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The eBearing News
July 1, 2005
Kaman Embroiled in Likely
Change of Controlling Ownership
copyright © 2005 eBearing Inc.
Kaman Corp. (USA, publicly traded on the Nasdaq as
KAMNA) is in the midst of a likely sea change in its ownership structure
and holdings, at the same time the Kaman family is apparently working to sell off its stake.
The current situation has been building for over a year, according to a recent management
conference. On June 7, the corporation entered into an agreement with the Kaman family to simplify
the company's, "capital structure and enhance its corporate governance by eliminating
the existing two-class structure of common stock."
As it stands today, 22.1 million common "A" stock shares are traded on the Nasdaq. Another
668,000 common "B" stock shares are not publicly traded; 80% are owned by the founding Kaman
family, 5% by the management team, and 15% by others. However, the Nasdaq-traded A shares are
non-voting; all voting control is in the hands of B share owners.
The Kaman family jointly reports owning approximately 3.5% of the publicly-traded A shares.
With this arrangement, class B holders represent only 2.9% of the company's economic ownership, yet
exercise 100% of voting control. A new arrangement has been offered that seeks to establish, "one
share, one vote."
The June 7 proposal would replace all A and B common shares with a single class of "voting common" stock.
The 22.1 million A shares would become the same 22.1 million shares of voting common. The 668,000
B shares would be exchanged for 1,302,600 shares of voting common (1.95 per B share), diluting the
former "A" shareholders by up to 5.6%. Alternatively, B shareholders could choose to receive
one voting common share plus a predetermined cash payment; under that plan, A dilution would be
as little as 2.9%.
By June 24, however, new options for Kaman family class B holders began to emerge.
Under a, "substitute recapitalization proposal," B shareholders requested an increase in the number of voting
shares they would receive in the exchange, and a $0.65 per share increase in the alternative cash payment.
Then on June 28, The class B holders moved to terminate the arrangement entirely. The Kaman family
revealed plans to sell out all class B shares to Mason Capital Management LLC, a New York-based private equity
fund, for $55.00 per share, or $36.7 million. In comparison, the original arrangement had been worth $10 million.
As of July 1, Kaman's board of directors exercised its right to see arbitration to resolve the conflicting
offers and situation. The process should be complete and an arbiter's decision in hand by July 18.
Mason Capital Management has already filed a petition with the board, seeking a list of shareholders to
approach with its buyout offer. Mason now says it has acquired 55,642 of the outstanding B shares.
The board is refusing Mason's request, indicating Mason has not formally met the statutory requirements
necessary before it can request the list.
If the arbiter decides in favor of the Mason buyout and Kaman family's class B sell-off, the board has five
business days
to submit an alternative recapitalization proposal. That alternative would now have to be at least
3.58 voting common shares for each B, or 1.84 voting shares and $27.10 cash.
Charles Kaman, still a key owner, founded the eponymous company in 1945. The current two-tier capital structure
has been in place almost since the company's founding.
Kaman is a diversified industrial product manufacturer and distributor. Important market segments are
dedicated to military, aerospace and industrial products, including parallel aftermarket replacement
product markets. Founder Charles Kaman and his son, Charles II, jointly control 48% of the company's
outstanding B shares. Paul Kuhn serves as Chairman, President and CEO.
Kamatics and RWG are the company's proprietary aircraft bearing businesses, operating within
the Aerospace Segment.
With bearing operations in Bloomfield, Connecticut, and RWG in Dachsbach, Germany, Kamatics
bearings reported record
sales and earnings for 2004, with 2005 results forecast to be even higher. First quarter bearing sales
were $23.0 million, up from $19.8 million in first quarter 2004.
Kaman Industrial Distribution, with over 200 branches, is North America's third-largest industrial
distributor. There, bearings represent fully 29% of overall sales.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
trademarks of eBearing Inc.
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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