Kaman Corporation Announces Substitute Recapitalization Proposal
29 July 2005 - 8:06AM
PR Newswire (US)
Kaman Corporation Announces Substitute Recapitalization Proposal
BLOOMFIELD, Conn., July 28 /PRNewswire-FirstCall/ -- In connection
with the recapitalization agreement between Kaman Corporation
(NASDAQ:KAMNA) and members of the Kaman family that was previously
announced on June 7, 2005, the company reported today that the
corporation's board of directors has approved a "substitute
recapitalization proposal", as permitted under the recapitalization
agreement. As previously reported, on June 28, 2005 the Company
received a letter from Kaman family representatives indicating that
the family intended to terminate the recapitalization agreement in
order to complete what they represented as a "qualifying
alternative transaction" contemplating a purchase of all of the
667,814 outstanding shares of the Company's Class B common stock
for $55.00 per share in cash. As permitted under the
recapitalization agreement, the corporation's Board of Directors
submitted questions to arbitration as to whether or not the
proposed alternative transaction constituted a "qualifying
alternative transaction" under the recapitalization agreement. On
July 22, 2005, the arbiter confirmed that the alternative
transaction was a "qualifying alternative transaction". Under the
recapitalization agreement, the Company had a period of five
business days within which to approve a "substitute
recapitalization proposal" with a minimum value per Class B common
share of at least the value per share of the "qualifying
alternative transaction" plus $.65, with both all stock and part
stock/part cash alternatives and subject to customary closing
conditions, including the vote of more shares of Class A common
stock in favor than against the recapitalization and the vote of
more shares of Class B common stock in favor than against the
recapitalization, each such class voting separately. The Kaman
family agreed to support any "substitute recapitalization proposal"
approved by the Board of Directors. The board has approved a
"substitute recapitalization proposal" with the equivalent value of
$55.65 per share that increases the number of voting common shares
into which each share of Class B common stock would be converted.
For this purpose, one share of the voting stock would be valued at
$15.54, which was the average closing price for the Class A common
stock over the ten trading day period prior to the recapitalization
agreement being signed. Accordingly, the "substitute
recapitalization proposal" has an exchange ratio of 3.58 voting
common shares for each share of Class B common stock and a part
stock/part cash alternative under which holders would have the
right to elect instead to receive for each of their shares of Class
B common stock 1.84 voting common shares and $27.10 in cash. The
Kaman family has agreed to make the part stock/part cash election
in an amount directed by the Company so as to avoid application of
the higher voting requirement of Section 33-841 of the Connecticut
Business Corporation Act. In that regard, the company has advised
the Kaman family that the minimum part stock/part cash election for
them collectively is 516,735 shares, which means that the Kaman
family is free to make either election for their remaining 34,976
shares. "After appropriate deliberation, the board came to the
conclusion that the recapitalization proposal continues to be in
the best interest of all shareholders. Shareholders will now have
the opportunity to approve the recapitalization proposal in order
to eliminate the existing dual class structure and provide all
shareholders with voting control proportionate to their economic
interest in the company," stated Paul R. Kuhn, Kaman's chairman,
president and chief executive officer. Kuhn added, "The Company has
continued to achieve progress, and as a result the dividend was
increased in June, as previously announced. By approving a
one-share one-vote capital structure, I believe shareholders would
be setting the stage for the financial markets to properly value
the Company going forward." Further detail on the proposed
recapitalization and recapitalization agreement can be found in the
recapitalization agreement, which was filed as Exhibit 2.1 to a
Form 8-K filed by the company on June 8, 2005. Based in Bloomfield,
Conn., Kaman Corporation conducts business in the aerospace,
industrial distribution and music markets. Kaman operates its
aerospace business through its Aerostructures, Fuzing, and
Helicopters divisions and its Kamatics subsidiary providing
subcontract aerostructure manufacturing for military and commercial
aircraft, missile and bomb fuzing products, SH-2G and K-MAX
helicopters, and proprietary aircraft bearings and products.
Principal aerospace facilities are located in Connecticut, Florida
and Kansas. Kaman is the third largest North American distributor
of power transmission, motion control, material handling and
electrical components and a wide range of bearings offered to a
customer base of more than 50,000 customers representing a highly
diversified cross-section of North American industry, with
principal facilities in Alabama, California, Connecticut, New York,
Indiana, Kentucky and Utah. Kaman is also the largest independent
distributor of musical instruments and accessories, offering more
than 17,500 products for amateurs and professionals, with principal
facilities in Arizona, Connecticut, California, New Jersey and
Tennessee. Forward-Looking Statements This release may contain
forward-looking information relating to the corporation's business
and prospects, including aerostructures and helicopter subcontract
programs and components, advanced technology products, the SH-2G
and K-MAX helicopter programs, the industrial distribution and
music businesses, operating cash flow, the benefits of the
recapitalization transaction, and other matters that involve a
number of uncertainties that may cause actual results to differ
materially from expectations. Those uncertainties include, but are
not limited to: 1) the successful conclusion of competitions for
government programs and thereafter contract negotiations with
government authorities, both foreign and domestic; 2) political
conditions in countries where the corporation does or intends to do
business; 3) standard government contract provisions permitting
renegotiation of terms and termination for the convenience of the
government; 4) economic and competitive conditions in markets
served by the corporation, particularly defense, commercial
aviation, industrial production and consumer market for music
products, as well as global economic conditions; 5) satisfactory
completion of the Australian SH-2G(A)program, including successful
completion and integration of the full ITAS software; 6) receipt
and successful execution of production orders for the JPF U.S.
government contract including the exercise of all contract options
and receipt of orders from allied militaries, as both have been
assumed in connection with goodwill impairment evaluations; 7)
satisfactory resolution of the EODC/University of Arizona
litigation; 8) achievement of enhanced business base in the
Aerospace segment in order to better absorb overhead and general
and administrative expenses, including successful execution of the
contract with Sikorsky for the BLACK HAWK Helicopter program; 9)
satisfactory results of negotiations with NAVAIR concerning the
corporation's leased facility in Bloomfield, Conn.; 10) profitable
integration of acquired businesses into the Corporation's
operations; 11) changes in supplier sales or vendor incentive
policies; 12) the effect of price increases or decreases; 13)
pension plan assumptions and future contributions; 14) continued
availability of raw materials in adequate supplies; 15)
satisfactory resolution of the supplier switch and incorrect part
issues at Dayron and the DCIS investigation; 16) cost growth in
connection with potential environmental remediation activities
related to the Bloomfield and Moosup facilities; 17) successful
replacement of the Corporation's revolving credit facility upon its
expiration in November 2005; 18) risks associated with the course
of litigation; 19) changes in laws and regulations, taxes, interest
rates, inflation rates, general business conditions and other
factors; 20) the effects of currency exchange rates and foreign
competition on future operations; and 21) other risks and
uncertainties set forth in Kaman's annual, quarterly and current
reports, and proxy statements. Any forward-looking information
provided in this release should be considered with these factors in
mind. The corporation assumes no obligation to update any
forward-looking statements contained in this release. The
Corporation intends to file with the Securities and Exchange
Commission a Registration Statement on Form S-4, which will contain
a proxy statement/prospectus in connection with the proposed
recapitalization. The proxy statement/prospectus will be mailed to
the stockholders of Kaman when it is finalized. STOCKHOLDERS OF
KAMAN ARE ADVISED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT
BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION.
Such proxy statement/prospectus (when available) and other relevant
documents may also be obtained, free of charge, on the Securities
and Exchange Commission's website (http://www.sec.gov/) or by
request from the contact listed below. Kaman and certain persons
may be deemed to be participants in the solicitation of proxies
relating to the proposed recapitalization. The participants in such
solicitation may include Kaman's executive officers and directors.
Further information regarding persons who may be deemed
participants will be available in Kaman's proxy
statement/prospectus to be filed with the Securities and Exchange
Commission in connection with the proposed recapitalization.
http://www.kaman.com/ DATASOURCE: Kaman Corporation CONTACT:
Russell H. Jones, SVP, Chief Investment Officer & Treasurer of
Kaman Corporation, +1-860-243-6307, Web site: http://www.kaman.com/
Company News On-Call: http://www.prnewswire.com/comp/480450.html
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