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Members of the Kaman family notified Kaman Corporation, Bloomfield, CT, on Jun. 23, 2005 that the family expects to reach an alternative transaction to the company's recapitalization plan. The new development represents at least an estimated $10-million premium above what Kaman family members would receive under the original recap plan floated earlier this month, which would have a total value of just over $20 million. The deal would provide holders of Class B shares with one share of Kaman Class A stock plus a cash premium set at a value of $14.76 per share, or a total cash premium to Class B holders of just under $10 million.
Earlier this month, the company entered into an agreement with certain members of the Kaman family that contemplates a proposed recapitalization which would simplify the corporation's capital structure and enhance its corporate governance by eliminating the existing two-class structure of common stock. According to the agreement, an alternate transaction would require a minimum offer of $46.62 for Kaman's Class B shares, held mainly by family members, making the deal worth roughly $31 million for the 668,000 shares of Class B common stock.
Class B share holders, while holding 100 percent of voting power, hold only 2.9 percent of the economic value of the company. Kaman Corp. had 2004 revenues of $995 million in 2004, with 59 percent of that ($582 million) coming from its industrial distribution business segment. Its aerospace division accounts for 25 percent of total revenues and its music distribution business contributes 16 percent of revenues.
In the proposed recapitalization, a single class of voting common stock will replace the existing non-voting Class A common stock and voting Class B common stock. Specifically, the approximately 22.1 million shares of Class A common stock would each remain outstanding as one share of voting common stock and the approximately 668,000 shares of Class B common stock would each be converted into 1.95 shares of voting common stock. Alternatively, the Class B common stockholders would be able to elect instead to convert each of their Class B shares into one share of voting common stock and receive $14.76 (which represents .95 times the average closing price of one share of Class A common stock over the prior ten trading days).
If the Kaman family terminates the recapitalization agreement, the company said its board would have 10 days to decide whether to put the alternative proposal to shareholders for a vote.
If approved by the Board and proposed to shareholders, a "substitute recapitalization proposal" would amend the existing recapitalization proposal to increase the number of voting common shares into which each share of Class B common stock would be converted and would need to provide for a minimum deemed value per Class B common share of at least $0.65 greater than the per share amount offered in the qualifying alternative transaction. 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. Pursuant to the recapitalization agreement, the Kaman family has agreed to support any "substitute recapitalization proposal" in the event one is approved by the Board of Directors.
Additional details of the recapitalization agreement can be found by reviewing the recapitalization agreement, which was filed as Exhibit 99.1 to the company's current report on Form 8-K filed on June 7, 2005.
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