Kaman (NASDAQ:KAMNA)
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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