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The eBearing News
September 21, 2005
Kaman Sued Over Restructuring
copyright © 2005 eBearing Inc.
Kaman Corp. (USA, NASDAQ:
KAMNA)
and its founding/controlling shareholder Kaman family are facing a suit filed in
Hartford, Connecticut federal district court by Mason Capital Management LLC.
Mason is invoking a 1994 Connecticut antitakeover law in an effort to stop Kaman from going forward
with an October 11 vote to recapitalize and change controlling ownership of the company, thwarting
Mason's bid for ownership and voting control.
The Kaman family has been pursuing a recapitalization of Kaman Corp. since early 2004. Although
22.1 million common "A" shares are traded on the Nasdaq, only the 668,000 "B" shares have voting rights.
And because the Kaman family owned 80% of the "B" shares, it controlled the company and its day-to-day
operations, though holding only 2.9% of the company's economic ownership.
Gabelli Asset Management is the largest "A" shareholder, while the Kaman family
owns approximately 3.5% of the "A" shares.
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.
The family sought a new arrangement, eliminating "A" and "B" shares, then making one class of voting shares.
This step would not only better monetarize their holdings, but establish, "one share, one vote,"
potentially make the company more attractive as a stock market investment for others.
article: Kaman in likely change of controlling ownership
The original proposal replaced all A and B 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 would choose
to receive one voting common share plus a predetermined cash payment; under that plan, A dilution
would be as little as 2.9%.
Several weeks later, the Kaman family moved to terminate that arrangement entirely, revealing
plans to sell out all class B shares to Mason Capital Management LLC.
article: Kaman buyout progressing via private equity
Mason and its affiliates are Delaware and Canary Islands based private equity investment groups,
with headquarters in New York City.
With the competing offer, the Kaman family saw the value of its holdings multiply.
Mason offered $55.00 for the B shares, or $36.7 million. In comparison, the original arrangement
had been worth $10 million.
Kaman's board of directors then exercised an arbitration option to resolve the conflicting
offers and situation. Arbitration resulted in the Kaman company matching Mason's offer, at
$55.65 per B share.
article: Kaman makes final buyout offer
The family shareholders agreed to support any equivalent Kaman company bid in preference over
Mason Capital.
Kaman's board of directors voted to match Mason's offer to the Kaman family
Class B common shareholders -- 3.58 shares of Common stock for each Class B
share, or 1.84 shares of Common stock plus USD $27.10 cash, or a combination.
Mason Capital's suit alleges that Kaman's proposed share reclassification automatically
triggers a 1994 Connecticut antitakeover law intended to inhibit hostile takeovers.
If the court holds the law applies, Kaman's recapitalization requires a different level of shareholder
approval. That is, Kaman's recapitalization must be approved by a simple majority of all shareholders,
and in addition, a "supermajority" -- two-thirds -- of all shareholders owning less than 10% of the
class B voting shares and not party to the recapitalization.
Mason Capital's suit alleges the structure of Kaman's offer does not avoid triggering
the antitakeover law, because the law is invoked any time shareholders are involved an exchange of
voting shares (i.e., class B to voting or cash) regardless of the form or method how it happens.
If the court allows Mason's lawsuit to go forward, then Mason's 4.76% stake is enough to stop
the recapitalization currently on the table from going to vote on October 11.
If it is able to stop Kaman's buyout, Mason would then exercise existing B share purchase contracts
with the Kaman family, paying them $55.00 per share in cash. Once the Kaman family shares are locked
up, Mason is offering $55.00 per share to the remaining non-family B shareholders.
Kaman Corp. issued a statement, saying: "The company believes that, as structured, the proposed
recapitalization does not require the "supermajority" vote that Mason Capital claims and the
Company intends to vigorously pursue denial of all the relief requested by Mason Capital. The
company plans to hold the special meetings of shareholders to approve the proposed
recapitalization as scheduled on October 11, 2005."
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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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