UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 31, 2006
MESTEK, INC.
(Exact name of registrant as specified in charter)
Pennsylvania 1-448 25-0661650
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(State or other |
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(I.R.S. Employer |
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jurisdiction of |
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Identification No.) | |||||
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incorporation) |
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260 North Elm Street
Westfield, Massachusetts 01085
(Address of Principal Executive Offices)
Registrants telephone number, including area code: 413568-9571____________________
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
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(17 CFR 240.14d-2(b)) |
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
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(17 CFR 240.13e-4(c)) |
This report contains forward-looking statements, which are subject to inherent uncertainties which are difficult to predict, and may be beyond the ability of the Company to control.
Certain statements in this Report on Form 8-K constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are not historical facts but rather reflect the Company's current expectations concerning future results and events. The words believes, expects, intends, plans, anticipates, hopes, likely, will, and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company (or entities in which the Company has interests), or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking statements which reflect managements view only as of the date of this Form 8-K. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements which may be made to reflect events or circumstance after the date hereof or to reflect the
occurrence of unanticipated events, conditions or circumstances.
ITEM 7.01. REGULATION FD DISCLOSURE.
On March 31, 2006, Mestek, Inc. (the Company) issued a press release relating to a recommendation made to the Companys Board of Directors by a Special Committee to the full Board in response to a proposal made on January 19, 2005 by John E. Reed, the Chairman and Chief Executive Officer of the Company, that the Company enter into a going-private transaction (the Transaction). A Special Committee of the Companys Board of Directors was appointed, consisting entirely of independent directors, to consider Mr. Reeds proposal and make recommendations to the full Board. The Special Committee retained independent legal counsel and independent financial advisers and over the course of more than a year investigated various options and alternatives, reviewed various valuation methodologies and conducted extensive discussions, the results of which were its formal recommendations made to the Companys full Board of Directors at a special meeting held on March 29, 2006 called solely for the purpose of deliberations on the proposed Transaction and in conjunction with its regularly scheduled meeting held on March 30, 2006. The Board of Directors of the Company has received, reviewed, considered and discussed this recommendation, and has agreed in principle to go forward with the Transaction by means of a meeting of the Shareholders of record as of June 6, 2006 (the Record Date), which Record Date determines who is eligible to vote at the meeting to be held on Tuesday, July 25, 2006 at 10:30 a.m. at the Companys headquarters in Westfield, Massachusetts, to obtain authority to take the actions necessary to accomplish the Transaction. Completion of the Transaction is subject to approval by the Companys Board of Directors of definitive documentation and proposed amendments to the Companys Articles of Incorporation and by-laws and approval by the shareholders of the Company of an amendment to the Companys Articles of Incorporation. There can be no assurances that the Transaction will be consummated.
A general description of the terms and conditions of the proposed Transaction is as follows:
Structure
The Transaction will take the form of a 1-for-2000 reverse split of the Companys issued and outstanding shares of common stock (each, a Share). The Transaction will have the effect of cashing out only those shareholders holding fewer than 2000 Shares (the Cashed Out Shareholders) as of the effective date of the Transaction (the Effective Date) which cash-out will follow shortly after the meeting of the shareholders. At this time it is expected that the Effective Date will be July 31, 2006, after which date the Companys shares will no longer be traded on the New York Stock Exchange. The percentage of Shares held by Cashed Out Shareholders as of the Effective Date of the Transaction is referred to as the Cashed Out Percentage.
Consideration
In exchange for his, her or its Shares, each Cashed Out Shareholder will receive $15.24 per Share (the Transaction Price), and a Contingent Payment Right, as defined below. Shareholders holding 2000 shares or more will not receive a cash payment and will remain shareholders of the Company.
Shareholder Protections
As described below, the proposal contains economic protections for the Cashed Out Shareholders and the Companys shareholders after the Transaction and corporate governance commitments by the Company (the Shareholder Protections). The Company will propose that its by-laws be amended to include provisions that (1) reflect the Shareholder Protections and (2) prohibit the amendment of the Shareholder Protections without the approval of a majority of the Companys board of directors, for a period of five years following the Transaction.
Economic Protections
Quoting on Pink Sheets
The Company will undertake to use reasonable efforts to cause its common stock to be published on the so-called Pink Sheets publication service including, without limitation, providing the information (1) required by Rule 15c2-11 of the Securities Exchange Act of 1934, as amended, and (2) necessary to complete a NASD Form 211 to a SEC registered broker-dealer that is a member of the NASD. The Company will also undertake to assist individuals and institutions to liquidate their substantial holdings including, without limitation, using its best efforts to find a broker willing to execute Pink Sheets orders in the Companys common stock.
Contingent Payment Right
Each Cashed Out Shareholder will receive a right to payment (the Contingent Payment Right) that vests upon the execution, in the one year following the Transaction (the Liquidity Period), of a binding agreement for a Liquidity Event resulting in a per Share value exceeding the Adjusted Transaction Price (the aggregate of such excesses across all Shares, the Liquidity Excess). If a Liquidity Event occurs, each Cashed Out Shareholder will receive a payment in
the amount of his, her or its pro rata portion of the Cashed Out Percentage of the Liquidity Excess.
Liquidity Event shall mean (1) any liquidation, winding up or dissolution of the Company, (2) any sale or transfer of 25% or more of the Companys Shares, whether by merger, consolidation or otherwise, or (3) any sale or transfer of 25% or more of the Companys assets.
Adjusted Transaction Price shall mean (1) in the case of a sale or transfer of a portion of the Companys assets, the percentage of the Transaction Price equal to the percentage of the Companys book value attributable to the assets being sold or transferred, as of the Effective Date of the Transaction, and (2) in all other cases, the Transaction Price.
If the Company executes a series of binding agreements in the Liquidity Period that would qualify as a Liquidity Event if treated as a single transaction, the transactions will be treated as a single transaction for the purpose of determining the Contingent Payment Right.
The Contingent Payment Right will not (1) be represented by a certificate or other instrument, (2) represent an ownership or equity interest in the Company, (3) confer dividend or voting rights, (4) bear interest, or (5) be transferable, unless under the laws of wills, distribution or descent, or by operation of law.
Dutch Auction
In each of the five calendar years immediately following the Transaction, the Company will undertake to hold one Dutch auction for its common stock, and to purchase up to $2,500,000 of its common stock in each auction. This commitment is subject to the Companys ability to meet reasonable constraints imposed by bank covenants and financial ratios, as determined by a majority of the Companys board of directors.
Corporate Governance Protections
Board and committee composition. A majority of the Companys board will consist of independent directors, as defined by the New York Stock Exchange (Independent Directors). The Companys Audit and Compensation Committees will consist entirely of Independent Directors.
Financial reporting. The Company will provide each of its shareholders with quarterly and annual financial reports, similar in general content to, but not necessarily in as great detail or in the same format as, the reports required by the Securities Exchange Act of 1934, as amended.
Shareholder questions. The Companys management will entertain questions asked by its shareholders and answer the questions fully and frankly.
Conflicts. The Company will disclose to the Independent Directors and its shareholders information relating to (1) any interested transaction as may be proposed, whether involving an insider or otherwise posing a conflict of interest, and (2) compensation paid to the Companys management.
Whistleblower hotline. The Company will provide a hotline to facilitate outside shareholders, employees, suppliers and others confidential reporting of improper conduct to the Companys Audit Committee or other designated governing body.
The information included in this Form 8-K, including the press release attached as Exhibit 99.1, are incorporated by reference into this Item 7.01 in satisfaction of the public disclosure requirements of Regulation FD. This information is furnished and not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, or otherwise subject to the liabilities of that section. It may be incorporated by reference in another filing under the Securities Exchange Act of 1934 or the Securities Act of 1933 only if and to the extent such subsequent filing specifically references the information incorporated by reference herein.
A copy of a press release issued by the Company with respect to these matters is attached hereto as Exhibit 99.1.
ITEM 9.01. FINANCIAL STATEMENT AND EXHIBITS
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none |
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none |
(c) |
The following document is filed herewith as an exhibit to this Form 8-K: |
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Exhibit 99.1 - Press Release |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MESTEK, INC.
(Registrant)
Date: April 3, 2006 |
By: /s/ Stephen M. Shea |
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Stephen M. Shea
Senior Vice President Finance
(Principal Financial and Accounting Officer)