Rock of Ages Receives Going Private Proposal
07 Maio 2010 - 4:54PM
Business Wire
Rock of Ages Corporation (NASDAQ:ROAC) today announced
that its Board of Directors received an unsolicited proposal from
Swenson Granite Company, LLC ("Swenson") to purchase all
outstanding shares of common stock, including shares underlying
vested options, of Rock of Ages for a purchase price of $4.38 per
share in cash. The text of Swenson's proposal letter is set forth
below in this release. The acquisition proposed by Swenson is
conditioned on lender due diligence, negotiation of a definitive
structure and terms to be set forth in a definitive acquisition
agreement with Rock of Ages, and Swenson obtaining financing for
the transaction in an amount sufficient to fund the purchase price
and the ongoing operations of the two companies. The acquisition
proposal also states that Swenson seeks to structure the
transaction so that the value of Rock of Ages' assets can be
"stepped up" to fair market value to the extent possible under the
Internal Revenue Code. There can be no assurance as to whether such
a step-up can be achieved. Accordingly, Rock of Ages' Board of
Directors cautions investors that an inability to achieve such a
step-up could result in a reduction of Swenson's proposed $4.38 per
share price.
Kurt M. Swenson, the Chairman of Swenson and non-executive
Chairman of Rock of Ages, together with his brother, Kevin Swenson
and Robert Pope, President and Chief Executive Officer of Swenson,
own approximately 74% of Swenson and approximately 29% of all
outstanding shares of common stock of Rock of Ages, and control
approximately 70% of the voting power of all outstanding capital
stock of Rock of Ages. According to the proposal letter, as part of
the transaction, Kurt Swenson, Kevin Swenson and Robert Pope would
exchange all of their 2,173,364 Class B shares of Rock of Ages for
additional interests in Swenson.
The Board of Directors of Rock of Ages has formed a special
committee of independent directors (the "Committee") which will
retain financial advisors and legal counsel, evaluate the proposal
from Swenson and determine how to proceed in the best interests of
Rock of Ages' shareholders. The Board of Directors cautions Rock of
Ages' shareholders and others considering trading in its securities
that it has only received the proposal and that no decisions have
been made by the Committee or the Board of Directors as to Rock of
Ages' response to the proposal or actions it may consider in light
of the proposal. There can be no assurance that the Swenson
proposal will lead to a definitive acquisition agreement, or that
the transaction contemplated by the Swenson proposal or any other
transaction will be approved or completed.
DELIVERED IN-HAND -- CONFIDENTIAL May 6, 2010 The Board of
Directors Rock of Ages Corporation 560 Graniteville Road
Graniteville, VT 05654 Dear Fellow Board Members,
Swenson Granite Company, LLC ("Swenson Granite" or "we") hereby
conditionally offers to purchase all of the outstanding shares of
common stock of Rock of Ages Corporation ("ROA" or the "company"),
including shares underlying vested options, at a price of $4.38 per
share. As a part of the transaction, Swenson Granite expects to
receive all the assets of ROA and agrees to assume all the
liabilities of ROA, including its pension and other retirement plan
liabilities, based on a mutually agreed-upon definitive written
acquisition agreement between the appropriate parties. Since the
proposed purchase price per share is in excess of company's book
value per share, Swenson Granite seeks to structure the transaction
in such a way that it can step up the value of the assets to fair
market value to the extent possible under the Internal Revenue
Code.
In addition to the condition of a
definitive written agreement, it is a condition of the transaction
that Swenson Granite obtains financing for the transaction on terms
satisfactory to it to fund the purchase price and the ongoing
operations of Swenson Granite and ROA. We have had a preliminary
meeting with Swenson Granite's long time lender and they have
informally indicated an interest in participating in this
transaction, but we have no comfort letter or financing commitment
at this juncture. I also have personal relationships with the
Company's current lenders. We expect that our financing source will
need to conduct substantial due diligence on non-public information
relating to ROA's business, operating results and financial
condition, subject to appropriate non-disclosure covenants.
In order to facilitate the
financing of the proposed transaction by Swenson Granite, holders
of the Class B Common Stock of ROA who are existing shareholders of
Swenson Granite or lineal descendents of existing shareholders who
under Swenson Granite's bylaws are entitled to receive Swenson
Granite shares free of any right of first refusal by Swenson
Granite, will be offered the opportunity to exchange their Class B
shares of ROA for Swenson Granite shares or to receive the $4.38
cash price. Kurt Swenson, Kevin Swenson and Bob Pope have all
agreed to take Swenson Granite shares in exchange for all the Class
B shares of ROA they own, which collectively total 2,173,364 Class
B shares of ROA.
We believe that the proposed transaction represents an
attractive alternative for ROA and its shareholders. Our per share
price reflects a substantial premium over the current trading price
of the company's stock and provides a means for shareholders to
gain liquidity for large blocks of stock in a short time horizon,
something that the public trading market is unlikely to provide, We
believe that federal capital gain tax rates are likely to rise in
the short- or medium-term future and that an early transaction
might allow shareholders to take advantage of the current rates. We
also believe that ROA is currently not well-positioned to create
value for its shareholders as a pubic company, given the company's
current business plan, current analyst and trading practices, and
the increasing cost of compliance with disclosure, accounting and
other public company obligations.
We think that the company would
be well-served by the board conducting a process of exploring its
strategic options for maximizing shareholder value, including a
consideration of our offer. We are prepared to work in good faith
with the board, or any committee which it may choose to form, to
firm up our financing and further develop our offer in the context
of a process which is consistent with the directors' fiduciary
duties. As you know, we have considerable familiarity with the
operations, assets, liabilities and employees of ROA, which we
believe will enable us to expedite the due diligence process. We
envision making relatively minimal changes to the operations and
employees of ROA following the closing of the proposed transaction.
We intend to offer Donald Labonte the opportunity to buy shares of
Swenson Granite as has been the case with other key officers of
Swenson Granite. Before reaching agreement on definitive terms,
among other things, we would ask to speak with Peter Gottlieb and
Eric Kuby of Northstar Investments and the Kuby Gottlieb fund, to
ascertain their intentions toward a proposed transaction, given
their large ownership position.
While Dick Kimball and Chuck Waite
are small shareholders of Swenson Granite with each owning less
than 1% of the outstanding shares and neither has served as a
director of Swenson Granite for over a decade, we understand that
they may be considered part of the prospective acquiring group. We
have retained Alan Reische of Sheehan Phinney Bass + Green
[redacted] to act as our special counsel in connection with
the proposed transaction.
We look forward to hearing from you or your representative
regarding next steps in the process. Sincerely,
/s/Kurt Swenson Chairman /s/Robert Pope President and CEO
cc: Kevin Swenson
About Rock of Ages
Rock of Ages (www.RockofAges.com) is the largest integrated
granite quarrier and manufacturer of finished granite memorials and
granite blocks for memorial use in North America.
Forward-Looking Statements
This press release contains statements that are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are based on current
expectations about future events. These statements are not
guarantees of future events and involve risks, uncertainties and
assumptions that are difficult to predict. Therefore, actual events
may differ materially from what is expressed in such
forward-looking statements due to numerous factors. These include
the uncertainties set forth in this press release regarding whether
the acquisition price proposed by Swenson Granite Company LLC
("Swenson") will be reduced, whether financing for the acquisition
can be obtained and whether an acquisition of the Company will be
consummated upon the terms proposed by Swenson, or at all. Further
information and risks regarding factors that could affect our
business, operations, financial results or financial positions are
discussed from time to time in Rock of Ages' Securities and
Exchange Commission filings and reports. Such forward-looking
statements speak only as of the date on which they are made, and
the Company does not undertake any obligation to update any
forward-looking statement to reflect events or circumstances after
the date of this release, except as may be required under the
federal securities laws.
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