GenCorp Announces Plan to Create Two Separate Companies
17 December 1998
GenCorp Announces Plan to Create Two Separate Companies With Spin Off of Polymer Products Businesses
FAIRLAWN, Ohio, Dec. 17 -- GenCorp announced today
a plan to spin off its Performance Chemicals (formerly Specialty Polymers) and
Decorative & Building Products businesses to GenCorp shareholders as a
separate publicly traded polymer products company. Following the spin-off,
GenCorp would continue to operate Aerojet, its existing aerospace, defense,
and fine chemicals segment, and its automotive Vehicle Sealing business unit.
The plan is subject to approval by GenCorp shareholders, the receipt of a
favorable ruling from the Internal Revenue Service, as well as market
conditions at the time of the spin-off.
"Our decision to separate GenCorp into two publicly traded companies with
independent management and efficient corporate structures will enable both
companies to increase focus on key core businesses," said John Yasinsky,
GenCorp Chairman and CEO.
"Aerojet, and Vehicle Sealing business objectives and growth strategies
are focused on long-term programs in industries that are uniquely different
from our polymer product businesses. Operating independently would allow
them, as well as the new polymer products company, to tailor capital
investments and resources to particular business requirements, more
aggressively pursue focused growth opportunities, and operate more
efficiently. We believe this separation is a sound business decision that
creates two strong, focused, and growing independent companies with greater
value-creating potential that will benefit shareholders, customers and
employees," Yasinsky said.
It is planned that upon completion of the spin-off, Yasinsky would become
Chairman and Chief Executive Officer of the new polymer products company.
Robert Wolfe, currently the President of Aerojet, would become Chairman and
Chief Executive Officer of GenCorp.
"The new polymer products company will continue to execute the aggressive
growth strategy initiated three years ago for Performance Chemicals and
Decorative & Building Products that has led to significant performance
improvement, market share gains, and successful expansion through internal
growth and highly synergistic acquisitions," Yasinsky said.
According to Wolfe, the spin-off serves as a key enabler to further
strengthen Aerojet, a business that has experienced outstanding performance
improvement, and significant growth through its rapidly expanding fine
chemicals business, and new major defense and aerospace contract wins in
recent years. It will also create greater focus on Vehicle Sealing, which is
strategically positioned through existing and new programs as a key supplier
on top selling OEM vehicle platforms. "Our efforts will be concentrated on
continued performance improvement, while our strategies and resources will be
dedicated to pursuing additional growth opportunities for these businesses,"
Wolfe said.
Headquarters for the new polymer products company will be located in the
Akron, Ohio area, where headquarters for its Performance Chemicals and
Decorative & Building Products business units, along with its Corporate
Technology Center will remain. Headquarters for GenCorp would ultimately move
closer to its primary aerospace, defense, and fine chemicals businesses
located in California.
Under the spin-off plan, all shares of the new, as yet unnamed, polymer
products company would be distributed to shareholders of GenCorp stock.
GenCorp intends to seek a ruling from the Internal Revenue Service to
confirm that the transaction would be tax-free to the company and its
shareholders. Credit Suisse First Boston is acting as GenCorp's financial
advisor on this transaction, which is expected to be finalized in the second
half of 1999.
While details are still being determined, GenCorp expects to assign
approximately one-half of its debt to the new company. The resulting debt
level and cash flow for both GenCorp and the new polymer products company is
expected to allow each to continue to invest in future growth.
In a separate announcement today, the Company released fourth quarter 1998
earnings of $0.77 per diluted share, and earnings from operations before
unusual items and a tax refund of $0.66 per diluted share, compared to
$0.52 per diluted share in the fourth quarter of 1997. For the Company's
fiscal year ending November 30, 1998, earnings per diluted share totaled
$1.99. Earnings from operations before unusual items and a tax refund were
$1.88, an increase of 9% compared to $1.72 per diluted share in 1997.
GenCorp is a technology based manufacturer with leading positions in
numerous polymer product markets, as well as the automotive and aerospace and
defense industries.