OFFER TO PURCHASE
Published on March 6, 2001
6,000,000 SHARES
THE PNC FINANCIAL SERVICES GROUP, INC.
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING FIXED/ADJUSTABLE RATE
NONCUMULATIVE PREFERRED STOCK SERIES F (CUSIP NO. 693475709)
AT A PURCHASE PRICE OF $50.35 PER SHARE
PLUS ACCRUED AND UNPAID DIVIDENDS
(FOR A TOTAL PRICE OF $50.392 PER SHARE)
THE OFFER AND WITHDRAWAL RIGHTS SET FORTH HEREIN EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON TUESDAY, APRIL 3, 2001,
UNLESS THE OFFER IS EXTENDED.
The PNC Financial Services Group, Inc. ("PNC" or the "Company"), a
Pennsylvania corporation, invites its shareholders to tender shares of its
Fixed/Adjustable Rate Noncumulative Preferred Stock, Series F, par value $1.00
per share, at a price of $50.35 per share, net to the seller in cash, plus
accrued and unpaid dividends up to but not including the payment date, upon the
terms and subject to the conditions set forth in this Offer to Purchase and the
related Letter of Transmittal, which together constitute the "Offer."
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 12.
OUR BOARD OF DIRECTORS HAS APPROVED THE OFFER. HOWEVER, SHAREHOLDERS MUST
MAKE THEIR OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER. NEITHER WE NOR OUR EXECUTIVE OFFICERS OR BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES OF
SERIES F PREFERRED STOCK.
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A summary of the principal terms of the Offer appears on pages 1 to 4
hereof.
If you have questions about the Offer, you can call Merrill Lynch & Co.,
the Dealer-Manger for the Offer, at the telephone numbers set forth on the back
cover of this Offer to Purchase. You can also obtain additional copies of this
Offer to Purchase and the related documentation from Mellon Investor Services
LLC ("Mellon") or your broker, dealer, commercial bank, trust company or other
nominee.
The Dealer-Manager for the Offer is:
MERRILL LYNCH & CO.
The Date of this Offer to Purchase is March 6, 2001.
IMPORTANT
If you hold your Series F Preferred Stock through a broker, dealer or other
similar nominee, you must contact that nominee if you desire to tender your
Series F Preferred Stock. If you hold your Series F Preferred Stock yourself,
you must complete and sign the Letter of Transmittal included with this document
in accordance with the instructions herein and therein, and mail or deliver it,
together with any other required documents, to Mellon, which also is acting as
depositary, and deliver the certificates for the tendered Series F Preferred
Stock to the Depositary.
No person has been authorized to give any information or to make any
representations, other than those contained in this Offer to Purchase. If given
or made, such information or representations cannot be relied upon as having
been authorized by PNC, Merrill Lynch or Mellon. The delivery of this Offer to
Purchase shall not, under any circumstances, create any implication that the
information contained herein is correct as of any time subsequent to the date
hereof or that there has been no change in the information contained in this
Offer to Purchase or in the affairs of PNC since the date hereof.
YOU SHOULD READ THIS DOCUMENT AND THE LETTER OF TRANSMITTAL CAREFULLY BEFORE
MAKING A
DECISION TO TENDER YOUR SERIES F PREFERRED STOCK.
No authority has passed upon the accuracy or adequacy of this document, and
it is unlawful and may be a criminal offense to make any representation other
than those contained in this document or in the Letter of Transmittal and, if
given or made, such information or representations must not be relied upon as
having been authorized. This document and related documents do not constitute an
offer to buy or the solicitation of an offer to sell the Series F Preferred
Stock under any circumstances or in any jurisdiction in which such offer or
solicitation is unlawful. In those jurisdictions where the securities, blue sky
or other laws require the Offer to be made by a licensed broker or dealer, the
Offer will be deemed to be made on our behalf by the Dealer-Manager or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
TABLE OF CONTENTS
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SUMMARY TERM SHEET
The following summary term sheet summarizes the principal terms,
conditions, and other provisions of the Offer. We urge you to read the section
entitled "The Offer" that follows and the accompanying Letter of Transmittal in
their entirety because only they and not this summary contain the complete
listing of the terms, conditions and other provisions that govern the Offer.
The PNC Financial Services Group, Inc. is offering to purchase all of its
Fixed/Adjustable Rate Noncumulative Preferred Stock, Series F, par value $1.00
per share ("Series F Preferred Stock"), at a price, net to the seller in cash,
of $50.35 per share plus accrued and unpaid dividends up to but not including
the payment date. Assuming a payment date of April 5, 2001, the amount to be
paid for accrued and unpaid dividends per share of the Series F Preferred Stock
is $.042, for a total purchase price of $50.392 per share. Total payments due to
individual holders will be rounded up to the nearest whole cent.
PNC may redeem the Series F Preferred Stock at a price of $50.00 per share,
plus accrued and unpaid dividends, on or after September 30, 2001.
The following are some of the questions you, as a shareholder of the Series
F Preferred Stock, may have and the answers to those questions.
WHO IS OFFERING TO BUY MY SECURITIES?
PNC, a Pennsylvania corporation, is offering to buy back its own Series F
Preferred Stock in a self-tender offer. We are a bank holding company registered
under the Bank Holding Company Act of 1956, as amended ("BHC Act"), and a
financial holding company under the recently enacted Gramm-Leach-Bliley Act. PNC
was incorporated under the laws of Pennsylvania in 1983 with the consolidation
of Pittsburgh National Corporation and Provident National Corporation. Since
1983, PNC has diversified its geographical presence and product capabilities
through strategic bank and nonbank acquisitions and the formation of various
nonbanking subsidiaries.
WHY ARE THEY OFFERING TO BUY MY SECURITIES?
We are making this Offer because we believe that it would be financially
advantageous for us to purchase the Series F Preferred Stock pursuant to the
Offer, given our current financial condition (including capital levels in excess
of regulatory capital requirements). In addition, the Offer will provide you
with an opportunity for cash liquidity at a premium above what you would receive
if the Series F Preferred Stock is redeemed on or after September 30, 2001, in
accordance with its terms.
Subject to market conditions and the receipt of necessary regulatory
approvals, we currently intend to redeem any shares of the Series F Preferred
Stock that are not purchased in the Offer at the earliest practicable date on or
after September 30, 2001.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding shares of the Series F
Preferred Stock.
As of December 31, 2000, there were 6,000,000 shares of the Series F
Preferred Stock outstanding.
IF I DECIDE TO TENDER MY SHARES, HOW MUCH WILL YOU PAY FOR MY SECURITIES AND
WHAT IS THE FORM OF PAYMENT? WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
We are offering to pay $50.35 per share net to you, in cash, plus accrued
dividends up to but not including the payment date. This amount is $.35 higher
than you would receive if the Series F Preferred Stock were redeemed on or after
September 30, 2001, in accordance with its terms.
If you tender your shares to us in the Offer, you will not have to pay
brokerage fees, commissions or similar expenses to PNC, Merrill Lynch or Mellon.
If you own shares through a broker or other nominee
and your broker tenders on your behalf, your broker or nominee may charge you a
fee for doing so. You should consult your broker or other nominee to determine
whether any charges will apply.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
The Series F Preferred Stock is not publicly traded, listed on any exchange
or quoted in any automated quotations system of a registered national securities
association.
To the limited extent that the Series F Preferred Stock is traded, if most
of the outstanding shares are tendered in the Offer and purchased by us, the
liquidity of the trading market for the remaining shares will likely be
adversely affected due to the smaller number of outstanding shares available for
trading.
If you do not tender your shares, the Offer will not affect your shares.
Your shares will continue to be outstanding and will continue to be governed by
the terms of the Series F Preferred Stock. You will be entitled to receive
noncumulative quarterly dividends as, if and when declared by our board of
directors at an annual rate of 6.05% or $3.025 per share per year to September
30, 2001. After September 30, 2001, dividends will be payable quarterly as, if
and when declared by our board of directors at an annual rate equal to .35% plus
the highest of the Treasury Bill Rate, the Ten Year Constant Maturity Rate and
the Thirty Year Constant Maturity Rate, although the annual rate will not be
less than 6.55% nor greater than 12.55%. In addition, we may redeem the shares
at a price of $50.00 per share, plus accrued and unpaid dividends, on or after
September 30, 2001.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision
whether to tender shares of Series F Preferred Stock and accept the Offer
because:
- the Offer is being made for all outstanding shares of Series F Preferred
Stock solely for cash, and
- the Offer is not subject to any financing condition.
DOES PNC HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Yes. We will need approximately $303.0 million to purchase all of the
outstanding Series F Preferred Stock pursuant to the Offer and to pay related
fees and expenses. It is anticipated that such funds will be available through
retained earnings and other normal operating sources. See Section 11, "Source
and Amount of Funds."
HOW DO I TENDER MY SHARES?
If your shares are held in street name by your broker, dealer, bank, trust
company or other nominee, you must instruct the nominee to tender your shares
through the Depository Trust Company so that the tender is completed prior to
the expiration of the Offer. See Section 3, "Procedures for Tendering Series F
Preferred Stock." If you hold physical certificates representing your shares,
you must deliver them, together with a completed Letter of Transmittal, to
Mellon, the depositary for the Offer, prior to the expiration of the Offer.
HOW LONG DO I HAVE TO DECIDE TO TENDER IN THE OFFER?
You have until 5:00 P.M., New York City time, on April 3, 2001, to tender
your shares in the Offer. In addition, if we decide, in our sole discretion, to
extend the Offer as described in Section 5, "Extension of Tender Period;
Termination; Amendment" you will have an additional period of time during which
you may tender your shares. We urge you to tender your shares or instruct your
broker or other nominee to tender your shares as soon as possible to ensure that
your shares are included in this Offer.
CAN THE OFFER BE EXTENDED? HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
The Offer can be extended, but we do not expect, at this time, to do so.
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If we decide to extend the Offer, we will inform Mellon, the depositary for
the Offer, of that fact and will make an announcement through a press release
issued to the Dow Jones News Service of the extension, not later than 9:00 A.M.,
New York City time, on the business day after the day on which the Offer was
scheduled to expire. See Section 5, "Extension of the Tender Period;
Termination; Amendment."
HOW DO I WITHDRAW TENDERED SHARES? UNTIL WHAT TIME CAN I WITHDRAW TENDERED
SHARES?
You can withdraw the shares you have tendered at any time until the Offer
has expired. If the Offer is extended, you can withdraw tendered shares until
the expiration of the extension period, and we have accepted the shares for
payment.
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, indicating your name, the number of shares tendered, the
number of shares you wish to withdraw and the name of the registered holder, to
Mellon prior to the expiration of the Offer. If your shares were to be tendered
by book-entry transfer, the notice must identify the relevant account number.
See Section 4, "Withdrawal Rights" for a more detailed discussion of withdrawal
procedures.
WHEN AND HOW WILL I BE PAID FOR MY TENDERED SHARES?
We will pay for all validly tendered and not withdrawn shares as soon as
practicable after the date the Offer expires. We expect payment to be made on
April 5, 2001. We reserve the right, in our sole discretion and subject to
applicable law, to delay payment for shares in order to comply with applicable
law.
We will pay for your validly tendered and not withdrawn shares by
depositing the purchase price with Mellon, which will act as your agent for
purposes of receiving payments from us and transmitting the payments to you. In
all cases, payment representing tendered shares will be made only after timely
confirmation of a book-entry transfer or timely receipt by Mellon of
certificates for such shares, plus in either case a properly completed and duly
executed Letter of Transmittal and any other required documents for such shares.
See Section 3, "Procedure for Tendering Series F Preferred Stock" and Section 2,
"Acceptance for Payment and Payment."
ARE THERE ANY CONDITIONS TO THE OFFER?
The Offer is not conditioned on the shareholders tendering any minimum
number of shares. There is also no financing condition in the Offer.
We can terminate the Offer, in our reasonable discretion, if, among other
things, any of the following have occurred:
- the threat or existence of governmental or regulatory proceeding
challenging the Offer or that could materially adversely affect PNC;
- a suspension or limitation on trading securities generally, or a
significant decline in the price of our securities or securities
generally, changes in political, economic or financial conditions that
could adversely affect us or the trading of our stock, a banking
moratorium or similar action, war or other national calamity or the
material worsening thereof;
- other events that have or may result in a change in our business,
condition, income operations, stock ownership or prospects.
See Section 12, "Conditions to the Offer."
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER?
Questions regarding the terms of this Offer should be directed to the
Liability Management Group of Merrill Lynch, the dealer-manager for this Offer,
at (888) 654-8637 or (212) 449-4914.
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Requests for additional copies of this Offer to Purchase, the Letter of
Transmittal or any related documents and questions regarding the procedures for
tendering shares should be directed to Mellon, the information agent for the
Offer, at (888) 232-7136.
HOW WILL I BE TAXED FOR U.S. FEDERAL INCOME TAX PURPOSES?
Your receipt of cash for shares validly tendered in the Offer will be a
taxable transaction for U.S. federal income tax purposes. If you meet certain
conditions, you will recognize gain or loss in an amount equal to the difference
between (1) the cash you receive in the Offer and (2) your adjusted tax basis in
the shares that you surrender in the Offer. That gain or loss will be a capital
gain or loss if the shares are a capital asset in your hands, and will be long
term capital gain or loss if you have held the shares for more than one year at
the time the offering is completed. The tax consequences of the Offer to you may
vary depending on your particular facts and circumstances, and it is possible
that the entire amount of the cash you receive in the Offer will be treated as a
dividend distribution. See Section 14, "Material United States Federal Income
Tax Consequences of the Offer" for a more detailed discussion of the tax
treatment of the Offer. We urge you to consult with your own tax advisor as to
the particular tax consequences to you of the Offer.
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THE OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE. On the terms and subject to the
conditions set forth in the Offer, we will accept for payment and pay for all of
the Series F Preferred Stock validly tendered prior to the Expiration Date and
not withdrawn.
The tender price is $50.35 per share of Series F Preferred Stock, plus
accrued and unpaid dividends up to but not including the payment date of $.042
per share (assuming a payment date of April 5, 2001) for a total price of
$50.392, in cash.
"Expiration Date" means 5:00 P.M., New York City Time, on Tuesday, April 3,
2001, unless we extend the period of time for which the Offer is open, in which
event "Expiration Date" means the latest time and date at which the Offer, as so
extended, shall expire.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. We will accept for payment and pay
for all Series F Preferred Stock validly tendered prior to the Expiration Date
and not withdrawn as soon as practicable after the Expiration Date, subject to
the satisfaction or waiver of the conditions set forth in Section 12,
"Conditions to the Offer." In addition, we reserve the right, subject to
compliance with Rule 13e-4(f)(5) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to delay the acceptance for payment or payment for
Series F Preferred Stock in order to comply in whole or in part with any
applicable law. For a description of our right to terminate the Offer and not
accept for payment or pay for Series F Preferred Stock or to delay acceptance
for payment or payment for Series F Preferred Stock, see Section 5, "Extension
of Tender Period; Termination; Amendment." For purposes of the Offer, we shall
be deemed to have accepted for payment tendered Series F Preferred Stock when,
as and if we give oral or written notice of our acceptance to the Depositary.
We will pay for all validly tendered and not withdrawn Series F Preferred
Stock as soon as practicable after the Expiration Date. We currently expect
payment to be made on April 5, 2001. We will pay the purchase price by
depositing the purchase price with the Depositary. The Depositary will act as
your agent for the purpose of receiving payments from us and transmitting such
payments to you. In all cases, payment for Series F Preferred Stock accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of a confirmation of a book-entry transfer of such Series F Preferred
Stock into the Depositary's account at the DTC or certificates for such Series F
Preferred Stock, as discussed in Section 3, "Procedure for Tendering Series F
Preferred Stock," a properly completed and duly executed Letter of Transmittal
and any other required documents. For a description of the procedure for
tendering Series F Preferred Stock pursuant to the Offer, see Section 3,
"Procedure for Tendering Series F Preferred Stock." The Depositary will forward
the consideration to the shareholders. Under no circumstances will we pay
interest on the consideration paid for Series F Preferred Stock pursuant to the
Offer.
If we increase the consideration to be paid for Series F Preferred Stock
pursuant to the Offer, we will pay such increased consideration for all Series F
Preferred Stock purchased pursuant to the Offer.
We reserve the right to transfer or assign to one or more of our
affiliates, in whole or from time to time in part, the right to purchase Series
F Preferred Stock tendered pursuant to the Offer, but any such transfer or
assignment will not relieve us of our obligations under the Offer or prejudice
your rights to receive payment for Series F Preferred Stock validly tendered and
accepted for payment.
All shares of Series F Preferred Stock not purchased, including shares not
purchased due to improper tender, will be returned through book-entry transfer
to an account maintained at the DTC or, if the shares are held in physical form,
through delivery of certificates, without expense to you, as promptly as
practicable following the expiration or termination of the Offer.
If all conditions to the Offer are satisfied or waived, we will accept for
payment and pay for all Series F Preferred Stock properly tendered by each
shareholder prior to or on the Expiration Date and not withdrawn. The results of
the Offer will be announced by press release as promptly as practicable after
the Expiration Date.
5
We will pay all stock transfer taxes, if any, payable on the transfer to us
of Series F Preferred Stock purchased pursuant to the Offer. If, however, (a)
payment of the purchase price is to be made to any person other than the
registered holder, (b) shares not tendered or rejected for purchase are to be
registered in the name of any person other than the registered holder or (c)
certificates representing tendered shares are registered in the name of any
person other than the person signing the Letter of Transmittal, the amount of
all stock transfer taxes, if any (whether imposed on the registered holder, the
other person or otherwise), payable on account of the transfer to the other
person, will be deducted from the purchase price unless satisfactory evidence of
the payment of the stock transfer taxes, or exemption therefrom, is submitted.
See Instruction 6 of the Letter of Transmittal.
Any tendering shareholder or other payee who fails to complete fully and
sign the substitute Form W-9 included in the Letter of Transmittal, or, in the
case of a foreign individual, a Form W-8BEN, may be subject to required federal
income tax withholding of 31% of the gross proceeds paid to such shareholder or
other payee pursuant to the Offer. See Section 3, "Procedures for Tendering
Series F Preferred Stock" and Instruction 8 of the Letter of Transmittal.
3. PROCEDURE FOR TENDERING SERIES F PREFERRED STOCK. To tender Series F
Preferred Stock pursuant to the Offer, the Depositary must receive at one of its
addresses set forth on the back cover of this Offer to Purchase (A) a properly
completed and duly executed Letter of Transmittal and any other documents
required by the Letter of Transmittal and (B) delivery of such Series F
Preferred Stock pursuant to the procedures for book-entry transfer described
below (and a confirmation of such delivery including an Agent's Message (as
defined below) if the tendering shareholder has not delivered a Letter of
Transmittal) or certificates for the Series F Preferred Stock to be tendered, in
each case by the Expiration Date.
The method of delivery of Series F Preferred Stock and all other required
documents, including through the DTC, is at your option and risk, and the
delivery will be deemed made only when actually received by the Depositary.
BOOK-ENTRY DELIVERY. The Depositary will establish an account with respect
to the Series F Preferred Stock at the DTC for purposes of the Offer within two
business days after the date of this Offer, and any financial institution that
is a participant in the DTC system may make delivery of Series F Preferred Stock
by causing the DTC to transfer such Series F Preferred Stock into the
Depositary's account in accordance with the procedures of the DTC. However,
although delivery of Series F Preferred Stock may be effected through book-entry
transfer, the Letter of Transmittal properly completed and duly executed
together with any required signature guarantees or an Agent's Message and any
other required documents must, in any case, be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase by the
Expiration Date. Delivery of the Letter of Transmittal and any other required
documents to the DTC does not constitute delivery to the Depositary.
The term "Agent's Message" means a message, transmitted by the DTC to, and
received by, the Depositary and forming a part of a book-entry confirmation
which states that the DTC has received an express acknowledgment from the
participant in the DTC tendering the Series F Preferred Stock that are the
subject of such book-entry confirmation which such participant has received, and
agrees to be bound by, the terms of the Letter of Transmittal and that we may
enforce such agreement against such participant.
SIGNATURE GUARANTEES. Except as otherwise provided below, all signatures
on a Letter of Transmittal must be guaranteed by a financial institution
(including most banks, savings and loan associations and brokerage houses) that
is a member of a recognized Medallion Program approved by The Securities
Transfer Association Inc., including the Securities Transfer Agents Medallion
Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York
Stock Exchange, Inc. Medallion Signature Program (MSP) (each an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be guaranteed (i)
if the Letter of Transmittal is signed by the registered holder(s) of the Series
F Preferred Stock tendered therewith and such holder(s) has/have not completed
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or
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(ii) if such Series F Preferred Stock is tendered for the account of an Eligible
Institution. See Instructions 1, 2 and 7 of the Letter of Transmittal.
VALIDITY. We will determine, in our sole discretion, all questions as to
the form of documents and the validity, eligibility (including time of receipt)
and acceptance for payment of any tender of Series F Preferred Stock, and our
determination shall be final and binding. We reserve the absolute right to
reject any or all tenders of Series F Preferred Stock that we determine not to
be in proper form or the acceptance for payment of or payment for which may, in
the opinion of our counsel, be unlawful. We also reserve the absolute right to
waive any defect or irregularity in any tender of Series F Preferred Stock. No
tender of Series F Preferred Stock will be deemed to have been validly made
until all defects or irregularities relating thereto have been cured or waived.
Our interpretation of the terms and conditions of the Offer will be final and
binding. No person, including us, the Dealer-Manager and the Depositary and
Information Agent will be under any duty to give notification of any defect or
irregularity in tenders or waiver of any such defect or irregularity or incur
any liability for failure to give any such notification.
FEDERAL BACKUP WITHHOLDING TAX. Under the United States federal backup
withholding tax rules, 31% of the gross proceeds payable to a shareholder or
other payee in the Offer must be withheld and remitted to the United States
Treasury unless the shareholder or other payee provides his, her or its taxpayer
identification number (employer identification number or social security number)
to the Depositary and certifies under penalties of perjury that such number is
correct or otherwise establishes an exemption. If the Depositary is not provided
with the correct taxpayer identification number or another adequate basis for
exemption, the holder may be subject to certain penalties imposed by the
Internal Revenue Service. Therefore, each tendering shareholder should complete
and sign the substitute Form W-9 included as part of the Letter of Transmittal
in order to provide the information and certification necessary to avoid backup
withholding, unless such shareholder otherwise establishes to the satisfaction
of the Depositary that the shareholder is not subject to backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign shareholders (in addition to foreign corporations)) are not subject to
these backup withholding rules. In order for a foreign shareholder to qualify as
an exempt recipient, that shareholder must submit an IRS Form W-8BEN or a
substitute Form W-8BEN, signed under penalties of perjury, attesting to that
shareholder's exempt status. The applicable form can be obtained from the
Depositary. See Instruction 8 of the Letter of Transmittal.
TO PREVENT FEDERAL BACKUP WITHHOLDING TAX EQUAL TO 31% OF THE GROSS
PAYMENTS MADE TO SHAREHOLDERS FOR SERIES F PREFERRED STOCK PURCHASED IN THE
OFFER, EACH SHAREHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH
WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH THE SHAREHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND PROVIDE OTHER INFORMATION BY COMPLETING THE SUBSTITUTE
FORM W-9 INCLUDED WITH THE LETTER OF TRANSMITTAL.
For a discussion of United States federal income tax consequences to
tendering shareholders, see Section 14, "Material United States Federal Income
Tax Consequences of the Offer."
4. WITHDRAWAL RIGHTS. Except as provided herein, tenders of Series F
Preferred Stock pursuant to the Offer are irrevocable. You may withdraw tenders
of Series F Preferred Stock made pursuant to the Offer at any time prior to the
Expiration Date (as it may be extended). In addition, you may withdraw any
tendered Series F Preferred Stock after May 1, 2001, unless we have accepted
your Series F Preferred Stock for payment. If we extend the period of time
during which the Offer is open, or are delayed in accepting for payment or
paying for Series F Preferred Stock pursuant to the Offer for any reason, then,
without prejudice to our rights under the Offer, the Depositary may, on our
behalf and subject to your withdrawal rights, as set forth herein, retain all
Series F Preferred Stock tendered.
To withdraw tendered Series F Preferred Stock, (1) a written or facsimile
transmission notice of withdrawal with respect to the Series F Preferred Stock
must be timely received by the Depositary at one of its addresses set forth on
the back cover of this Offer to Purchase and (2) the notice of withdrawal must
specify (a) the name of the person who tendered the Series F Preferred Stock to
be withdrawn, (b) the number of shares of Series F Preferred Stock to be
withdrawn and (c) the name of the registered
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holder of the Series F Preferred Stock, if different from that of the person who
tendered such Series F Preferred Stock.
If the Series F Preferred Stock to be withdrawn has been delivered to the
Depositary, a signed notice of withdrawal with (except in the case of Series F
Preferred Stock tendered by an Eligible Institution) signatures guaranteed by an
Eligible Institution must be submitted prior to the release of such Series F
Preferred Stock. In addition, such notice must specify, in the case of Series F
Preferred Stock tendered by book-entry transfer, the name and number of the
account at the DTC to be credited with the withdrawn Series F Preferred Stock.
In the case of Series F Preferred Stock tendered by delivery of certificates,
such notice must specify the name of the registered holder (if different from
that of the tendering shareholder) and the serial numbers shown on the
particular certificates representing the Series F Preferred Stock to be
withdrawn.
Withdrawals may not be rescinded, and Series F Preferred Stock withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Series F Preferred Stock may be tendered by again following
one of the procedures described in Section 3, "Procedures for Tendering Series F
Preferred Stock" at any time prior to the Expiration Date.
We will determine, in our sole discretion, all questions as to the form and
validity (including time of receipt) of any notice of withdrawal, and our
determination shall be final and binding. Nobody, including us, the
Dealer-Manager and the Depositary and Information Agent will be under any duty
to give notification of any defect or irregularity in any notice of withdrawal
or waiver of any such defect or irregularity or incur any liability for failure
to give any such notification.
5. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT. We expressly
reserve the right, in our sole discretion, at any time and from time to time, to
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and payment for, any shares by giving oral or written
notice of such extension to the Depositary and making a public announcement of
the extension. We also expressly reserve the right, in our sole discretion, to
terminate the Offer and not accept for payment or pay for any shares of Series F
Preferred Stock not already accepted for payment or paid for or, subject to
applicable law, to postpone payment for the Series F Preferred Stock upon the
occurrence of any of the conditions specified in Section 12, by giving oral or
written notice of such termination or postponement to the Depositary and making
a public announcement of the termination or postponement.
Subject to compliance with applicable law, we further reserve the right, in
our sole discretion, and regardless of whether any of the events set forth in
Section 12 will occur or are deemed by us to have occurred, to amend the Offer
in any respect. If we make a material change in the terms of the Offer or the
information concerning the Offer, or if we waive a material condition of the
Offer, we will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(3) under the Exchange Act. If (1) we increase or decrease the price to
be paid for the Series F Preferred Stock or we increase or decrease the number
of shares of Series F Preferred Stock being sought and (2) 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 notice of such
increase or decrease is first published, sent or given, we will extend the Offer
until the expiration of such period of ten business days from the date of
publication of such notice. If we make a material change to other terms of the
Offer or to the information concerning the Offer, or waive a material condition
of the Offer, we will extend the Offer, if required by applicable law, for a
period of five business days to allow you to consider the amended terms of the
Offer. Business day means any day other than Saturday, Sunday or a federal
holiday and shall consist of the time period from 12:01 A.M. through 12:00
midnight, New York City time.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement, in the case of an extension of
the Offer to be made no later than 9:00 A.M., New York City time, on the next
business day after the previously scheduled Expiration Date. Any public
announcement made pursuant to the Offer will be disseminated promptly to
stockholders in a manner reasonably designed to inform stockholders of such
change. Without limiting the manner in which we may
8
choose to make any public announcement, except as provided by applicable law,
including Rules 13e-4(d)(2) and 13e-4(e)(3) under the Exchange Act, we shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a press release to the Dow Jones News
Service.
If we extend the time during which the Offer is open, or if we are delayed
in accepting for payment of or payment for the Series F Preferred Stock pursuant
to the Offer for any reason, then, without prejudice to our rights under the
Offer, the Depositary may retain tendered Series F Preferred Stock on our behalf
and that Series F Preferred Stock may not be withdrawn except to the extent
tendering shareholders are entitled to withdrawal rights as described herein
under Section 4, "Withdrawal Rights." However, our ability to delay the payment
for the Series F Preferred Stock that we have accepted for payment is limited by
Rule 13e-4(f)(5) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by or on behalf of
shareholders promptly after the termination or withdrawal of such bidder's
offer.
6. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS. The shares of Series
F Preferred Stock purchased pursuant to the Offer will be retired.
We are making the Offer now because we believe that:
- it would be financially advantageous for us to purchase the Series F
Preferred Stock pursuant to the Offer, given our current financial
condition (including capital levels in excess of regulatory capital
requirements); and
- the Offer will provide an opportunity of cash liquidity to shareholders
by allowing them to sell their Series F Preferred Stock at a price above
what they would receive if the Series F Preferred Stock were redeemed on
or after September 30, 2001, in accordance with its terms.
We may in the future repurchase additional Series F Preferred Stock in the
open market, private transactions, tender offers or otherwise. Any such
purchases may be on the same terms as, or on terms more or less favorable to
shareholders than, the terms of the Offer. However, Rule 13e-4 under the
Exchange Act generally prohibits us and our affiliates from purchasing any
shares, other than through the Offer, until at least ten business days after the
expiration or termination of the Offer. Any possible future purchases by us will
depend on many factors, including the results of the Offer, our business and
financial position and general economic and market conditions. However, subject
to market conditions and the receipt of any necessary regulatory approvals, we
currently intend to redeem the Series F Preferred Stock at the earliest
practicable date.
Except as disclosed herein, or as may occur in the ordinary course of our
business, we currently have no plans or proposals that relate to or would result
in:
- an extraordinary transaction, such as a merger, reorganization or
liquidation, involving us or any of our subsidiaries;
- a purchase, sale or transfer of a material amount of our assets or any of
our subsidiaries;
- any material change in our present dividend rate or policy, indebtedness
or capitalization;
- any change in our present board of directors or management;
- any other material change in our corporate structure or business;
- a class of our equity security being delisted from a national securities
exchange or ceasing to be authorized to be quoted in an automated
quotations system of a registered national securities association;
- a class of our equity securities becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Exchange Act;
- the suspension of our obligation to file reports pursuant to Section
15(d) of the Exchange Act;
9
- the acquisition by any person of additional securities of ours or the
disposition of our securities; or
- any changes in our charter, bylaws or other governing instruments or
other actions that could impede the acquisition of control of us.
7. EFFECT OF THE OFFER ON THE MARKET FOR OUR PREFERRED STOCK; REGISTRATION
UNDER THE EXCHANGE ACT. The Series F Preferred Stock is not publicly traded,
listed on any exchange or quoted in any automated quotations system of a
registered national securities association. To the limited extent that the
Series F Preferred Stock is traded, if most of the outstanding shares are
tendered in the Offer and purchased by us, the liquidity of the trading market
for the remaining shares will likely be adversely affected due to the smaller
number of outstanding shares available for trading.
Our purchase of Series F Preferred Stock in the Offer will reduce the
number of shares of our preferred stock outstanding and may reduce the number of
shareholders. Nonetheless, there will be at least 300 holders of the other
outstanding series of our preferred stock after completion of the Offer.
Our common stock, Series F Preferred Stock and other series of preferred
stock are registered under the Exchange Act, which requires, among other things,
that we furnish certain information to our shareholders and the Securities &
Exchange Commission (the "SEC") and comply with the SEC's proxy rules in
connection with meetings of our shareholders. We believe that our purchase of
the Series F Preferred Stock in connection with the Offer will not result in our
preferred stock becoming eligible for deregistration under the Exchange Act.
8. CERTAIN INFORMATION ABOUT THE SERIES F PREFERRED STOCK. The Series F
Preferred Stock is not publicly traded, listed on any exchange or quoted in any
automated quotations system of a registered national securities association.
As of December 31, 2000 there were 6,000,000 shares of the Series F
Preferred Stock outstanding. All shares of Series F Preferred Stock are
currently held through the DTC.
9. CERTAIN INFORMATION CONCERNING PNC.
GENERAL. We are a Pennsylvania corporation with our principal offices at
One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2707.
We are a bank holding company registered under the Bank Holding Company Act
of 1956, as amended ("BHC Act"), and a financial holding company under the
recently enacted Gramm-Leach-Bliley Act. PNC was incorporated under the laws of
Pennsylvania in 1983 with the consolidation of Pittsburgh National Corporation
and Provident National Corporation. Since 1983, PNC has diversified its
geographical presence and product capabilities through strategic bank and
nonbank acquisitions and the formation of various nonbanking subsidiaries.
We are one of the largest diversified financial services companies in the
United States, operating community banking, corporate banking, real estate
finance, asset-based lending, wealth management, asset management and global
fund services businesses. PNC provides certain products and services nationally
and others in PNC's primary geographic markets in Pennsylvania, New Jersey,
Delaware, Ohio and Kentucky. We also provide certain products and services
internationally. At December 31, 2000, our consolidated total assets, deposits
and shareholders' equity were $69.8 billion, $47.7 billion and $6.7 billion,
respectively.
AVAILABLE INFORMATION. We are subject to the informational requirements of
the Exchange Act and in accordance therewith file periodic reports, proxy
statements and other information with the SEC relating to our business,
financial condition and other matters. We are required to disclose in such proxy
statements certain information, as of particular dates, concerning our directors
and officers, their remuneration, stock options granted to them, the principal
holders of our securities and any material interests of such persons in
transactions with us. Such reports, proxy statements and other information may
be inspected at the public reference facilities maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of such material
10
can also be obtained at prescribed rates from the Public Reference Section of
the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, or
free of charge at the Web site maintained by the SEC at http://www.sec.gov.
FORWARD-LOOKING STATEMENTS. This Offer to Purchase, documents referred to
herein and reports and other documents we file with the SEC include
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act with respect to future financial or business performance,
conditions, strategies, expectations and goals. In addition, we may also include
forward-looking statements in other written or oral statements. Forward-looking
statements are typically identified by words or phrases such as "believe,"
"expect," "anticipate," "intend," "estimate," "position," "target," "mission,"
"assume," "achievable," "potential," "strategy," "goal," "objective," "plan,"
"aspiration," "outlook," "outcome," "continue," "remain," "maintain," "strive,"
"trend," and variations of such words and similar expressions, or future or
conditional verbs such as "will," "would," "should," "could," "may" or similar
expressions.
We caution you that forward-looking statements are subject to numerous
assumptions, risks and uncertainties, which change over time. Actual results
could differ materially from those anticipated in forward-looking statements and
future results could differ materially from historical performance. Forward-
looking statements speak only as of the date they are made and we assume no duty
to update forward-looking statements.
In addition to factors we disclose here and those identified in the
periodic reports, proxy statements and other information we refer to above, the
following factors, among others, could cause actual results to differ materially
from forward-looking statements or historical performance: decisions PNC makes
with respect to the redeployment of available capital; changes in asset quality
and credit risk; economic changes; changes in financial and capital markets; the
inability to sustain revenue and earnings growth; changes in interest rates;
inflation; changes in values of assets under management and assets serviced;
relative investment performance of assets under management; customer acceptance
of PNC products and services; customer borrowing; repayment, investment and
deposit practices; customer disintermediation; valuations of debt and equity
investments; the inability to successfully manage risks inherent in our
business; the introduction, withdrawal, success and timing of business
initiatives and strategies; the extent and cost of any share repurchases;
decisions PNC makes with respect to further reductions of balance sheet leverage
and potential investments in PNC businesses; competitive conditions; the
inability to realize cost savings or revenue enhancements, implement integration
plans and other consequences associated with mergers, acquisitions,
restructurings and divestitures; and the impact, extent and timing of
technological changes, capital management activities and actions of the Federal
Reserve Board and legislative and regulatory actions and reforms. Further, an
increase in the number of customer or counterparty delinquencies, bankruptcies
or defaults could result in, among other things, a higher loan loss provision
and reduced profitability.
10. INTEREST OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND
ARRANGEMENTS CONCERNING SHARES. None of our officers, directors, or persons who
would be considered to be "controlling the corporation" own any of the Series F
Preferred Stock.
Based on our records and information provided to us by our directors,
executive officers, associates and subsidiaries, neither we, nor any of our
associates or subsidiaries, nor, to the best of our knowledge, any of our
directors or executive officers or any associates or subsidiaries thereof, have
effected any transactions in the Series F Preferred Stock during the 60 days
before March 6, 2001.
Except for outstanding options or other awards pursuant to benefit plans to
purchase shares of common stock granted to certain employees (including
executive officers) and except as otherwise described herein, neither we nor any
person controlling us nor, to our knowledge, any of our directors or executive
officers, is a party to any contract, arrangement, understanding or relationship
with any other person relating, directly or indirectly, to any of our
securities, including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, consents or authorizations.
11
11. SOURCE AND AMOUNT OF FUNDS. We will need approximately $303.0 million
to purchase all of the Series F Preferred Stock pursuant to the Offer and to pay
related fees and expenses, assuming a tender of 100% of the outstanding Series F
Preferred Stock. It is anticipated that such funds will be available through
retained earnings and other normal operating sources.
12. CONDITIONS TO THE OFFER. Notwithstanding any other provision of the
Offer, we will not be required to accept for payment or pay for any Series F
Preferred Stock tendered, and may terminate or amend and may postpone, subject
to the requirements of the Exchange Act for prompt payment for or return of
shares tendered, the acceptance for payment of Series F Preferred Stock
tendered, if at any time after March 6, 2001 and at or before the time when we
have accepted for payment all shares validly tendered, any of the following
shall have occurred:
1. there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or to us or any
of our subsidiaries, by any legislative body, court, authority, government
or governmental agency, authority or tribunal which, in our sole judgment,
would or might directly or indirectly (i) make the acceptance for payment
of, or payment for, some or all of the Series F Preferred Stock illegal or
otherwise restrict or prohibit consummation of the Offer, (ii) delay or
restrict our ability or render us unable to accept for payment or pay for
some or all of the Series F Preferred Stock, (iii) materially impair the
contemplated benefits of the Offer to us or (iv) in our reasonable
judgment, could materially and adversely affect the business, condition
(financial or otherwise), income, operations or prospects of us and our
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of our business or the business of any of
our subsidiaries or the Offer's contemplated benefits to us;
2. there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market, (ii) any significant decline in the
market price of our common or preferred stock or in the general level of
market prices of equity securities in the United States or abroad, (iii)
any change in the general political, market, economic or financial
condition in the United States or abroad that could have a material adverse
effect on our business, condition (financial or otherwise), income,
operations, prospects or ability to obtain financing generally or the
trading in our stock, (iv) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation on, or any event which, in our reasonable judgment, might affect
the extension of credit by lending institutions in the United States, (v)
the commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States or
(vi) in the case of any of the foregoing existing at the time of the
commencement of the Offer, in our reasonable judgment, a material
acceleration or worsening thereof;
3. there shall have occurred any event or events that has resulted, or
may in our reasonable judgment result, directly or indirectly, in an actual
or threatened change in the business, condition, financial or other,
income, operations, stock ownership or prospects of us and our
subsidiaries;
and, in our reasonable judgment, such event or events make it undesirable or
inadvisable to proceed with the Offer or with such acceptance for payment.
The foregoing conditions are for our benefit and we may assert them
regardless of the circumstances, including any action or inaction on our part
giving rise to any of these conditions, and we may waive any such condition, in
whole or in part, at any time and from time to time in our discretion. Our
failure at any time to exercise any of the foregoing rights shall not be deemed
a waiver of the right and each of these rights shall be deemed an ongoing right
which may be asserted at any time and from time to time. Any determination by us
concerning the events described above will be final and binding on all parties.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS. We are not aware of any
license or regulatory permit that appears to be material to our business that
might be adversely affected by our acquisition of
12
the Series F Preferred Stock as contemplated in the Offer or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for our
acquisition or ownership of Series F Preferred Stock as contemplated by the
Offer. Should any such approval or other action be required, we currently
contemplate that we will seek such approval or other action. We cannot predict
whether we may determine that we are required to delay the acceptance for
payment of, or payment for, Series F Preferred Stock tendered in the Offer
pending the outcome of any such matter. There can be no assurance that any such
approval or other action, if needed, would be obtained at all or without
substantial conditions or that the failure to obtain any such approval or other
action might not result in adverse consequences to our business. Our obligations
under the Offer to accept for payment and pay for Series F Preferred Stock are
subject to certain conditions. See Section 12, "Conditions to the Offer."
14. MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE
OFFER. The following discussion summarizes the material U.S. federal income tax
considerations that are generally applicable to holders of Series F Preferred
Stock who tender such Series F Preferred Stock for cash pursuant to the Offer.
You should be aware that this discussion does not deal with all federal income
tax considerations that may be relevant to particular shareholders in light of
their individual circumstances. In particular, this discussion does not address
the tax consequences of the Offer to holders of the Series F Preferred Stock who
are dealers in securities, are foreign persons, do not hold their Series F
Preferred Stock as capital assets, or who hold their Series F Preferred Stock as
part of an integrated investment comprised of the Series F Preferred Stock and
one or more other positions. Nor does this discussion address the tax
consequences of the Offer to any person under foreign, state or local tax laws.
ACCORDINGLY, YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC
TAX CONSEQUENCES TO YOU OF THE OFFER AND RELATED TRANSACTIONS.
In addition, this discussion applies only to "United States holders" (as
defined below). For purposes of this discussion, a "United States holder" means:
- a citizen or resident of the United States;
- a corporation or other entity taxable as a corporation created or
organized in the United States or under the laws of the United States or
of any political subdivision of the United States;
- an estate, the income of which is includible in gross income for United
States federal income tax purposes regardless of its source; or
- a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States persons who
have the authority to control all of its substantial decisions.
CHARACTERIZATION OF THE PURCHASE. Our purchase of a United States holder's
shares in the Offer will be a taxable transaction for United States federal
income tax purposes. As a consequence of the purchase, a United States holder
will, depending on its particular circumstances, be treated either as having
sold its Series F Preferred Stock or as having received a distribution in
respect of stock from the Company.
Under Section 302 of the Internal Revenue Code, a United States holder
whose Series F Preferred Stock is purchased by us in the Offer will be treated
as having sold its Series F Preferred Stock, and thus will recognize capital
gain or loss if the purchase:
- results in a "complete termination" of the United States holder's equity
interest in the Company; or
- is "not essentially equivalent to a dividend" with respect to the United
States holder.
Both of these tests, referred to as the "Section 302 tests," are explained in
more detail below.
If a United States holder satisfies either of the Section 302 tests
explained below under the caption "Section 302 Tests," the United States holder
will be treated as if it sold its Series F Preferred Stock to us and will
recognize capital gain or loss equal to the difference between the amount of
cash received in the Offer and the United States holder's adjusted tax basis in
the Series F Preferred Stock surrendered in exchange therefor. This gain or loss
will be long-term capital gain or loss if the United States holder's
13
holding period for the Series F Preferred Stock that was sold exceeds one year
as of the date of purchase by us in the Offer. Specified limitations apply to
the deductibility of capital losses by United States holders. Gain or loss must
be determined separately for each block of shares (shares acquired at the same
cost in a single transaction) that is purchased by us from a United States
holder in the Offer. United States holders should consult their tax advisors
concerning the mechanics and desirability of that determination.
If a United States holder does not satisfy any of the Section 302 tests
explained below, our purchase of that holder's Series F Preferred Stock in the
Offer will not be treated as a sale or exchange under Section 302 of the
Internal Revenue Code with respect to that holder. Instead, the entire amount
received by that holder with respect to our purchase of its Series F Preferred
Stock in the Offer will be treated as a dividend distribution to that holder
with respect to its Series F Preferred Stock under Section 301 of the Internal
Revenue Code, taxable at ordinary income tax rates to the extent of that
holder's share of our current and accumulated earnings and profits (within the
meaning of the Internal Revenue Code). To the extent the amount of the
distribution exceeds that holder's share of our current and accumulated earnings
and profits, the excess first will be treated as a tax-free return of capital to
the extent of that holder's adjusted tax basis in its Series F Preferred Stock
and any remainder will be treated as capital gain (which may be long-term
capital gain as described above). To the extent that our purchase of a United
States holder's Series F Preferred Stock in the Offer is treated as the receipt
by that holder of a dividend, the United States holder's adjusted tax basis in
the purchased Series F Preferred Stock will be added to any Series F Preferred
Stock retained by that holder, and, if the United States holder retains no
Series F Preferred Stock, the adjusted tax basis will be added to any other
stock of the Company owned by that holder.
CONSTRUCTIVE OWNERSHIP OF STOCK AND OTHER ISSUES. In applying each of the
Section 302 tests explained below, United States holders must take into account
not only Series F Preferred Stock and any other stock in the Company that they
actually own but also Series F Preferred Stock and any other stock in the
Company they are treated as owning under the constructive ownership rules of
Section 318 of the Internal Revenue Code. Under the constructive ownership
rules, a United States holder is treated as owning any Series F Preferred Stock
and any other stock in the Company that is owned (actually and in some cases
constructively) by certain related individuals and entities, as well as Series F
Preferred Stock and any other stock in the Company that the United States holder
has the right to acquire by exercise of an option or by conversion or exchange
of a security including any convertible stock or debt of the Company. Due to the
factual nature of the Section 302 tests explained below, United States holders
should consult their tax advisors to determine whether the purchase of their
Series F Preferred Stock in the Offer qualifies for sale treatment in their
particular circumstances.
SECTION 302 TESTS. One of the following tests must be satisfied with
respect to a United States holder in order for our purchase of Series F
Preferred Stock in the Offer to be treated as a sale or exchange by that holder
for federal income tax purposes:
Complete Termination Test. Assuming the United States holder actually or
constructively owns no other stock in the Company, aside from the Series F
Preferred Stock, our purchase of a United States holder's Series F Preferred
Stock in the Offer will result in a "complete termination" of that holder's
equity interest in the Company if (i) all of the Series F Preferred Stock that
is actually owned by the United States holder is sold to us in the Offer and
(ii) all of the Series F Preferred Stock that is constructively owned by the
United States holder, if any, is sold to us in the Offer or, with respect to
Series F Preferred Stock owned by certain related individuals, the United States
holder effectively waives, in accordance with Section 302(c) of the Internal
Revenue Code, attribution of Series F Preferred Stock which otherwise would be
considered as constructively owned by that holder. United States holders wishing
to satisfy the "complete termination" test through waiver of the constructive
ownership rules should consult their tax advisors.
Not Essentially Equivalent to a Dividend Test. The purchase of a United
States holder's Series F Preferred Stock in the Offer will be treated as "not
essentially equivalent to a dividend" if the reduction in
14
the United States holder's proportionate interest in the Company as a result of
the purchase constitutes a "meaningful reduction" given the United States
holder's particular circumstances. Whether the receipt of cash by a shareholder
who sells Series F Preferred Stock in the Offer will be "not essentially
equivalent to a dividend" will depend upon a shareholder's particular facts and
circumstances. The IRS has indicated in a published revenue ruling that even a
small reduction in the percentage interest of a shareholder whose relative stock
interest in a publicly held corporation is minimal (for example, an interest of
less than 1%) and who exercises no control over corporate affairs should
constitute a "meaningful reduction." United States holders should consult their
tax advisors as to the application of this test in their particular
circumstances.
CORPORATE SHAREHOLDER DIVIDEND TREATMENT. In the case of a corporate
United States holder, to the extent that any amounts received in the Offer are
treated as a dividend, such holder may be eligible for the dividends-received
deduction. The dividends-received deduction is subject to certain limitations.
In addition, any amount received by a corporate United States holder pursuant to
the Offer that is treated as a dividend may constitute an "extraordinary
dividend" under Section 1059 of the Internal Revenue Code. Corporate United
States holders should consult their own tax advisors as to the application of
Section 1059 of the Internal Revenue Code to the Offer, and as to the tax
consequences of dividend treatment in their particular circumstances.
BACKUP WITHHOLDING. Under certain circumstances, holders of the Series F
Preferred Stock may be subject to backup withholding at a 31% rate with respect
to the amount of consideration received pursuant to the Offer, unless the holder
provides proof of an applicable exemption or a correct taxpayer identification
number and otherwise complies with applicable requirements of the backup
withholding rules. Amounts withheld under the backup withholding rules are not
an additional tax and may be refunded or credited against the holder's federal
income tax liability, provided the required information is furnished to the
Internal Revenue Service.
15. DEALER-MANAGER; INFORMATION AGENT; FEES AND EXPENSES. Merrill Lynch &
Co. is acting as our financial advisor and as Dealer-Manager in connection with
the Offer. We have agreed to pay Merrill Lynch as compensation for its services
as financial advisor and as Dealer-Manager in connection with the Offer a
customary fee. We have has also agreed to reimburse Merrill Lynch for certain
reasonable out-of-pocket expenses incurred in connection with the Offer and to
indemnify Merrill Lynch against certain liabilities, including certain
liabilities under the federal securities laws.
We have retained Mellon to act as the Information Agent and the Depositary
in connection with the Offer. The Information Agent may contact holders of the
Series F Preferred Stock by mail, telephone, facsimile, email, telex, telegraph
and personal interviews and may request brokers, dealers, banks, trust companies
and other nominees to forward materials relating to the Offer to beneficial
owners. Mellon will receive reasonable and customary compensation for its
services as Information Agent and Depositary, will be reimbursed for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities in connection therewith, including certain liabilities under the
federal securities laws.
At any given time, Merrill Lynch and Mellon may each trade our common or
preferred stock for its own account or for the account of its customers and,
accordingly, may hold a long or short position in our stock.
16. MISCELLANEOUS. The Offer is not being made to, nor will tenders be
accepted from or on behalf of, holders of Series F Preferred Stock in any
jurisdiction in which the making of the Offer or acceptance thereof would not be
in compliance with the laws of such jurisdiction. However, we may, in our
discretion, take such action as we may deem necessary to make the Offer in any
such jurisdiction and extend the Offer to holders of Series F Preferred Stock in
such jurisdiction.
No person has been authorized to give any information or make any
representation on our behalf not contained in this Offer to Purchase or in the
Letter of Transmittal and, if given or made, such information or representation
must not be relied upon as having been authorized.
15
Pursuant to Rule 13e-4 promulgated under the Exchange Act, PNC has filed
with the SEC an Issuer Tender Offer Statement on Schedule TO which contains
additional information with respect to the Offer. The Schedule TO, including the
exhibits and any amendments and supplements to that document, may be examined,
and copies may be obtained, at the same places and in the same manner as is set
forth in Section 9, "Certain Information Concerning PNC."
THE PNC FINANCIAL SERVICES GROUP, INC.
March 6, 2001
16
The Letter of Transmittal and Certificates representing Series F Preferred
Stock and any other required documents should be sent to the Depositary at one
of the addresses set forth below:
The Depositary for the Offer is:
MELLON INVESTOR SERVICES LLC
By facsimile:
(201) 296-4293
Confirm facsimile by
telephone ONLY:
(201) 296-4860
Questions regarding the terms of this Offer should be directed to the
Liability Management Group of Merrill Lynch & Co., the Dealer-Manager for this
Offer, at (888) ML4-TNDR or (212) 499-4914. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
Requests for additional copies of this Offer to Purchase, the Letter of
Transmittal or any related documents and questions regarding the procedures for
tendering Series F Preferred Stock, should be directed to Mellon, the
Information Agent for the Offer, at (888) 232-7136.
The Information Agent for the Offer is:
MELLON INVESTOR SERVICES LLC
44 Wall Street -- 7th Floor
New York, NY 10005
(917) 320-6286 (banks and brokers)
(888) 232-7136 (toll free)
The Dealer-Manager for the Offer is:
MERRILL LYNCH & CO.
4 World Financial Center, 7th Floor
New York, NY 10080
(888) ML4-TNDR (654-8637)
(212) 449-4914
Attention: Liability Management Group