Glendale Management Group to purchase shares from D. Morgan Firestone
- Management group to own approximately 45.2% of outstanding Glendale shares -
OAKVILLE, ON, June 11 -- Glendale International Corp. (TSX:GIN) announced today that a company formed by Glendale's senior management group has entered into a binding Letter of Intent with the Corporation's largest shareholder, G.P. Metal Products Limited ("G.P. Metal Products"), to purchase 5,000,000 Glendale common shares for an aggregate price of $26.39 million or $5.28 per common share. G.P. Metal Products is controlled by D.M. (Morgan) Firestone, a Director of Glendale.
This Letter of Intent follows on a press release issued on May 15, 2003 in which the Corporation announced that the senior management group had entered into discussions with Mr. Firestone to acquire his Glendale shares. Mr. Firestone had previously indicated that the interests of the Corporation, its shareholders, employees and other stakeholders would be best served if he were to relinquish control of the Corporation and sell his share position to the Corporation's senior management group.
"Building on a vision that Mr. Firestone started more than thirty years ago, the entire management team is excited to lead the Company into a new phase of growth," said Edward C. Hanna, Chairman, President and Chief Executive Officer, Glendale International Corp. "The new ownership structure provides an orderly succession for Mr. Firestone's stake while aligning the interests of all shareholders with those executing the business strategy. On behalf of the entire management team and Board of Directors, I would like to thank Mr. Firestone for his many years of dedicated service and leadership that has contributed to the creation of a strong foundation for future growth."
Glendale management expects that the proposed transaction will have a beneficial impact on the Corporation's business in the long-term.
The Glendale management group consists of Mr. Edward Hanna, Chairman, President and Chief Executive Officer, Mr. Terry Mullan, President, Glendale RV, Mr. Philip L. Szabo, Vice President, Chief Financial Officer and Secretary, Mr. Brad Bourne, President, Firan Technology Group Inc., Mr. Kevin Kearns, Managing Director, Fernau Avionics, and Mr. Barry Bateman, General Manager, Travelaire. The senior management group will acquire the shares through a newly formed corporation owned by it, 2027633 Ontario Limited ("2027633"). The transaction is expected to be concluded within 90 days, subject to the satisfaction of various conditions.
After the completion of the proposed transaction, the 5,000,000 Glendale shares purchased from G.P. Metal Products will be beneficially held as follows: Mr. Hanna, as to 31%; Mr. Mullan as to 26%; and 10.75% held by each of Messrs. Szabo, Bourne, Kearns and Bateman. Including the Glendale common shares that would be owned by 2027633, the aforementioned members of the senior management group would in aggregate beneficially own and control, on a non-diluted basis, approximately 5,650,000 Glendale common shares following completion of the proposed transaction (representing approximately 45.2% of the issued and outstanding shares).
The purchase price for the 5,000,000 Glendale shares was established through arms-length negotiations between the management group and Mr. Firestone. The purchase price will be satisfied through a combination of cash, a vendor take-back promissory note and a non-interest bearing promissory note from 2027633 to G.P. Metal Products. The cash portion of the purchase price will be funded to some extent through a loan from a third party. The Letter of Intent contemplates that the Corporation may provide financial assistance to 2027633 by guaranteeing to the lender the repayment of up to $5 million of the loaned amount, plus unpaid interest and costs. This guarantee, if provided, will be subject to the conditions that 2027633 grant a first position security interest in the acquired shares to G.P. Metal Products and, in the event the guaranteed loan were to go into default, the senior management would waive rights to any severance or termination payments to the extent of each senior manager's share of the guarantee to which they may be otherwise entitled to under their employment arrangements with the Corporation. G.P. Metal Products will agree to indemnify the Corporation in respect of any liability it incurs pursuant to the Guarantee.
Related to the transaction, it is anticipated that Glendale will declare a special dividend in the amount of $1.00 per common share to all of its shareholders. Payment of the special dividend will require a reduction of the Corporation's stated capital, which requires special shareholder approval. The Corporation will hold a Special Meeting of Shareholders to obtain approval for the reduction of stated capital on August 11, 2003. A notice of the Special Meeting, Management Information Circular and Form of Proxy will be mailed to shareholders in due course.
The Corporation will establish an independent committee of its board of directors to review the advisability of declaring the proposed $1.00 dividend and of guaranteeing repayment of a loan from a third-party to the senior management group to facilitate the transaction. The independent committee is expected to retain its own financial advisor and legal counsel to assist it in making its assessment, and will prepare a report to the board of directors. Determination and publication of the record date for determining eligibility to receive the dividend must await board approval. At this time there can be no assurance that the proposed $1.00 special dividend will be declared or that the proposed transaction will be completed as described, or at all.
The closing of the proposed transaction is conditional upon the satisfaction of a number of conditions, including:
- 2027633 obtaining the required financing to fund the purchase of the
5,000,000 shares;
- The Corporation having received shareholder approval of a reduction
in its stated capital attributable to its common shares sufficient to
enable the Corporation to pay a special dividend of $1.00 per common
share to all of its shareholders;
- The board of directors of Glendale approving of the declaration of a
special dividend of $1.00 to all of the Corporation's shareholders;
- All securities commission or stock exchange approvals, either
required or deemed advisable by counsel to G.P. Metal Products,
having been obtained, and no regulatory or judicial proceedings
having been commenced or contemplated that may in any way bear upon
the contemplated transaction;
- The appropriate exemptions from the take-over bid rules in section 93
of the Securities Act (Ontario) will be available;
- The shareholders of 2027633 having entered into a unanimous
shareholders agreement with G.P. Metal Products satisfactory to G.P.
Metal Products, restricting certain actions on the part of 2027633.
About Glendale International Corp.
Glendale International Corp. is a diversified Canadian company that operates through autonomous subsidiaries in Canada and the U.K. The Corporation is the largest Canadian manufacturer of recreational vehicles (RVs) and sells its extensive product range through dealers in Canada and the U.S. Glendale's other subsidiaries and divisions include Scarborough, Ontario based Firan Technology Group Inc., U.K. based Fernau Avionics and Oakville, Ontario based Quality Plastics.
Glendale International Corp. is publicly traded on the Toronto Stock Exchange ("TSX") under the symbol "GIN" and has approximately 12.5 million common shares outstanding.
To reach Glendale via the worldwide web logon to www.glendaleint.com.
This press release contains certain forward-looking statements that reflect the current views and/or expectations of management of Glendale with respect to its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly.