement for its 2005
annual meeting of shareholders.
On November 7, 2005, TrustCo sent a letter to Ballston Spa asserting
TrustCo's rights under New York law as a shareholder of Ballston Spa to
inspect certain of Ballston Spa's books and records, including a list of
Ballston Spa's shareholders. By letter dated November 10, 2005, Ballston Spa
responded by providing to TrustCo a copy of financial information for the
nine months ended September 30, 2005 and for the year ended December 31,
2004, minutes of Ballston Spa's annual meetings of shareholders for 2005 and
2004, Ballston Spa's certificate of incorporation and bylaws and a list of
Ballston Spa's shareholders.
On November 18, 2005, TrustCo sent another letter to the board of
Ballston Spa. This letter again proposed a business combination of TrustCo
and Ballston Spa and increased the per share merger consideration to $43.00.
On December 1, 2005, TrustCo received a response from Ballston Spa in which
it again rejected TrustCo's proposal.
On December 5, 2005, TrustCo publicly announced its intention to
commence this Offer to Purchase each share of Ballston Spa common stock for
$45.50 cash.
Ballston Spa Capital Stock
The following description of Ballston Spa's capital stock is based
on information contained in materials provided by Ballston Spa and other
publicly available information regarding Ballston Spa.
Ballston Spa is authorized to issue 10,000,000 shares of common
stock, par value $12.50 per share (referred to in this Offer to Purchase as
"Ballston Spa common stock"). According to Ballston Spa's stock records, as
of November 9, 2005, there were 768,000 shares of Ballston Spa common stock
issued, of which 25,337 shares were "treasury shares" held by Ballston Spa.
The holders of shares of Ballston Spa common stock are entitled to receive
dividends from funds legally available therefor when, as and if declared by
the Ballston Spa board, and are entitled upon liquidation to receive pro rata
the net assets of Ballston Spa after satisfaction in full of the prior rights
of creditors of Ballston Spa.
The holders of shares of Ballston Spa common stock are generally
entitled to one vote for each share of Ballston Spa common stock held on all
matters as to which stockholders are entitled to vote. The holders of
Ballston Spa common stock have cumulative voting rights in the election of
directors and have preemptive rights with respect to the Ballston Spa common
stock.
Ballston Spa common stock is quoted on the OTC Bulletin Board under
the symbol "BSPA.BB". Ballston Spa National Bank is the transfer agent and
registrar for the shares of Ballston Spa common stock. The table below sets
forth the high and low bid prices for Ballston Spa common stock for the
periods indicated, as reported on the OTC Bulletin Board.
8
Ballston Spa
------------
Common
------
Year Quarter Ended High Low
---- ------------- ---- ---
2003 March 31 $36.50 $36.00
June 30 36.50 30.05
September 30 30.34 29.50
December 31 30.50 28.25
2004 March 31 32.00 28.25
June 30 30.50 29.50
September 30 37.00 29.50
December 31 39.00 36.00
2005 March 31 38.50 36.00
June 30 37.50 33.75
September 30 35.50 31.25
December 31 41.00 32.00
You can obtain current stock price quotations for Ballston Spa
common stock from a newspaper, on the Internet or by calling your broker.
Shares of Ballston Spa Common Stock Owned by TrustCo and Affiliates
As of December 5, 2005, TrustCo beneficially owned 4,000 shares of
Ballston Spa common stock, which, based upon 742,663 shares issued and
outstanding according to Ballston Spa's November 9, 2005 list of
shareholders, would comprise 0.54% of the outstanding shares of Ballston Spa
common stock.
Information regarding transactions by TrustCo in shares of Ballston
Spa common stock during the past 60 days is as follows:
Date Amount Price
---- ------ -----
11/7/2005 500 $35.00
11/8/2005 500 $35.06
11/9/2005 500 $36.20
11/15/2005 500 $38.80
To TrustCo's knowledge, none of its directors or executive officers
owns any shares of Ballston Spa common stock, nor are any of them a party to
any contract, understanding, relationship or arrangement with respect to
Ballston Spa securities, nor have any of them undertaken any transaction
within the past sixty days with respect to any Ballston Spa securities.
9
THE OFFER
The following description contains, among other information, a
summary of the Offer and the enclosed Letter of Transmittal and is qualified
in its entirety by reference to the full text of the Letter of Transmittal.
You should carefully read the Letter of Transmittal.
General
TrustCo hereby offers, upon the terms and subject to the conditions
described in this Offer to Purchase and the enclosed Letter of Transmittal,
to purchase for $45.50 cash (the "Offer Consideration") each outstanding
share of Ballston Spa common stock validly tendered on or prior to the
Expiration Date (as defined herein) and not withdrawn. A tendering Ballston
Spa shareholder may, by properly completing the Letter of Transmittal, elect
to receive the Offer Consideration for his or her Ballston Spa common stock.
TrustCo reserves the right to amend the Offer, including the
composition or amount of the Offer Consideration, for any reason. If TrustCo
so amends the Offer, it will extend the Offer for a period of not less than
ten business days if the Offer is scheduled to expire prior thereto. Any
Ballston Spa shareholder who has previously tendered his or her shares under
this Offer may withdraw the shares under the procedures described in this
Offer to Purchase.
The term "Expiration Date" means 5:00 p.m., New York time, on
January 9, 2006, unless and until TrustCo extends the period of time for
which the Offer is open, in which event the term "Expiration Date" means the
latest time and date at which the Offer, as so extended by TrustCo, expires.
TrustCo presently anticipates electing to extend the Offer from time to time
until such time as all of the conditions to the Offer have been satisfied or
waived; however, TrustCo will not be obligated to do so. See "THE
OFFER--Certain Legal Matters" and "--Certain Conditions of the Offer."
Tendering shareholders will not be obligated to pay any charges or
expenses of Mellon Investor Services, LLC, the Depositary for this Offer, or
any brokerage commissions.
TrustCo's obligation to pay cash for Ballston Spa common stock
pursuant to the Offer is subject to a number of conditions described below
under "THE OFFER--Certain Conditions of the Offer," including a minimum
tender condition, a regulatory approval condition and an absence of material
adverse change condition.
If by 5:00 p.m., New York time, on January 9, 2006, or any later
time to which the Expiration Date and this Offer have been extended, all of
the conditions have not been satisfied or waived, TrustCo may elect either
to: (i) extend the Expiration Date and this Offer and retain all shares of
Ballston Spa common stock theretofore tendered until the expiration of this
Offer, as extended, subject to the right of a tendering shareholder to
withdraw his or her Ballston Spa common stock; (ii) waive the remaining
conditions (other than the regulatory approval condition), extend the Offer
for a period of ten business days if the Offer is scheduled to expire prior
thereto and thereafter purchase all tendered shares of Ballston Spa common
stock; or (iii) terminate the Offer and purchase none of the Ballston Spa
common stock and return all tendered shares of Ballston Spa common stock.
TrustCo will not accept for purchase any shares of Ballston Spa common stock
pursuant to the Offer until such time as the regulatory approval condition is
satisfied. See "THE OFFER--Certain Legal Matters" and "--Certain Conditions
of the Offer--Regulatory Approval Condition."
The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Ballston Spa common stock and will be furnished
to brokers, banks and similar persons whose names or the names of whose
nominees appear on the shareholder list provided by Ballston Spa or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Ballston
Spa common stock.
10
Extension, Termination and Amendment
TrustCo expressly reserves the right, in its sole discretion, at any
time on or prior to the Expiration Date, to extend the period of time during
which the Offer is to remain open by giving oral or written notice of such
extension to the Depositary. There can be no assurance that TrustCo will
exercise its right to extend the Expiration Date and this Offer, although it
is presently anticipated that the Expiration Date and this Offer will be
extended in order to permit the conditions to be satisfied.
TrustCo reserves the absolute right to waive on or prior to the
Expiration Date any of the conditions of the Offer (other than the regulatory
approval condition), or any defect or irregularity in the tender of any
shares of Ballston Spa common stock. If TrustCo amends the Offer in any
material respect, TrustCo will extend the Offer and disseminate additional
tender offer materials to the extent required by applicable law. The period
during which the Offer will remain open following material changes in the
terms of the Offer or information concerning the Offer will depend upon the
facts and circumstances, including the relative materiality of the change in
terms or information.
TrustCo also reserves the right to delay acceptance for payment of,
or payment for, any shares of Ballston Spa common stock pursuant to the
Offer, regardless of whether such shares of Ballston Spa common stock were
theretofore accepted for payment, and to amend or terminate the Offer and not
accept for payment, or pay for, any shares of Ballston Spa common stock not
theretofore accepted for payment, or paid for, upon the failure of any of the
conditions of the Offer to be satisfied or waived on or before the Expiration
Date. Any such extension, termination, amendment or delay will be followed as
promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be issued no later than 9:00 a.m., New York time,
on the next business day after the previously scheduled Expiration Date.
Without limiting the manner in which TrustCo may choose to make such public
announcement, TrustCo may make any such public announcement by making a
release to the Dow Jones News Service. If, prior to the Expiration Date,
TrustCo increases the consideration offered to holders of Ballston Spa common
stock, such increase will be applicable to all holders whose shares of
Ballston Spa common stock are accepted for payment pursuant to the Offer and,
if at the time notice of such increase is first published, sent or given to
holders of Ballston Spa common stock, the Offer is scheduled to expire at any
time earlier than the expiration of a period ending on the tenth business day
from and including the date that such notice is first so published, sent or
given, the Offer will be extended until the expiration of such period of ten
business days. For purposes of the Offer, a "business day" means any day
other than a Saturday, Sunday or New York Stock Exchange holiday and consists
of the time period from 12:01 a.m. through 12:00 midnight, New York City
time.
Acceptance and Payment for Ballston Spa Common Stock
Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
any such extension or amendment), TrustCo will accept for payment, and will
pay for, all shares of Ballston Spa common stock validly tendered before the
Expiration Date and not properly withdrawn (including such shares validly
tendered and not properly withdrawn during any extension of the Offer, if the
Offer is extended, subject to the terms and conditions of such extension) as
soon as practicable after the Expiration Date. In addition, TrustCo expressly
reserves the right, in its sole discretion, to delay the acceptance for
payment of or payment for shares of Ballston Spa common stock in order to
comply, in whole or in part, with any other applicable law. Any such delays
will be effected in compliance with Rule 14e-1(c) under the Securities
Exchange Act of 1934 (relating to TrustCo's obligation to pay for or return
tendered shares of Ballston Spa common stock promptly after the termination
or withdrawal of the Offer).
11
The price per share paid to any shareholder of Ballston Spa pursuant
to the Offer will be the highest price per share paid to any such other
shareholder pursuant to the Offer. In all cases, payment for shares of
Ballston Spa common stock accepted for payment pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates for such
shares (or timely confirmation (a "Book-Entry Confirmation") of the
book-entry transfer of such shares into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility")), pursuant to
the procedures set forth below under "THE OFFER--Procedure for Tendering
Shares"), (ii) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) with any required signature guarantees, or an Agent's
Message (as defined below) in connection with a book-entry transfer, and
(iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a
Book-Entry Transfer Facility to, and received by, the Depositary and forming
a part of a Book-Entry Confirmation, which states that such Book-Entry
Transfer Facility has received an express acknowledgment from the participant
in such Book-Entry Transfer Facility tendering the shares of Ballston Spa
common stock, that such participant has received and agrees to be bound by
the terms of the Letter of Transmittal and that TrustCo may enforce such
agreement against the participant.
For purposes of the Offer, TrustCo will be deemed to have accepted
for payment, and thereby purchased, shares of Ballston Spa common stock
properly tendered to TrustCo and not withdrawn, if, as and when TrustCo gives
oral or written notice to the Depositary of its acceptance for payment of the
tenders of such shares. Payment for shares of Ballston Spa common stock
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for the
tendering shareholders for purposes of receiving payment from TrustCo and
transmitting payment to tendering shareholders.
Under no circumstances will TrustCo pay interest on the purchase
price of the shares, regardless of any delay in making such payment.
Upon the deposit of funds with the Depositary for the purpose of
making payments to tendering shareholders, TrustCo's obligation to make such
payment shall be satisfied and tendering shareholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of shares of Ballston Spa common stock pursuant to the
Offer.
If any tendered shares of Ballston Spa common stock are not accepted
for payment pursuant to the terms and conditions of the Offer for any reason
or are not paid for because of an invalid tender, or if certificates are
submitted representing more shares than are tendered, certificates
representing unpurchased or untendered shares of Ballston Spa common stock
will be returned, without expense to the tendering shareholder (or, in the
case of shares tendered by book-entry transfer of such shares into the
Depositary's account at a Book-Entry Transfer Facility as described in below,
such shares will be credited to an account maintained within such Book-Entry
Transfer Facility), as soon as practicable following the expiration,
termination or withdrawal of the Offer.
Withdrawal Rights
Shares of Ballston Spa common stock tendered pursuant to the Offer
may be withdrawn at any time prior to the Expiration Date and also after
February 3, 2006 and prior to the expiration of the Offer and the acceptance
of Ballston Spa common stock for purchase pursuant to the Offer.
12
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at its address set forth on the back cover of this Offer to
Purchase and must specify the name of the person having tendered the shares
of Ballston Spa common stock to be withdrawn, the number of such shares to be
withdrawn and, if the certificates representing such shares have been
delivered or otherwise identified to the Depositary, the name of the
registered holder of such shares as set forth in the certificates.
If the certificates representing the shares of Ballston Spa common
stock to be withdrawn have been delivered to the Depositary, then prior to
the release of such certificates the tendering stockholder must also submit
the certificate number shown on the particular certificates evidencing such
shares and the signature(s) on the notice of withdrawal must be guaranteed by
a firm that is a member of a registered national securities exchange or the
National Association of Securities Dealers, Inc., or by a bank, broker,
dealer, credit union, savings association or other entity that is an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934 and is a participant or member of the
Securities Transfer Agents Medallion Program or such other Medallion
signature guarantee program as may be acceptable to TrustCo (an "Eligible
Institution") unless such shares of Ballston Spa common stock have been
tendered for the account of any Eligible Institution. If certificates have
been delivered or otherwise identified to the Depositary, the name of the
registered holder and the serial numbers of the particular certificates
evidencing the shares of Ballston Spa common stock withdrawn must also be
furnished to the Depositary as aforesaid prior to the physical release of
such certificates. Any shares of Ballston Spa common stock properly withdrawn
will be deemed not to have been validly tendered for purposes of the Offer.
However, withdrawn shares of Ballston Spa common stock may be re-tendered by
following one of the procedures described under "THE OFFER--Procedure for
Tendering Shares" at any time prior to the Expiration Date.
All questions as to the form and validity (including time of
receipt) of any notice of withdrawal will be determined by TrustCo, in its
sole discretion, whose determination shall be final and binding. None of
TrustCo, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in any
notice of withdrawal or will incur any liability for failure to give any such
notification.
Procedure for Tendering Shares
To tender shares of Ballston Spa common stock pursuant to the Offer,
a shareholder of Ballston Spa must cause a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of such shares and any other required documents, to be received by
the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase. The shareholder must either cause certificates for
tendered shares to be received by the Depositary at one of such addresses or
cause such shares to be delivered pursuant to the procedures for book-entry
delivery set forth below (and a Book-Entry Confirmation to be received by the
Depositary), in each case before the Expiration Date, or (in lieu of the
foregoing) such shareholder must comply with the guaranteed delivery
procedure set forth below.
The Depositary will establish accounts with respect to the shares of
Ballston Spa common stock at the Book-Entry Transfer Facilities for purposes
of the Offer. Any financial institution that is a participant in any of the
Book-Entry Transfer Facilities' systems may make book-entry delivery of the
shares of Ballston Spa common stock by causing such Book-Entry Transfer
Facility to transfer such shares into the Depositary's account in accordance
with such Book-Entry Transfer Facility's procedure for such transfer.
However, although delivery of shares of Ballston Spa common stock may be
effected through book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry delivery of
shares of Ballston Spa common stock, and any other required documents, must,
in any case, be transmitted to and received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase before the
Expiration Date, or the tendering shareholder must comply with the guaranteed
delivery procedure described below.
13
Signatures on all Letters of Transmittal must be guaranteed by an
Eligible Institution in cases where shares of Ballston Spa common stock are
tendered by a registered holder (which term includes any participant in a
Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of Ballston Spa common stock) of Ballston Spa common
stock who has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on the
Letter of Transmittal. If the certificates are registered in the name of a
person other than the signer of the Letter of Transmittal, or if certificates
for un-purchased shares of Ballston Spa common stock are to be issued to a
person other than the registered holder(s), the certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as
the name or names of the registered owner or owners appear on the
certificates, with the signature(s) on the certificates or stock powers
guaranteed as aforesaid.
By executing a Letter of Transmittal as set forth above, the
tendering shareholder irrevocably appoints designees of TrustCo, and each of
them, as his or her attorneys-in-fact and proxies, in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such shareholder's rights with respect to the shares of Ballston
Spa common stock tendered by such shareholder and accepted for payment by
TrustCo and with respect to any and all other shares or other securities
issued or issuable in respect of such shares on or after the date of this
Offer to Purchase. All such powers of attorney and proxies shall be
considered irrevocable and coupled with an interest in the tendered shares of
Ballston Spa common stock. Such appointment will be effective when, and only
to the extent that, TrustCo accepts such shares for payment. Upon such
appointment, all prior proxies given by such shareholder will be revoked, and
no subsequent proxies may be given by such shareholder (and if given, will
not be deemed effective). TrustCo's designees will be empowered, among other
things, to exercise all voting and other rights of such shareholder as they
in their sole discretion may deem proper at any annual, special or adjourned
meeting of the shareholders of Ballston Spa or any consent in lieu of any
such meeting or otherwise.
If a shareholder desires to tender shares of Ballston Spa common
stock pursuant to the Offer and such shareholder's certificates are not
immediately available or time will not permit his or her Letter of
Transmittal, stock certificates and any other required documents to reach the
Depositary prior to the Expiration Date, his or her tender may nevertheless
be effected if all the following conditions are met: (i) such tender is made
by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery substantially in the form provided by
TrustCo is received by the Depositary as provided below on or prior to the
Expiration Date; and (iii) the certificates for all tendered shares of
Ballston Spa common stock, together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by the Letter of Transmittal, are received by the Depositary within
three business days after the date of execution of such Notice of Guaranteed
Delivery. The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, telex, facsimile transmission or mail
to the Depositary and must include a signature guaranteed by an Eligible
Institution in the form set forth in such Notice.
In all cases, payment for shares of Ballston Spa common stock
tendered and accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) Certificates for the tendered
shares of Ballston Spa common stock, or a Book-Entry Confirmation of such
shares, (ii) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) (or, in the case of a book-entry transfer, an Agent's
Message) and (iii) any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering shareholders at the
same time, and will depend upon when Certificates or Book-Entry Confirmations
of the tendered shares of Ballston Spa common stock are received by the
Depositary.
14
To avoid backup federal income tax withholding with respect to the
Offer Consideration to be received by a shareholder pursuant to the Offer,
the shareholder must provide the Depositary with his or her correct taxpayer
identification number or certify that he or she is not subject to backup
Federal income tax withholding by completing the Substitute Form W-9 included
in the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time
of receipt) and acceptance of any tender of Ballston Spa common stock will be
determined by TrustCo in its sole discretion and whose determination will be
final and binding. TrustCo reserves the absolute right to reject any or all
tenders determined by it not to be in proper form or the acceptance or
purchase of which may, in the opinion of TrustCo's counsel, be unlawful. No
tender of Ballston Spa common stock will be deemed to have been validly made
until all defects and irregularities have been cured or waived. Neither
TrustCo, the Depositary nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any shares of
Ballston Spa common stock or will incur any liability for failure to give any
such notification.
TrustCo's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and instructions thereto) will be final
and binding.
The valid tender of shares of Ballston Spa common stock pursuant to
one of the procedures described above will constitute the tendering
shareholder's acceptance of the terms and conditions of the Offer. TrustCo's
acceptance for payment of shares tendered pursuant to the Offer will
constitute a binding agreement between the tendering shareholder and TrustCo
upon the terms and subject to the conditions of the Offer.
Material Federal Income Tax Consequences
The following is a general discussion of the material federal income
tax consequences to shareholders of Ballston Spa who tender their shares
pursuant to the Offer or who receive cash pursuant to the TrustCo-Ballston
Spa Merger. The discussion is based upon the Internal Revenue Code of 1986,
as amended (the "Code"), applicable Treasury regulations thereunder,
administrative rulings and court decisions in effect on the date hereof, all
of which are subject to change (possibly with retroactive effect) by
legislation, administrative action or judicial decision. No ruling has or
will be requested from the Internal Revenue Service regarding the anticipated
tax consequences described herein. This discussion does not address all of
the tax consequences that may be relevant to a particular shareholder in
light of their individual circumstances or to certain types of shareholders
subject to special rules under the federal income tax laws (including,
without limitation, tax-exempt organizations, foreign corporations, financial
institutions, insurance agencies or individuals who have received shares of
Ballston Spa common stock as compensation or who are not citizens or
residents of the United States) and does not discuss alternative minimum tax
or any aspect of state, local or foreign taxation. The discussion is limited
to those shareholders who hold the shares of Ballston Spa common stock as
capital assets (generally, property held for investment) within the meaning
of Section 1221 of the Code.
SHAREHOLDERS SHOULD CONSULT THEIR INDIVIDUAL TAX ADVISORS CONCERNING
THE SPECIFIC TAX CONSEQUENCES OF THE OFFER, INCLUDING THE APPLICATION AND
EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
15
Sale of Shares for Cash
The sale of shares of Ballston Spa common stock by tendering
shareholders or pursuant to the TrustCo-Ballston Spa Merger will be a taxable
event for federal income tax purposes. A shareholder will generally recognize
gain or loss equal to the difference between the amount of cash received by
the shareholder pursuant to the Offer and the shareholder's adjusted tax
basis in the shares sold pursuant to the Offer or pursuant to the
TrustCo-Ballston Spa Merger. Gain or loss will be calculated separately for
each block of shares of Ballston Spa common stock tendered by the shareholder
and purchased pursuant to the Offer or pursuant to the TrustCo-Ballston Spa
Merger.
Gain or loss recognized by a tendering shareholder will be capital
gain or loss if the shares are held as capital assets. Such capital gain or
loss will be classified as a long-term capital gain or loss to the extent
that the tendered shares have a holding period of more than twelve months at
the time of their purchase pursuant to the Offer.
Backup Withholding
To prevent "backup withholding" of federal income tax on payments of
cash to a shareholder of Ballston Spa who sells shares for cash in the Offer
or the TrustCo-Ballston Spa Merger, a shareholder of Ballston Spa must,
unless an exception applies under applicable law and regulations, provide the
payor of such cash with such shareholder's correct taxpayer identification
number ("TIN") on a Substitute Form W-9 and certify under penalties of
perjury that such number is correct and that such shareholder is not subject
to backup withholding. A Substitute Form W-9 is included in the Letter of
Transmittal. If the correct TIN and certifications are not provided, a $50
penalty may be imposed on a shareholder of Ballston Spa by the Internal
Revenue Service, and cash received by such shareholder in payment for shares
in the Offer may be subject to backup withholding at the rate of 28%. Amounts
paid as backup withholding do not constitute an additional tax and would be
allowable as a credit against the shareholder's federal income tax liability.
Effect of Offer on Market for Shares
As of November 9, 2005, according to Ballston Spa's stock records
there were 768,000 shares of Ballston Spa common stock issued, of which
25,337 shares were "treasury shares" held by Ballston Spa, and there were
approximately 280 shareholders of record, not including the number of persons
whose stock is held in nominee or "street" name through various brokerage
firms or other financial institutions.
Ballston Spa common stock is quoted on the OTC Bulletin Board. The
purchase of Ballston Spa common stock pursuant to the Offer will reduce the
number of shares of Ballston Spa common stock that might otherwise trade
publicly and the number of holders of Ballston Spa common stock and, pending
consummation of the TrustCo-Ballston Spa Merger, could adversely affect the
liquidity and market value of the remaining Ballston Spa common stock held by
the public.
If the Offer is consummated, the extent of the public market for the
remaining shares of Ballston Spa common stock, and the availability of price
quotations, will depend upon the number of holders, the aggregate market
value of the Ballston Spa common stock remaining, the interest of securities
firms in maintaining a market in the Ballston Spa common stock and other
factors.
16
Certain Legal Matters
General
Except as set forth below, based upon an examination of information
provided by Ballston Spa and other publicly available information with
respect to Ballston Spa, TrustCo is not aware of any license or regulatory
permit which appears to be material to the business of Ballston Spa and which
is likely to be adversely affected by TrustCo's acquisition of Ballston Spa
common stock pursuant to the Offer or, except as disclosed below, of any
approval or other action by any state, federal or foreign government or
governmental agency that would be required prior to the acquisition of
Ballston Spa common stock pursuant to the Offer. TrustCo presently intends to
take such actions with respect to any approvals as will enable it to acquire
the Ballston Spa common stock as expeditiously as possible.
There can be no assurance that any license, permit, approval or
other action, if needed, would be obtained and, if obtained, there can be no
assurance as to the date of any such license, permit or approval or the
absence of any litigation challenging any such license, permit or approval.
TrustCo's obligation under the Offer to accept for purchase and purchase
Ballston Spa common stock is subject to satisfaction of the regulatory
approval condition (defined below) as well as other conditions which could be
triggered by an adverse regulatory development. See "THE OFFER--General" and
"--Certain Conditions of the Offer."
Regulatory Matters
The acquisition of Ballston Spa common stock pursuant to the Offer
(the "Stock Acquisition") and consummation of the TrustCo-Ballston Spa Merger
are subject to the prior approval of the Board of Governors of the Federal
Reserve System under the Bank Holding Company Act of 1956. In determining
whether to approve the Stock Acquisition and the TrustCo-Ballston Spa Merger,
the Federal Reserve will consider, among other things: (i) competitive
factors; (ii) the financial and managerial resources and future prospects of
TrustCo and Ballston Spa; (iii) the convenience and needs of the community
served by TrustCo and Ballston Spa; and (iv) other supervisory factors
described below. TrustCo's application to the Federal Reserve with respect to
the Stock Acquisition and the TrustCo-Ballston Spa Merger will be filed as
soon as practicable.
The Federal Reserve is prohibited from approving any transaction
under the applicable statutes that: (i) would result in a monopoly or which
would be in furtherance of any combination or conspiracy to monopolize or to
attempt to monopolize the business of banking in any part of the United
States; or (ii) may have the effect in any section of the United States of
substantially lessening competition, or tending to create a monopoly, or
resulting in a restraint of trade; unless in each case the agencies find that
the anti-competitive effects of the transaction are clearly outweighed in the
public interest by the probable effect of the transaction in meeting the
convenience and needs of the communities to be served.
In reviewing a transaction under the applicable statutes, the
Federal Reserve will also consider the financial and managerial resources of
the companies and their subsidiary banks and the convenience and needs of the
communities to be served. As part of, or in addition to, consideration of the
above factors, it is anticipated that the agencies will consider the
regulatory status of TrustCo and Ballston Spa and their subsidiaries and the
overall capital and safety and soundness standards established by the Federal
Deposit Insurance Corporation Improvement Act of 1991 and the regulations
promulgated thereunder.
Under the Community Reinvestment Act of 1977, the Federal Reserve
must also take into account the record of performance of each of TrustCo and
Ballston Spa and their subsidiaries in meeting the credit needs of the entire
community, including low and moderate income neighborhoods, served by each
company. As of the date of this Offer to Purchase, Trustco Bank and Ballston
Spa National Bank have each received Community Reinvestment Act ratings of
satisfactory in their most recent examinations under that law.
17
The Bank Holding Company Act, as well as Federal Reserve
regulations, require publication of notice of, and the opportunity for public
comment on, any application submitted by TrustCo with respect to the Stock
Acquisition and the TrustCo-Ballston Spa Merger and authorize the Federal
Reserve to hold a public hearing in connection therewith if it determines
that such a hearing would be appropriate. Any such hearing or comments
provided by third parties could prolong the period during which the
applications are subject to review by the Federal Reserve.
The Stock Acquisition may not be consummated until 30 days after
Federal Reserve approval, during which time the U.S. Department of Justice
may challenge the Stock Acquisition and the TrustCo-Ballston Spa Merger on
antitrust grounds and seek the divestiture of certain assets and liabilities.
With the approval of the Federal Reserve and the Department of Justice, the
waiting period may be reduced to no less than 15 days. The commencement of an
antitrust action by the Department of Justice would stay the effectiveness of
Federal Reserve approval unless a court specifically orders otherwise. In
reviewing the Stock Acquisition and the TrustCo-Ballston Spa Merger, the
Department of Justice could analyze the effect of the transactions on
competition differently than the Federal Reserve and, thus, it is possible
that the Department of Justice could reach a different conclusion than the
Federal Reserve. Failure of the Department of Justice to object to the Stock
Acquisition and the TrustCo-Ballston Spa Merger may not prevent the filing of
antitrust actions by private persons or state attorneys general. In general,
the Federal Reserve and the Department of Justice will examine the impact on
competition of the Stock Acquisition and the TrustCo-Ballston Spa Merger in
various product and geographic markets, including competition for deposits
and loans, especially loans to small and middle market businesses.
As noted above, TrustCo intends, as soon as practicable after
consummation of the Offer, to cause the combination of Ballston Spa's
subsidiary, Ballston Spa National Bank, with our principal subsidiary,
Trustco Bank. This combination, if accomplished under Trustco Bank's federal
savings bank charter, would be subject to the prior approval by the Office of
Thrift Supervision (the "OTS") under the Home Owners' Loan Act of 1933 and
the federal Bank Merger Act. The OTS would review TrustCo's applications for
regulatory approval for the combination under standards similar to those
described above for the Stock Acquisition and the TrustCo-Ballston Spa
Merger.
Anticipated Approvals
While TrustCo expects to receive the approval from the Federal
Reserve and other relevant agencies required to consummate the Stock
Acquisition and the TrustCo-Ballston Spa Merger, TrustCo cannot predict when,
or give any assurance that, such approvals will be received. It is
anticipated that, in any event, the approval process (including the mandatory
waiting periods) could take four to six months from the date the applications
are filed. Any such approvals may be issued subject to prior compliance with
material conditions, which conditions might be unacceptable to TrustCo and
would entitle TrustCo to terminate the Offer. In any event, the receipt of
all such regulatory approvals and the expiration of all waiting periods is a
non-waivable condition to the Offer.
No Appraisal Rights in Connection with the Offer
The Offer does not entitle Ballston Spa shareholders to appraisal
rights with respect to their shares of Ballston Spa common stock. Ballston
Spa stockholders who have not validly tendered their shares in the Offer and
do not vote in favor of the proposed TrustCo-Ballston Spa Merger will have
the right under the New York Business Corporation Law, in connection with the
TrustCo-Ballston Spa Merger, to dissent and demand appraisal of their shares
of Ballston Spa common stock.
18
Certain Conditions of the Offer
TrustCo's obligation to accept Ballston Spa common stock pursuant to
the Offer is subject to a number of conditions, which are described below.
Notwithstanding any other provisions of the Offer, TrustCo will not be
required to accept for payment or pay for any shares of Ballston Spa common
stock, may postpone the acceptance for payment of shares tendered and may
terminate or amend the Offer as provided herein if any of the following
conditions are not satisfied. TrustCo reserves the absolute right to waive on
or before the Expiration Date any of the conditions of the Offer other than
the condition regarding regulatory approval.
Minimum Tender Condition
The Offer is conditioned upon there being validly tendered and not
withdrawn prior to the Expiration Date a number of shares of Ballston Spa
common stock which, together with the shares of Ballston Spa common stock
beneficially owned by TrustCo and its affiliates for their own respective
accounts, would represent at least 67% of the Ballston Spa common stock
outstanding on a fully diluted basis (i.e., as though all options or other
securities convertible into or exercisable for shares of Ballston Spa common
stock had been so converted, exercised or exchanged) on the date shares of
Ballston Spa common stock are accepted by TrustCo pursuant to the Offer (the
"minimum tender condition"). According to Ballston Spa's shareholder records
there were 768,000 shares of Ballston Spa common stock issued as of November
9, 2005, of which 25,337 shares were "treasury shares" held by Ballston Spa.
Based on the foregoing, TrustCo believes that the minimum tender condition
would have been satisfied on November 9, 2005 if, in addition to the 4,000
shares of Ballston Spa common stock currently owned beneficially by TrustCo
for its own account, at least an aggregate of 493,585 shares of Ballston Spa
common stock outstanding on November 9, 2005, had been validly tendered
pursuant to the Offer and not withdrawn. TrustCo reserves the right (but is
not obligated) to waive or amend the minimum tender condition on or before
the Expiration Date and to purchase fewer than such number of shares of
Ballston Spa common stock as would satisfy the minimum tender condition
pursuant to the Offer.
Regulatory Approval Condition
The Offer to Purchase and the TrustCo-Ballston Spa Merger are
subject to the receipt of all regulatory approvals sought by TrustCo in
connection with the transactions contemplated by the Offer and the
TrustCo-Ballston Spa Merger without the imposition of any material condition
unacceptable to TrustCo, the expiration of all required waiting periods, and
the compliance by TrustCo with any terms or conditions of such approvals (the
"regulatory approval condition"). See "THE OFFER--Certain Legal Matters."
While TrustCo expects to receive the requisite governmental approvals,
TrustCo cannot predict when, or give any assurance that, such approvals will
be received. TrustCo may not waive the regulatory approval condition.
Material Adverse Change Condition
The Offer is subject to the condition that, since December 31, 2004,
there has been no material adverse change, or any prospective material
adverse change, in the financial condition, business or assets of Ballston
Spa. This condition will be deemed satisfied unless, after December 31, 2004
and prior to the close of business on the Expiration Date any of the
following events occur:
19
(a) there is threatened, instituted or pending any action
or proceeding before any domestic or foreign court or governmental
agency or other regulatory or administrative agency or commission,
including but not limited to any such investigation, action or
proceeding which was in existence on or prior to December 31, 2004:
(i) seeking to obtain any material damages from Ballston Spa; (ii)
seeking to prohibit or restrict Ballston Spa's ownership or
operation of any material portion of its business or assets, or to
compel Ballston Spa to dispose of or hold separate all or any
material portion of Ballston Spa's business or assets; (iii) which
otherwise is reasonably likely to materially adversely affect
Ballston Spa or the value of the Ballston Spa common stock; (iv)
which imposes material limitations on the ability of TrustCo
effectively to acquire or hold or to exercise full rights of
ownership of the Ballston Spa common stock, including, without
limitation, the right to vote the shares of Ballston Spa common
stock acquired by it on all matters properly presented to the
stockholders of Ballston Spa or any material condition unacceptable
to TrustCo; or (v) which is reasonably likely to enjoin, restrain or
prohibit, or result in material damages in respect of, or which is
related to or arises out of, the Offer or the TrustCo-Ballston Spa
Merger or the consummation of the transactions contemplated hereby;
or
(b) any change (or any condition, event or development
involving a prospective change) has occurred or is threatened in the
business, properties, assets, liabilities, capitalization,
stockholders' equity, financial condition, results of operations or
prospects of Ballston Spa (including, without limitation, the
disposition of assets) which, in the reasonable judgment of TrustCo,
is or may be materially adverse to Ballston Spa or to the value of
the Ballston Spa common stock, or TrustCo becomes aware of any fact
(including, but not limited to, any such change, condition, event or
development) which, in the reasonable judgment of TrustCo, has or
may have materially adverse significance with respect to Ballston
Spa or any of its subsidiaries or to the value of the Ballston Spa
common stock; and
which, in the case of either (a) or (b) above, in the reasonable judgment of
TrustCo, makes it inadvisable to proceed with the Offer.
The foregoing conditions are for the sole benefit of TrustCo and may
be asserted by TrustCo on or before the Expiration Date regardless of the
circumstances giving rise to any such conditions (including any action or
inaction by TrustCo) or may be waived on or before the Expiration Date by
TrustCo in whole or in part. The failure by TrustCo to exercise any of the
foregoing rights will not be deemed a waiver of any such right and each such
right will be deemed a continuing right which may be asserted at any time and
from time to time on or before the Expiration Date.
Dividends and Distributions
If, on or after the date of this Offer to Purchase, Ballston Spa
should split, combine or otherwise change the shares of Ballston Spa common
stock or its capitalization, or disclose that it has taken any such action,
then, subject to the terms and conditions of this Offer to Purchase, TrustCo
may, in its sole judgment, make such adjustments as it deems appropriate to
reflect such split, combination or other change in the purchase price and the
other terms of the Offer (including, without limitation, the number and type
of securities offered to be purchased, the amounts payable therefor and the
fees payable hereunder).
20
If, on or after the date of this Offer, Ballston Spa should declare
or pay any cash or stock dividend or other distribution on or issue any
rights with respect to the shares of Ballston Spa common stock, payable or
distributable to shareholders of record on a date before the transfer to the
name of TrustCo or its nominee or transferee on Ballston Spa's stock transfer
records of the shares of Ballston Spa common stock accepted for payment
pursuant to the Offer, then, subject to the terms and conditions of the
Offer, (i) the purchase price per share payable by TrustCo pursuant to the
Offer will be reduced by the amount of any such cash dividend or cash
distribution and (ii) the whole of any such non-cash dividend, distribution
or right will be received and held by the tendering shareholder for the
account of TrustCo and shall be required to be promptly remitted and
transferred by each tendering shareholder to the Depositary for the account
of TrustCo, accompanied by appropriate documentation of transfer. Pending
such remittance, TrustCo will be entitled to all rights and privileges as
owner of any such non-cash dividend, distribution or right and may withhold
the entire purchase price or deduct from the purchase price the amount or
value thereof, as determined by TrustCo in its sole discretion.
Fees and Expenses
TrustCo has engaged Regan & Associates, Inc. to act as TrustCo's
information agent (the "Information Agent") with respect to the Offer.
TrustCo will pay the Information Agent a fee of $10,000 for its services in
connection with the Offer, plus reimbursement for out-of-pocket expenses, and
will indemnify the Information Agent against certain liabilities and expenses
in connection therewith, including liabilities under the federal securities
laws.
TrustCo will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including
liabilities under the federal securities laws.
Brokers, dealers, commercials banks and trust companies will be
reimbursed by TrustCo for customary mailing and handling expenses incurred by
them in forwarding material to their customers.
Accounting Treatment
Upon consummation of the Offer, TrustCo will account for the
acquisition of the Ballston Spa common stock as a purchase business
combination.
Source of Funds
TrustCo expects to fund the Offer Consideration, i.e. the $45.50 net
in cash, from its existing cash assets and/or a dividend from TrustCo's
wholly owned subsidiary, Trustco Bank. The aggregate Offer Consideration for
all issued and outstanding shares of Ballston Spa common stock totals
approximately $33.8 million. Currently, TrustCo and Trustco Bank have cash
assets and securities held "available for sale" of approximately $1.3 billion
on a consolidated basis, which is more than adequate to pay the aggregate
Offer Consideration. To the extent the financing of the Offer Consideration
is derived from "available for sale" securities, such securities are readily
marketable, and a large and liquid market exists. TrustCo does not anticipate
any difficulty in attracting purchasers for such securities. TrustCo believes
that the transaction as structured will ensure prompt payment of the Offer
Consideration to Ballston Spa stockholders. TrustCo currently has no plan or
arrangement in place with respect to alternate sources of financing for the
Offer Consideration and does not expect to obtain an advance from Trustco
Bank to fund the Offer Consideration.
21
TRUSTCO'S DIRECTORS AND EXECUTIVE OFFICERS
Following is a list of TrustCo's directors and senior executive
officers and their business backgrounds:
* Joseph A. Lucarelli (President, Traditional Builders
(residential home builder and developer). Former President,
Bellevue Builders Supply, Inc. Director of TrustCo and Trustco
Bank since 1999.)
* Anthony J. Marinello (M.D., Ph.D., Family Physician. Director
of TrustCo and Trustco Bank since 1999.)
* William D. Powers (Partner, Powers & Company, LLC
(consultants); former Chairman, New York Republican State
Committee. Director of TrustCo and Trustco Bank since 1995.)
* William J. Purdy (President, Welbourne & Purdy Realty, Inc.
Director of TrustCo and Trustco Bank since 1991.)
* Robert A. McCormick (Chairman TrustCo and Trustco Bank since
2001. President of TrustCo and Trustco Bank 1982-2002.
President and Chief Executive Officer of TrustCo and Trustco
Bank 1984-2002. Director of TrustCo and Trustco Bank since
1980. Mr. McCormick retired as an executive officer of TrustCo
and Trustco Bank as of November 1, 2002.)
* Robert J. McCormick (President and Chief Executive Officer of
TrustCo since January 2004, Executive Officer of TrustCo since
2001 and President and Chief Executive Officer of Trustco Bank
since November 2002. Director of TrustCo and Trustco Bank
since June 2005. Robert J. McCormick is the son of Robert A.
McCormick.)
* Thomas O. Maggs (President, Maggs & Associates, The Business
Insurance Brokers, Inc. (insurance brokerage). Director of
TrustCo and Trustco Bank since July 2005.)
* Robert T. Cushing (Executive Vice President and Chief
Financial Officer of TrustCo and Trustco Bank since January
2004. President and Chief Executive Officer of TrustCo from
November 2002 to December 2003. Executive Officer of TrustCo
and Trustco Bank since 1994.)
* Scot R. Salvador (Executive Vice President and Chief Banking
Officer of TrustCo and Trustco Bank since January 2004.
Executive Officer of TrustCo and Trustco Bank since 2004.
Joined Trustco Bank in 1995.)
* Robert M. Leonard (Secretary of TrustCo and Trustco Bank since
2003. Administrative Vice President of TrustCo and Trustco
Bank since 2004. Executive Officer of TrustCo and Trustco Bank
since 2003. Joined Trustco Bank in 1986.)
None of the directors or executive officers of TrustCo have been
convicted in a criminal proceeding within the last five years nor have any of
the directors or executive officers of TrustCo been a party to any proceeding
resulting in the imposition of any restrictions relating to federal or state
securities laws.
Further, to TrustCo's knowledge, none of the above-named directors
or executive officers owns any shares of Ballston Spa common stock nor is any
of the above-named individuals a party to any contract, understanding,
relationship or arrangement with respect to Ballston Spa securities, nor have
any of the above-named individuals undertaken any transaction within the past
sixty days with respect to any Ballston Spa securities. To TrustCo's
knowledge, none of the above-named individuals have entered into or proposed
or received any proposed material agreements or arrangements with respect to
Ballston Spa.
22
MISCELLANEOUS
The Offer is being made to all holders of shares of Ballston Spa
common stock. TrustCo is not aware of any state where the making of the Offer
is prohibited by administrative or judicial action pursuant to a state
statute. If TrustCo becomes aware of any state where the making of the Offer
is so prohibited, TrustCo will make a good faith effort to comply with any
such statute or seek to have such statute declared inapplicable to the Offer.
If, after such good faith effort, TrustCo cannot comply with any applicable
statute, the Offer will not be made to (nor will tenders be accepted from or
on behalf of) the holders of shares of Ballston Spa common stock in such
state. In any jurisdiction the securities, "blue sky" or other laws of which
require the Offer to be made by a licensed broker or dealer, the Offer shall
be made on behalf of TrustCo by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Although neither TrustCo nor the Information Agent has any knowledge
that would indicate that any of the information contained herein that has
been derived from information or materials provided by Ballston Spa is
untrue, neither TrustCo nor the Information Agent takes responsibility for
the accuracy or completeness of the information derived from that information
or those materials, or for any failure by Ballston Spa to disclose events
which may have occurred or may affect the significance or accuracy of any
such information but which are unknown to TrustCo or the Information Agent.
TrustCo has not authorized anyone to give any information or make
any representation about this Offer that is different from, or in addition
to, that contained in this Offer to Purchase or in the Letter of Transmittal.
Therefore, if anyone does give you information of this sort, you should not
rely on it.
The information contained in this Offer to Purchase speaks only as
of the date of this document unless the information specifically indicates
that another date applies.
TRUSTCO BANK CORP NY
December 5, 2005
23
This page intentionally left blank.
24
This page intentionally left blank.
25
The Depositary for the Offer is:
MELLON INVESTOR SERVICES, LLC
By mail: By hand delivery: By overnight delivery:
P.O. Box 3301 120 Broadway, 13th Floor Newport Office Center VII
South Hackensack, NJ 07606 New York, NY 10271 480 Washington Blvd
Attn: Reorganization Dept. Attn: Reorganization Dept., 27th Floor
Jersey City, NJ 07310
Facsimile (for eligible institutions only): 201-680-4626
Confirm facsimile by telephone ONLY: 201-680-4860
The Information Agent for the Offer is:
[LOGO]
R&A REGAN &
ASSOCIATES, INC.
505 EIGHTH AVENUE - SUITE 800 * NEW YORK, NEW YORK 10018
TOLL FREE: (800) 737-3426
26