Safety Components International Announces $28M Equity Investment
1 April 1999
Safety Components International, Inc. Announces $28 Million Equity Investment by Brera Capital Partners, LLC
FORT LEE, N.J., March 31 -- Safety Components International
, one of the world's leading manufacturers of airbag fabric and
cushions, today announced that Brera Capital Partners, LLC, through an
affiliate, has agreed to invest $28 million in the Company through the
purchase of a new Convertible Preferred Stock, subject to customary closing
conditions. Brera is a private equity fund, founded by Alberto Cribiore and
his partners, with $650 million in capital.
Robert A. Zummo, Chief Executive Officer of SCI, stated, "We are pleased
that an investment group of Brera's stature has agreed with our vision of the
Company's future. The investment by Brera will provide SCI with an infusion
of capital to continue our long-term strategy of becoming the largest and
lowest cost outsourced supplier of airbag cushions and fabric on a global
basis. We intend to accomplish this objective through strategic acquisitions
as well as internal growth. The addition of Brera as a financial partner and
their participation on our Board of Directors will add financial resources and
insight that we believe will be of enormous value in our efforts to maximize
shareholder value. We are also pleased to announce the appointment of John C.
Corey as President and Chief Operating Officer. John was formerly President
of Stanley Mechanics Tools, Inc., an $850 million division of The Stanley
Works and President of AlliedSignal North American Aftermarket, an
$800 million division of AlliedSignal, Inc. John's worldwide financial,
operational and management experience will materially enhance our existing
management team."
Alberto Cribiore of Brera stated that, "We are very enthusiastic about our
investment in Safety Components and our partnership with the management team.
Led by Bob Zummo, the management has provided its customers with a
high-quality outsourcing alternative. The capital, which we are committing to
the Company, will be used to further expand capacity in North America, Europe
and Asia and will allow the implementation of numerous lean manufacturing
initiatives. The growth potential of the Company is well documented, and we
look forward to working with Bob, John and the rest of the management team to
realize this potential."
The Preferred Stock will be convertible into Common Stock at an initial
conversion price of $12 per share or into approximately 31.2% of the
outstanding Common Stock. The conversion price will be subject to adjustment
based upon the Company's fiscal year 2000 EBITDA, to an exercise price ranging
between $14.00 per share and $3.00 per share. The Board of Directors of SCI
has approved the transaction and has received a fairness opinion from BT
Wolfensohn that the issuance of the Preferred Stock is fair to SCI and,
accordingly, its stockholders. The closing of the transaction is not subject
to stockholder approval; however, prior to obtaining such stockholder
approval, the Senior Preferred Stock will be convertible into no more than 18%
of the outstanding shares of Common Stock, with the remaining shares being
convertible into shares of non-voting Junior Preferred Stock. The Preferred
Stock will bear an initial dividend rate of 8.0% per annum, payable in cash or
in kind, declining to 6.0%, payable in cash, after three years and will be
redeemable at the option of the Company, at declining premiums, commencing
after the third anniversary of issuance and will be mandatorily redeemable on
the ninth anniversary of issuance.
Under the Agreement, Brera will initially designate one member to the
Company's Board of Directors increasing to three of the Company's Board
members following shareholder approval and to half of the Company's Board
members in June 2000. In the event of certain defaults, Brera will be able to
designate a majority of the Board of Directors. Robert A. Zummo, Chairman and
Chief Executive of SCI, Brera and certain other stockholders who will
collectively own approximately 51.6% of the equity of SCI following closing of
the Brera investment, have agreed to vote in favor of the Brera investment,
the reconstituted Board of Directors and other related matters.
The consummation of the transactions contemplated by the Investment
Agreement is subject to customary conditions including the receipt of all
necessary consents and regulatory approvals and the absence of material
adverse changes to the business of SCI. Subject to the satisfaction of all
conditions, the transactions are expected to be consummated during April 1999.
Under certain conditions, if the Investment Agreement is terminated or the
transactions contemplated therein are not consummated, Brera will be entitled
to a customary break-up fee and/or reimbursement of expenses.
In a separate transaction, Brera has agreed with Francis X. Suozzi, a
director of the Company, to purchase all of the shares of Common Stock owned
by Mr. Suozzi that constitutes 4.4% of the outstanding Common Stock of the
Company. Mr. Suozzi will resign as a director upon consummation of the sale
of his shares to Brera.
This release contains forward-looking statements. There are certain
important factors that could cause results to materially differ from those
anticipated from the statements above. These factors include, but are not
limited to: the Company's ability to obtain financing to fund growth;
worldwide economic conditions; automotive industry trends; the marketplace for
airbag related products; approval of automobile manufacturers of airbag
cushions currently in production by the Company; pricing pressures; the
ability of the Company to effectively control costs and to satisfy customers
on timeliness and quality. Additional information on these and other factors
that could potentially affect the Company's financial results may be found in
the Company's filings with the Securities and Exchange Commission.
Safety Components International, Inc. is a leading, low-cost supplier of
automotive airbag fabric and cushions with operations in North America, Europe
and Asia. The Company is also a leading manufacturer of value-added synthetic
fabrics used in a variety of niche industrial and commercial applications. In
addition, Safety Components supplies metal airbag components to its airbag
customers utilizing its machining and stamping capabilities gained from years
of experience as a military ordnance manufacturer and continues as a systems
integrator and manufacturer for ordnance program.