UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, DC
20549
___________________
SCHEDULE
14D-9
SOLICITATION/RECOMMENDATION
STATEMENT UNDER
SECTION
14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment
No. 5)
TODD
SHIPYARDS CORPORATION
(Name of
Subject Company)
TODD
SHIPYARDS CORPORATION
(Name of
Person Filing Statement)
Common
Stock, Par Value $0.01 Per Share
(Title of
Class of Securities)
889039103
(CUSIP
Number of Class of Securities)
___________________
Michael
G. Marsh
Secretary
and General Counsel
TODD
SHIPYARDS CORPORATION
1801-16th
Avenue SW
Seattle,
WA 98134
(206)
623-1635
(Name,
address, and telephone numbers of person authorized to receive
notices
and communications on behalf of filing persons)
Copy
to:
Phillip
R. Stanton, Esq.
Greensfelder,
Hemker & Gale, P.C.
10
South Broadway, Suite 2000
St.
Louis, Missouri 63102
(314)241-9090
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Check
the box if the filing relates solely to preliminary communications made
before the commencement of a tender offer
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Introduction
This
Amendment No. 5 (this “Amendment”) amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 (as amended or
supplemented from time to time, the “Schedule”) originally filed with the U.S.
Securities and Exchange Commission (the “SEC”) by Todd Shipyards Corporation, a
Delaware corporation (the “Company”), on December 30, 2010, as amended by
Amendment No. 1 filed with the SEC on January 11, 2011, as further amended by
Amendment No. 2 filed with the SEC on January 14, 2011, as further amended by
Amendment No. 3 filed with the SEC on January 21, 2011, and as further amended
by Amendment No. 4 filed with the SEC on January 25, 2011. The
Schedule relates to the offer by Nautical Miles, Inc., a Delaware corporation
(“Purchaser”) and a wholly-owned subsidiary of Vigor Industrial LLC, an Oregon
limited liability company (“Parent”), to purchase for cash all outstanding
Shares at a price of $22.27 per Share (the “Offer Price”), net to the
stockholder in cash, without interest and less any applicable withholding and
transfer taxes, payable by Purchaser upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated December 30, 2010 and the
related Letter of Transmittal, in each case as amended, copies of which are
attached to the Tender Offer Schedule on Schedule TO filed by Parent and certain
of its affiliates, including Purchaser, with the SEC on December 30,
2010.
Except as
otherwise set forth below, the information set forth in the Schedule remains
unchanged and is incorporated herein by reference as relevant to the items in
this Amendment. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Schedule.
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ITEM
4.
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THE SOLICITATION OR
RECOMMENDATION
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Item 4,
“
The Solicitation or
Recommendation
” is hereby amended by replacing the fifth paragraph under
the heading “
(b) Background of
the Transaction, Negotiations with Parent
” with the
following:
“On June
4, 2010, representatives of Parent met with representatives of the
Company. In attendance on behalf of Parent were Mr. Foti, Mr. Joe
O’Rourke (Senior Vice President for Business Development), Mr. Bruce Dummer
(Senior Vice President, Finance) and, on behalf of the Company, Mr. Welch and
Mr. Lehrer. At the meeting, the parties discussed the structure of a possible
transaction, the method by which Parent would finance the transaction, the
necessary steps in acquiring a publicly traded corporation, the particular areas
of emphasis for due diligence and the method of valuing the
company. Representatives of Parent expressed that their approach to
valuing the Company would be to use multiple of 5 to 6 times adjusted
EBITDA. Representatives of the Company said the multiple should be at
least 6 times adjusted EBITDA and that the valuation should consider the
Company’s cash. At the meeting, it was determined that the parties
would sign confidentiality agreements that would provide for a confidential
exchange of information between the parties and provide for the non-disclosure
of discussions concerning a possible transaction.”
Item 4,
“
The Solicitation or
Recommendation
” is hereby amended by replacing the eighth main bullet
point under the heading “
(c)
Reasons for the Recommendation of the Company Board
” with the
following
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“•
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the
fact that the Company’s short term and long term projections indicate
peaking revenue as existing and projected contracts are performed and
there are not indications of replacement contracts for certain work, as
well as declining profitability due to the relatively fixed nature of
indirect costs;”
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Item 4,
“
The Solicitation or
Recommendation - (e) Opinion of Financial Advisor”
is hereby
amended by deleting such subsection (e) and replacing such subsection (e) with
the following:
“
(e)
Opinion of Financial
Advisor
On
December 21, 2010, Houlihan Lokey rendered an oral opinion to the Transaction
Committee and the Company Board (which was confirmed in writing by delivery of
Houlihan Lokey’s written opinion dated December 21, 2010), to the effect that,
as of December 21, 2010, based upon and subject to the procedures followed,
assumptions made, qualifications and limitations on the review undertaken and
other matters considered by Houlihan Lokey in preparing its opinion, the
consideration to be received by the holders of Company Common Stock (other than
Parent, Purchaser and their respective affiliates) in the Offer and the Merger
was fair, from a financial point of view, to the holders of Company Common Stock
(other than Parent, Purchaser and their respective affiliates).
Houlihan
Lokey’s opinion was directed to the Transaction Committee and the Company Board
and only addressed the fairness, from a financial point of view, of the
consideration to be received by the holders of Company Common Stock (other than
Parent, Purchaser and their respective affiliates) in the Offer and the Merger
and does not address any other aspect or implication of the Offer or the Merger.
The summary of Houlihan Lokey’s opinion in this Schedule is qualified in its
entirety by reference to the full text of its written opinion, which is included
as Annex II to this Schedule and sets forth the procedures followed, assumptions
made, qualifications and limitations on the review undertaken and other matters
considered by Houlihan Lokey in preparing its opinion. We encourage Company
stockholders to carefully read the full text of Houlihan Lokey’s written
opinion. However, neither Houlihan Lokey’s opinion nor the summary of its
opinion and the related analyses set forth in this Schedule are intended to be,
and do not constitute advice or a recommendation to the Transaction Committee or
the Company Board or any stockholder as to how to act or vote or make any
election with respect to any matter relating to, or whether to tender Shares in
connection with, the Offer or the Merger.
In
arriving at its opinion, Houlihan Lokey, among other things:
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reviewed
a draft dated December 20, 2010 of the Merger
Agreement;
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reviewed
certain publicly available business and financial information relating to
the Company that Houlihan Lokey deemed to be
relevant;
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·
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reviewed
certain information relating to the historical, current and future
operations, financial condition and prospects of the Company made
available to Houlihan Lokey by the Company, including financial
projections (and adjustments thereto) prepared by or discussed with the
management of the Company relating to the Company for the fiscal years
ending 2011 through 2015;
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·
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spoke
with certain members of the management of the Company and certain of its
representatives and advisors regarding the business, operations, financial
condition and prospects of the Company, the Offer and the Merger and
related matters;
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·
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compared
the financial and operating performance of the Company with that of other
public companies that Houlihan Lokey deemed to be
relevant;
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·
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considered
the publicly available financial terms of certain transactions that
Houlihan Lokey deemed to be
relevant;
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·
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reviewed
the current and historical market prices and trading volume for certain of
the Company’s publicly traded securities, and the current and historical
market prices and trading volume of the publicly traded securities of
certain other companies that Houlihan Lokey deemed to be relevant;
and
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·
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conducted
such other financial studies, analyses and inquiries and considered such
other information and factors as Houlihan Lokey deemed
appropriate.
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Houlihan
Lokey relied upon and assumed, without independent verification, the accuracy
and completeness of all data, material and other information furnished, or
otherwise made available, to Houlihan Lokey, discussed with or reviewed by
Houlihan Lokey, or publicly available, and did not assume any responsibility
with respect to that data, material and other information. In addition,
management of the Company advised Houlihan Lokey, and Houlihan Lokey assumed,
that the financial projections (and adjustments thereto) reviewed by Houlihan
Lokey were reasonably prepared in good faith on bases reflecting the most likely
currently available estimates and judgments of the management of the Company as
to the future financial results and condition of the Company, and Houlihan Lokey
expressed no opinion with respect to those projections or the assumptions on
which they were based. Houlihan Lokey relied upon and assumed, without
independent verification, that there had been no change in the business, assets,
liabilities, financial condition, results of operations, cash flows or prospects
of the Company since the respective dates of the most recent financial
statements and other information, financial or otherwise, provided to Houlihan
Lokey that would be material to Houlihan Lokey’s analyses or its opinion, and
that there was no information or any facts that would make any of the
information reviewed by Houlihan Lokey incomplete or misleading.
Houlihan
Lokey relied upon and assumed, without independent verification, that (a) the
representations and warranties of all parties to the Merger Agreement and all
other related documents and instruments that are referred to therein are true
and correct, (b) each party to the Merger Agreement and the other related
documents and instruments that are referred to therein will fully and timely
perform all of the covenants and agreements required to be performed by that
party, (c) all conditions to the consummation of the Offer and the Merger will
be satisfied without waiver thereof, and (d) the Offer and the Merger will be
consummated in a timely manner in accordance with the terms described in the
Merger Agreement and the other related documents and instruments that are
referred to therein, without any amendments or modifications thereto, in each
case other than as would not be material to Houlihan Lokey’s analysis or its
opinion. Houlihan Lokey also relied upon and assumed, without independent
verification, that (i) each of the Offer and the Merger will be consummated in a
manner that complies in all respects with all applicable federal and state
statutes, rules and regulations, and (ii) all governmental, regulatory, and
other consents and approvals necessary for the consummation of the Offer and the
Merger will be obtained and that no delay, limitations, restrictions or
conditions will be imposed or amendments, modifications or waivers made that
would result in the disposition of any material portion of the assets of the
Company, or otherwise have an effect on the Company or any expected benefits of
the Offer and the Merger that would be material to Houlihan Lokey’s analyses or
its opinion. In addition, Houlihan Lokey relied upon and assumed, without
independent verification, that the final form of the Merger Agreement would not
differ in any respect material to Houlihan Lokey’s analysis or its opinion from
the draft of the Merger Agreement identified above.
Furthermore,
in connection with its opinion, Houlihan Lokey was not requested to make, and
did not make, any physical inspection or independent appraisal or evaluation of
any of the assets, properties or liabilities (fixed, contingent, derivative,
off-balance-sheet or otherwise) of the Company or any other party, nor was
Houlihan Lokey provided with any such appraisal or evaluation. Houlihan Lokey
did not estimate, and expressed no opinion regarding, the liquidation value of
any entity or business. Houlihan Lokey undertook no independent analysis of any
potential or actual litigation, regulatory action, possible unasserted claims or
other contingent liabilities, to which the Company is or may be a party or is or
may be subject, or of any governmental investigation of any possible unasserted
claims or other contingent liabilities to which the Company is or may be a party
or is or may be subject.
Houlihan
Lokey was not requested to, and did not, (a) initiate or participate in any
discussions or negotiations with, or solicit any indications of interest from,
third parties with respect to the Offer or the Merger, the securities, assets,
businesses or operations of the Company or any other party, or any alternatives
to the Offer or the Merger, (b) negotiate the terms of the Offer or the Merger,
or (c) advise the Transaction Committee, the Company Board or any other party
with respect to alternatives to the Offer or the Merger. Houlihan Lokey’s
opinion was necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to Houlihan Lokey
as of, the date of its opinion. Houlihan Lokey did not undertake, and is under
no obligation, to update, revise, reaffirm or withdraw its opinion, or otherwise
comment on or consider events occurring or coming to Houlihan Lokey’s attention
after the date of its opinion.
Houlihan
Lokey’s opinion was furnished for the use and benefit of the Transaction
Committee and the Company Board (solely in their capacities as such) in
connection with their consideration of the Offer and the
Merger. Houlihan Lokey’s opinion should not be construed as creating
any fiduciary duty on Houlihan Lokey’s part to any party.
Houlihan
Lokey was not requested to opine as to, and its opinion does not express an
opinion as to or otherwise address, among other things: (i) the underlying
business decision of the Transaction Committee, the Company Board, the Company,
Parent, their respective security holders or any other party to proceed with or
effect the Offer or the Merger, (ii) the terms of any arrangements,
understandings, agreements or documents related to, or the form, structure or
any other portion or aspect of, the Offer or the Merger or otherwise (other than
the Offer Price and Merger Consideration to the extent expressly specified in
Houlihan Lokey’s opinion), (iii) the fairness of any portion or aspect of the
Offer or the Merger to the holders of any class of securities, creditors or
other constituencies of the Company, Parent or to any other party, except as
expressly set forth in the last sentence of Houlihan Lokey’s opinion, (iv) the
relative merits of the Offer and the Merger as compared to any alternative
business strategies that might exist for the Company, Parent or any other party
or the effect of any other transaction in which the Company, Parent or any other
party might engage, (v) the fairness of any portion or aspect of the Offer or
the Merger to any one class or group of the Company’s, Parent’s or any other
party’s security holders vis-à-vis any other class or group of the Company’s,
Parent’s or such other party’s security holders (including, without limitation,
the allocation of any consideration amongst or within such classes or groups of
security holders), (vi) whether or not the Company, Parent, their respective
security holders or any other party is receiving or paying reasonably equivalent
value in the Offer or the Merger, (vii) the solvency, creditworthiness or fair
value of the Company, Parent or any other participant in the Offer or the
Merger, or any of their respective assets, under any applicable laws relating to
bankruptcy, insolvency, fraudulent conveyance or similar matters, or (viii) the
fairness, financial or otherwise, of the amount, nature or any other aspect of
any compensation to or consideration payable to or received by any officers,
directors or employees of any party to the Offer or the Merger, any class of
such persons or any other party, relative to the Offer Price and Merger
Consideration or otherwise. Furthermore, no opinion, counsel or interpretation
was intended in matters that require legal, regulatory, accounting, insurance,
tax or other similar professional advice. It was assumed that such opinions,
counsel or interpretations have been or will be obtained from the appropriate
professional sources. Furthermore, Houlihan Lokey relied, with the consent of
the Transaction Committee and the Company Board, on the assessments by the
Transaction Committee, the Company Board, the Company and their respective
advisors, as to all legal, regulatory, accounting, insurance and tax matters
with respect to the Company and the Offer and the Merger. The issuance of
Houlihan Lokey’s opinion was approved by a committee authorized to approve
opinions of that nature.
In
preparing its opinion to the Transaction Committee and the Company Board,
Houlihan Lokey performed a variety of analyses, including those described
below. The preparation of a fairness opinion is a complex process
involving various quantitative and qualitative judgments and determinations with
respect to the financial, comparative and other analytical methods employed and
the adaptation and application of these methods to the unique facts and
circumstances presented. As a consequence, neither a fairness opinion nor its
underlying analyses is readily susceptible to summary description. Houlihan
Lokey arrived at its opinion based on the results of all analyses undertaken by
it and assessed as a whole and did not draw, in isolation, conclusions from or
with regard to any individual analysis, methodology or factor. Accordingly,
Houlihan Lokey believes that its analyses and the following summary must be
considered as a whole and that selecting portions of its analyses, methodologies
and factors, without considering all analyses, methodologies and factors, could
create a misleading or incomplete view of the processes underlying Houlihan
Lokey’s analyses and opinion. Each analytical technique has inherent
strengths and weaknesses, and the nature of the available information may
further affect the value of particular techniques.
The
following is a summary of the material analyses reviewed by Houlihan Lokey with
the Transaction Committee and the Company Board in connection with Houlihan
Lokey’s opinion rendered on December 21, 2010. The order of the analyses does
not represent relative importance or weight given to those analyses by Houlihan
Lokey. The analyses summarized below include information presented in
tabular format. The tables alone do not constitute a complete description of the
analyses. Considering the data in the tables below without considering the full
narrative description of the analyses, as well as the methodologies underlying,
and the assumptions, qualifications and limitations affecting, each analysis,
could create a misleading or incomplete view of Houlihan Lokey’s
analyses.
For
purposes of its analyses, Houlihan Lokey reviewed a number of financial and
operating metrics, including:
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Enterprise
value calculated as the value of the relevant company’s outstanding equity
securities (taking into account its outstanding warrants and other
convertible securities) based on the relevant company’s closing stock
price (“equity value”) plus net debt (calculated as outstanding
indebtedness, preferred stock and capital lease obligations less the
amount of unrestricted cash on its balance sheet), plus net after-tax
pension liability as of a specified
date.
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Earnings
before interest, taxes, depreciation, and amortization
(“EBITDA”).
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Earnings
before interest, taxes, depreciation, amortization and pension expense
adjusted for certain non-recurring items (“adjusted
EBITDA”).
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Unless
the context indicates otherwise, enterprise values derived from the selected
companies analysis described below were calculated using the closing price of
Company Common Stock and the common stock of the selected shipbuilding and
repair companies and selected defense contracting companies listed below as of
December 20, 2010, and transaction values for the target companies derived from
the selected transactions analysis described below were calculated as of the
announcement date of the relevant transaction based on the estimated enterprise
value as of such date, using the purchase prices to be paid for the target
companies’ stock in the selected transactions, instead of closing stock
prices. Accordingly, this information may not reflect current or
future market conditions. Estimates of 2011 and 2012 adjusted EBITDA for the
Company were based on estimates provided by our management for fiscal years 2011
and 2012. Estimates of 2011 and 2012 adjusted EBITDA for the selected
shipbuilding and repair companies and selected defense contracting companies
listed below were based on certain publicly available research analyst estimates
for those shipbuilding and repair companies and defense contracting
companies.
For each
analysis described below, Houlihan Lokey made several adjustments to the
respective selected enterprise value reference range to arrive at an implied per
share reference range. These adjustments included assuming the
addition of (i) $41.9 million of total cash and securities, (ii) less $8.6
million of restricted cash, which was comprised of escrow funds held for (a)
certain environmental clean up costs, and (b) satisfaction of subcontractor
claims as part of the Company’s on-going business, (iii) less $11.4 million of
deposits for project performance requirements, (iv) plus $3.3 million of
overfunded pension, and (v) less $0.5 million payable to holders of stock
appreciation rights, together with assuming outstanding common shares of 5.8
million.
Selected
Companies Analysis
. Houlihan Lokey calculated multiples of enterprise
value based on certain financial data for the Company and the only publicly
traded shipbuilding and repair companies identified by Houlihan Lokey that have
significant U.S. operations, as well as selected defense contracting
companies. Houlihan Lokey reviewed selected defense contracting
companies because of the amount of their businesses attributable to contracts
with the U.S. government, together with a large amount of their revenues derived
from “cost-type” contracts.
The
calculated multiples included:
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Enterprise
value as a multiple of adjusted EBITDA for the latest 12 month period for
which financial information has been made public as of December 20, 2010
(“LTM”).
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Enterprise
value as a multiple of estimated adjusted EBITDA for the year ending March
31, 2011 (“2011E”).
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Enterprise
value as a multiple of estimated adjusted EBITDA for the year ending March
31, 2012 (“2012E”).
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The list
of selected companies and the related financial data for such selected companies
are set forth below.
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Shipbuilding
and Repair Companies
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Austal
Ltd.(1)
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10.4
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x
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9.2
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x
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6.4
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x
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Conrad
Industries Inc.(2)
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1.8
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x
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NA
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(3)
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NA
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Defense
Contracting Companies
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BAE
Systems plc(4)
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6.0
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x
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5.8
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x
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5.7
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x
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General
Dynamics Corp.
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6.5
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x
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6.3
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x
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6.1
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x
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Lockheed
Martin Corporation
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5.1
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x
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5.4
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x
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5.7
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x
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Northrop
Grumman Corporation
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5.1
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x
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5.1
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x
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4.8
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x
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Oshkosh
Corporation
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2.4
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x
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3.5
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x
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5.3
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x
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Force
Protection Inc.
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4.5
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x
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5.6
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x
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NA
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(1) Austal
Ltd. (“Austal”) is traded on the Australian stock
exchange. Approximately 91% of year revenue for the year ended June
30, 2010 related to shipbuilding and repair. Approximately 51% of
revenue for the year ended June 30, 2010 related to U.S. government
contracts. In October 2010, U.S. Navy notified Austal to begin
construction of the fourth and fifth warships pursuant to an agreement that may
result in construction of up to 10 warships for the U.S. Navy.
(2) Approximately
100% of revenue for the year ended December 31, 2009 related to shipbuilding and
repair. Approximately 19% of revenue for the year ended
December 31, 2009 related to U.S. government contracts.
(3) For
purposes of the tables in this Schedule, “NA” means “not
available.”
(4) BAE
Systems plc is traded on the London Stock Exchange.
The
calculated multiple ranges and averages for the selected defense contracting
companies were as follows:
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Enterprise
Value to LTM Adjusted EBITDA multiple
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2.4
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x
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6.5
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x
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4.9
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x
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5.1
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x
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Enterprise
Value to 2011E Adjusted EBITDA multiple
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3.5
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x
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6.3
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x
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5.3
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x
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5.5
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x
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Enterprise
Value to 2012E Adjusted EBITDA multiple
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4.8
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x
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6.1
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x
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5.5
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x
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5.7
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x
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Houlihan
Lokey applied the following selected multiple ranges derived from the selected
companies analysis to corresponding financial data for the
Company. Houlihan Lokey selected multiple ranges primarily by
reference to Conrad Industries Inc., the selected company most comparable to the
Company, and, to a lesser extent, Oshkosh Corporation and Force Protection Inc.,
the smallest of the selected defense contracting companies. This
analysis indicated the following implied enterprise value reference ranges for
the Company:
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Selected
Implied
Enterprise
Value
Reference
Range
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(in
millions)
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Enterprise
Value to LTM Adjusted EBITDA multiple
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3.0x
- 4.0x
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$
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86.8
- $115.8
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Enterprise
Value to 2011E Adjusted EBITDA multiple
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3.0x
- 4.0x
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$
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80.4
- $107.2
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Enterprise
Value to 2012E Adjusted EBITDA multiple
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3.5x
- 4.5x
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$
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86.2
- $110.8
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This
analysis, after the adjustments described above, resulted in the following
implied per share reference ranges for the Company, as compared to the per share
consideration payable in the Offer and the Merger:
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Implied
Per Share
Reference
Range for
the
Company
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Enterprise
Value to LTM Adjusted EBITDA multiple
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$
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19.20
– $24.18
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$
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22.27
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Enterprise
Value to 2011E Adjusted EBITDA multiple
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$
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18.09
– $22.70
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Enterprise
Value to 2012E Adjusted EBITDA multiple
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$
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19.09
– $23.32
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Selected
Transactions Analysis.
Houlihan Lokey calculated multiples of implied
enterprise value based on the estimated purchase prices paid in certain publicly
announced shipyard and industrial manufacturing and repair
transactions. Houlihan Lokey selected such transactions for the prior
three years, since the date of the most recent acquisition by the
Company. The calculated multiples included:
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Enterprise
value as a multiple of LTM revenue where
available.
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·
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Enterprise
value as a multiple of LTM EBITDA for such
transactions.
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The list
of selected transactions and the related multiples are set forth
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/7/10
|
|
Sentinel
Capital Partners LLC
|
|
Portec
Rail Products, Inc.
|
|
|
1.10
|
x
|
|
|
7.4
|
x
|
|
11/8/10
|
|
Primoris
Services Corporation
|
|
Rockford
Corporation
|
|
|
0.53
|
x
|
|
NA
|
|
|
7/29/10
|
|
Fishing
Holdings LLC
|
|
Triton
Boat Company, LP
|
|
NA
|
|
|
NA
|
|
|
7/29/10
|
|
Stanley
Black & Decker, Inc.
|
|
CRC-Evans
Pipeline International, Inc.
|
|
|
1.78
|
x
|
|
NA
|
|
|
7/16/10
|
|
Vigor
Marine LLC
|
|
Marine
Industries Northwest, Inc.
|
|
NA
|
|
|
NA
|
|
|
7/14/10
|
|
Fehrway
Marine, Inc.
|
|
Clear
Marine Ltd.
|
|
NA
|
|
|
NA
|
|
|
7/14/10
|
|
AECOM
Technical Services, Inc.
|
|
Tishman
Construction Corporation
|
|
|
0.23
|
x
|
|
NA
|
|
|
6/30/10
|
|
Pike
Electric Corporation
|
|
Klondyke
Construction LLC
|
|
|
0.54
|
x
|
|
NA
|
|
|
6/16/10
|
|
Signet
Maritime Corp.
|
|
Colle
Maritime Co.
|
|
NA
|
|
|
NA
|
|
|
5/17/10
|
|
BAE
Systems plc
|
|
Atlantic
Marine Holding Co.
|
|
|
1.14
|
x
|
|
NA
|
|
|
5/16/10
|
|
Churchill
Corp.
|
|
Seacliff
Construction Corp.
|
|
|
0.54
|
x
|
|
|
8.1
|
x
|
|
5/5/10
|
|
The
Turner Corporation; Flatiron Construction Corp
|
|
E.
E. Cruz & Company, Inc.
|
|
|
0.39
|
x
|
|
NA
|
|
|
4/11/10
|
|
Cerberus
Capital Management, LP
|
|
DynCorp
International Inc.
|
|
|
0.40
|
x
|
|
|
5.6
|
x
|
|
2/9/10
|
|
DXP
Enterprises Inc.
|
|
NMMFP,
Inc.
|
|
|
0.55
|
x
|
|
|
7.4
|
x
|
|
1/27/10
|
|
Renaissance
Marine Group, Inc.
|
|
Northwest
Jet Boats, Inc.
|
|
NA
|
|
|
NA
|
|
|
12/15/09
|
|
Donjon
Marine Company, Inc.
|
|
Erie
Shipbuilding, LLC
|
|
NA
|
|
|
NA
|
|
|
12/3/09
|
|
Sterling
Construction Co. Inc.
|
|
Ralph
L. Wadsworth Construction Company, Inc.
|
|
|
0.35
|
x
|
|
|
1.7
|
x
|
|
11/30/09
|
|
Dragados
Construction USA Inc.
|
|
Pulice
Construction, Inc.
|
|
|
0.47
|
x
|
|
NA
|
|
|
11/18/09
|
|
Primoris
Services Corporation
|
|
James
Construction Group, LLC
|
|
|
0.18
|
x
|
|
|
2.0
|
x
|
|
11/17/09
|
|
Seacliff
Construction Corp.
|
|
Broda
Construction Ltd.
|
|
|
0.93
|
x
|
|
|
3.9
|
x
|
|
11/3/09
|
|
MasTec,
Inc.
|
|
Precision
Pipeline, LLC
|
|
|
0.33
|
x
|
|
|
1.8
|
x
|
|
7/1/09
|
|
Lufkin
Industries Inc.
|
|
Rotating
Machinery Technology, Inc.
|
|
|
1.10
|
x
|
|
|
5.7
|
x
|
|
6/22/09
|
|
J.F.
Lehman & Co.
|
|
Drew
Marine
|
|
|
0.86
|
x
|
|
NA
|
|
|
5/28/09
|
|
Mint
Turbines LLC
|
|
Northstar
Aerospace Turbine Engine Service Group, Inc.
|
|
|
0.62
|
x
|
|
NA
|
|
|
5/18/09
|
|
Edac
Technologies Corp.
|
|
EDAC
Aero
|
|
|
0.48
|
x
|
|
NA
|
|
|
2/11/09
|
|
Ted
Gelov
|
|
Hake
Yachts, Inc.
|
|
NA
|
|
|
NA
|
|
|
1/28/09
|
|
Astronics
Corp.
|
|
DME
Corporation
|
|
|
0.68
|
x
|
|
|
7.0
|
x
|
|
1/20/09
|
|
Ametek
Aerospace & Defense
|
|
Ametek
HSA, Inc.
|
|
|
1.30
|
x
|
|
NA
|
|
|
12/28/08
|
|
Atlantic
Marine Boston, LLC
|
|
Boston
Ship Repair, Inc.
|
|
NA
|
|
|
NA
|
|
|
12/15/08
|
|
Aecon
Group Inc.
|
|
Lockerbie
& Hole Inc.
|
|
|
0.23
|
x
|
|
|
3.3
|
x
|
|
12/15/08
|
|
Aecon
Group Inc.
|
|
South
Rock Ltd.
|
|
|
0.29
|
x
|
|
NA
|
|
|
8/1/08
|
|
Fincantieri
and Lockheed Martin Corp.
|
|
Manitowoc
Marine Group, LLC
|
|
|
0.34
|
x
|
|
NA
|
|
|
6/30/08
|
|
American
Maritime Holdings, Inc.
|
|
Marine
Hydraulics International, Inc.
|
|
NA
|
|
|
NA
|
|
|
6/30/08
|
|
American
Maritime Holdings, Inc.
|
|
Tecnico
Corporation, Inc.
|
|
NA
|
|
|
NA
|
|
|
4/21/08
|
|
Babcock
International Group
|
|
Strachan
& Henshaw Ltd.
|
|
|
1.25
|
x
|
|
NA
|
|
|
3/20/08
|
|
Fountain
Powerboat Industries, Inc.
|
|
Baja
Marine Corp.
|
|
NA
|
|
|
NA
|
|
|
3/12/08
|
|
Jeppesen
Sanderson, Inc.
|
|
Ocean
Systems, Inc.
|
|
NA
|
|
|
NA
|
|
|
1/21/08
|
|
Todd
Shipyards Corp.
|
|
Everett
Shipyard
|
|
|
1.15
|
x
|
|
NMF
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For
purposes of the tables in this Schedule, “NMF” means “not
meaningful.”
The
calculated multiple ranges and averages were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise
Value to LTM Revenue Multiple
|
|
|
0.18
|
x
|
|
|
1.78
|
x
|
|
|
0.68
|
x
|
|
|
0.54
|
x
|
|
Enterprise
Value to LTM Adjusted EBITDA Multiple
|
|
|
1.7
|
x
|
|
|
8.1
|
x
|
|
|
4.9
|
x
|
|
|
5.6
|
x
|
Houlihan
Lokey applied the following selected multiple ranges derived from the selected
transactions to corresponding financial data for the Company. In
light of the lack of any comparable transactions deemed particularly relevant,
Houlihan Lokey selected multiple ranges consistent with the valuations implied
by the selected companies and discounted cash flow analyses, which were within
the lower half of the selected transactions analysis. The selected
transactions analysis indicated the following implied enterprise value reference
ranges for the Company:
|
|
|
|
|
|
Selected
Implied
Enterprise
Value
Reference
Range
|
|
|
|
|
|
|
|
(in
millions)
|
|
|
Enterprise
Value to LTM Revenue Multiple
|
|
|
0.35x
- 0.45x
|
|
|
$
|
87.3
- $112.2
|
|
|
Enterprise
Value to LTM EBITDA Multiple
|
|
|
3.0x
- 4.0x
|
|
|
$
|
86.8
- $115.8
|
|
This
analysis, after the adjustments described above, resulted in the following
implied per share equity reference ranges, as compared to the per share
consideration payable in the Offer and the Merger:
|
|
|
Implied
Per Share
Reference
Range for
the
Company
|
|
|
|
|
|
Enterprise
Value to LTM Revenue Multiple
|
|
$
|
19.27
– $23.56
|
|
|
$
|
22.27
|
|
|
Enterprise
Value to LTM Adjusted EBITDA Multiple
|
|
$
|
19.20
– $24.18
|
|
Discounted Cash
Flow Analysis
. Houlihan Lokey performed a discounted cash flow analysis
of the Company by calculating the estimated net present value of the unlevered,
after-tax free cash flows that the Company was forecasted to generate through
the fiscal year ending March 29, 2015 based on internal estimates provided by
the Company’s management. Houlihan Lokey calculated terminal values for the
Company by applying a range of perpetuity growth rates of 2.75% to 3.25% to the
Company’s fiscal year 2015 unlevered, after-tax free cash flow. Houlihan Lokey
selected the range of perpetuity growth rates based on Houlihan Lokey’s judgment
of long-term growth rate of the Company’s free cash flow. This
judgment was based on a review of (i) the compound annual growth rate per decade
of the Consumer Price Index (“CPI”) over the prior three decades (1979-2009),
which ranged from 2.6% to 3.5%, as well as (ii) the projected annual growth rate
from 2010 to 2012, as published by Bloomberg, of (a) the CPI, which ranged from
1.6% to 2.0%, and (b) the real gross domestic product for the U.S., which ranged
from 2.8% to 3.2%. The present values of the cash flows and terminal
values were then calculated using discount rates ranging from 13.5% to
15.5%. Houlihan Lokey selected the range of discount rates based on
the Company’s observed weighted average cost of capital.
The
discounted cash flow analysis indicated the following implied enterprise value
reference range for the Company:
Selected
Implied Enterprise Value Reference Range
|
|
(in
millions)
|
|
$77.6
- $91.1
|
This
analysis, after the adjustments described above, resulted in the following
implied per share reference range for the Company, as compared to the per share
consideration payable in the Offer and the Merger:
Implied
Per Share
Reference
Range for the Company
|
|
|
|
|
|
$
|
17.60
– $19.93
|
|
|
$
|
22.27
|
|
Miscellaneous
In
performing its analyses, Houlihan Lokey considered general business, economic,
industry and market conditions, financial and otherwise, and other matters as
they existed on, and could be evaluated as of, the date of the opinion. Houlihan
Lokey’s analyses involved judgments and assumptions with regard to industry
performance, general business, economic, regulatory, market and financial
conditions and other matters, many of which are beyond the control of the
Company, such as the impact of competition on the business of the Company and on
the industry generally, industry growth and the absence of any adverse material
change in the financial condition and prospects of the Company or the industry
or in the markets generally. No company, transaction or business used in
Houlihan Lokey’s analyses for comparative purposes is identical to the Company
or the Offer and proposed Merger and an evaluation of the results of those
analyses is not entirely mathematical. Houlihan Lokey believes that
mathematical derivations (such as determining average and median) of financial
data are not by themselves meaningful and should be considered together with
qualities, judgments and informed assumptions. The estimates
contained in the Company’s analyses and the implied reference range values
indicated by Houlihan Lokey’s analyses are not necessarily indicative of actual
values or predictive of future results or values, which may be significantly
more or less favorable than those suggested by the analyses. In
addition, any analyses relating to the value of assets, businesses or securities
do not purport to be appraisals or to reflect the prices at which businesses or
securities actually may be sold, which may depend on a variety of factors, many
of which are beyond the control of the Company.
Houlihan
Lokey’s opinion was provided to the Transaction Committee and the Company Board
in connection with their consideration of the Offer and proposed Merger and was
only one of many factors considered by the Transaction Committee and the Company
Board in evaluating the Offer and proposed Merger. Neither Houlihan Lokey’s
opinion nor its analyses were determinative of the consideration payable in the
Offer or the Merger or of the views of the Transaction Committee, the Company
Board or management with respect to the Offer and the Merger or the
consideration payable in the Offer and the Merger. The type and amount of
consideration payable in the Offer and the Merger were determined through
negotiation between the Company and Parent, and the decision to enter into the
Merger Agreement was solely that of the Company Board.”
|
ITEM
8.
|
ADDITIONAL
INFORMATION
|
Item 8,
“
Additional
Information
” is hereby supplemented by adding the following sentences
immediately following the second sentence of the first paragraph of the
subsection titled “
Go Shop
Period
”:
“Of the
13 parties with whom the Company held discussions during the Go Shop Period, 11
were strategic acquirers in the defense or shipyard industry, 1 was engaged in
infrastructure construction, including marine construction, and one was a
private equity fund. Of the 13 parties, two were parties with whom
the Company had conducted previous discussions as described in Item 4, “
The Solicitation or Recommendation -
(b) Background of the Transaction, Prior Activities Related to Possible Sales of
the Company.
”
Item 8,
“
Additional
Information
” is hereby supplemented by adding the following subsections
at the end of such Item:
On
January 31, 2011, the Purchaser and the Company announced the extension of the
expiration of the Offer until 12:00 midnight New York City time, on Friday,
February 4, 2011, unless further extended in accordance with the Merger
Agreement. The Offer, which was previously scheduled to expire at
12:00 midnight, New York City time, on Friday January 28, 2011, was extended in
accordance with the Merger Agreement because certain conditions to the Offer
were not satisfied as of such expiration date, including without limitation the
Minimum Tender Condition (as defined in the Merger
Agreement). American Stock Transfer & Trust Company, LLC, the
depositary for the Offer, has indicated that, as of the initial expiration date,
approximately 2,934,298 Shares had been validly tendered and not withdrawn
pursuant to the Offer, representing approximately 50.7% of the outstanding
Shares.
The
Merger Agreement provided that if at any scheduled expiration of the
Offer, any condition to the consummation of the tender offer is not
satisfied or waived (other than the condition that Purchaser or Parent shall
have received the proceeds of financing in an amount sufficient to consummate
the Offer), Purchaser shall extend the Offer, on one or more occasions, in
consecutive increments of up to five business days. However,
Purchaser is not so obligated to extend the expiration of the Offer beyond
February 11, 2011 if, on or prior to such date, the SEC has, orally or in
writing, confirmed that it has no further comments on the preliminary proxy
statement filed by the Company in connection with the merger contemplated by the
Merger Agreement, including the first date following the tenth calendar day
following the filing of the preliminary proxy statement if the SEC has not
informed the Company that it intends to review the proxy statement.
On
January 31, 2011, the parties to the Merger Agreement announced that they have
agreed to waive the requirement that the Purchaser extend the expiration of the
Offer as late as February 11, 2011 such that Purchaser will not be obligated to
extend the offer beyond February 4, 2011.
To the
extent the conditions to the Offer, including the satisfaction of the Minimum
Tender Condition of approximately 67% of the outstanding Shares, are not
satisfied by midnight on February 4, 2011, the parties expect to proceed to hold
a meeting of the Company’s stockholders to approve a one-step merger transaction
as provided in the Merger Agreement and described in the Offer to
Purchase. Approval of the one-step merger requires the affirmative
vote of holders of a majority of the outstanding Shares.
A copy of
the joint press release announcing the extension of the Offer and the waiver of
the requirement to extend the Offer is attached hereto as Exhibit
(a)(5)(vi).”
Item 9,
“
Exhibits
” is hereby
amended and supplemented by inserting the following exhibit
thereto:
|
“(a)(5)(vi)
|
Joint
Press Release issued by Parent and the Company on January 31, 2011
(incorporated by reference to Exhibit 99.1 to the Company’s Current Report
on Form 8-K filed with the Securities and Exchange Commission on January
31, 2011).”
|
SIGNATURE
After due
inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this Statement is true, complete and
correct.
TODD
SHIPYARDS CORPORATION
Name:
Michael G. Marsh
Title: Secretary
and General Counsel
Dated:
January 31, 2011
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