Thor Urges Shareholders to Send Message to Agree to a Merger
21 April 2000
Thor Urges Coachmen Shareholders to Send Strong Message to Coachmen Board to Agree to a Merger
JACKSON CENTER, Ohio, April 20 Thor Industries, Inc.
(NYSE: THO) announced today that it has released the following letter to the
shareholders of Coachmen Industries, Inc. (NYSE: COA)
FELLOW SHAREHOLDERS OF COACHMEN INDUSTRIES, INC.:
PLEASE USE COACHMEN'S PROXY CARD FOR ITS SHAREHOLDER MEETING TO SEND A
MESSAGE THAT COACHMEN SHOULD AGREE TO A MERGER WITH THOR
Coachmen shareholders need to send a strong message to the Coachmen Board
that Coachmen should agree to a merger with Thor. The proxy card you have
received from Coachmen and their annual meeting, currently scheduled for
May 4, 2000, present a timely opportunity for shareholders to send such a
message to the Coachmen Board. Yesterday, we asked Coachmen to promptly enter
into a binding agreement with Thor and to postpone the annual meeting of
shareholders while we negotiate a transaction. We also asked them to waive the
defensive provisions of Coachmen's by-laws.
WE STRONGLY URGE YOU TO:
-- WITHHOLD AUTHORITY TO VOTE FOR ALL NAMED DIRECTOR NOMINEES, and
-- vote AGAINST approval of Coachmen's 2000 Omnibus Stock Incentive
Program.
On April 17, 2000, Thor, which owns 466,300 or 3% of Coachmen's
outstanding shares, made a proposal to Coachmen to acquire all of the
outstanding Coachmen common stock for $18 per share. The proposed
consideration consists of 60% cash and 40% Thor stock based upon Thor's
closing price of $24 7/16 on April 14, 2000 (resulting in an exchange ratio of
0.7366 Thor shares for each Coachmen share exchanged entirely for Thor stock).
Our offer is not subject to financing contingencies. The $18 offering price
represents a 41.9% premium over Coachmen's closing stock price of $12-11/16 on
April 14, 2000.
The offer not only gives Coachmen shareholders a substantial premium, but
also permits them to continue as shareholders in the combined enterprise,
providing further opportunities for long term value enhancement.
We reluctantly made our proposal public because of Coachmen's
unwillingness to enter into discussions with us about a mutually beneficial
merger. On February 21, 2000, we privately proposed a merger with Coachmen at
$17 per share, only to be told that Coachmen was not interested in discussing
our proposal.
ADVANTAGES OF A MERGER WITH THOR
The advantages of a merger of Coachmen and Thor are significant. We
believe the transaction would be immediately accretive to pro-forma earnings
per share and create additional opportunities to increase shareholder value as
a result of:
-- cost savings from increased purchasing leverage in the RV industry, and
synergies due to the fit in products and geography between the two
companies.
COMPARE THOR'S STRONG PERFORMANCE TO COACHMEN'S PERFORMANCE
Since our founding 20 years ago, Thor has achieved an excellent record:
-- We have never had a year in which we lost money.
-- We have substantial cash and no debt. Despite our strong cash
position, we achieved a return on beginning stockholders equity of
22.3% in fiscal 1999 versus Coachmen's 14.4% in fiscal 1999.
-- While our diluted earnings per share have grown from $1.12 in fiscal
1996 to $2.52 in fiscal 1999 (a compound annual growth rate of 31.0%),
Coachmen's diluted earnings per share have declined from $1.84 in
fiscal 1996 to $1.80 in fiscal 1999. These earnings results were
achieved while both companies had similar revenue growth rates during
the same periods.
-- During 1999, a year in which RV industry shipments were up nearly 10%
to the highest unit sales in 20 years following a 15% increase in 1998,
Coachmen's RV income before taxes for the year was down 22.1%. In the
second half of 1999, its RV income dropped 32.8% versus 1998 and
declined 62.1% in the last quarter alone. Coachmen was the only major
public manufacturer to show an RV earnings decline in 1999.
-- In contrast, Thor's latest six months' results show RV sales up
18.3% and RV income up 37.0%.
-- We believe our stock should be very attractive to Coachmen
shareholders, since the ratio of Coachmen to Thor closing stock prices
has declined during the last two years. On February 4, 1998, this
ratio was 1.26x-its highest level in the past two years. However, by
April 14, 2000, the ratio declined to .52x. Thor's closing stock price
increased 8.0% from $22 5/8 on March 31, 1999 to $24 7/16 on
April 14, 2000. In contrast, Coachmen's closing stock price dropped
38.1% from $20 1/2 on March 31, 1999 to $12 11/16 on April 14, 2000.
Between March 31, 1999 and April 14, 2000, Coachmen shareholders lost
approximately $120 million in market value.
-- Coachmen possesses a number of un-utilized and under-utilized assets,
including real estate and, we understand, a corporate jet. Coachmen
recently acquired a new corporate headquarters.
-- Coachmen has spent $13.3 million over the past 3 years on an Enterprise
Resource Planning system. These costs incurred represented
approximately 10% of the company's net income before taxes during this
time. Coachmen's 1999 Annual Report to Shareholders discloses that the
system has resulted in "major operational disruptions ... , significant
material shortages ... , high rework costs and missed sales that
resulted in dramatically reduced profits." Plus, its 1999 Annual
Report states that "higher costs associated with ... the underlying
system will continue to impact profits in 2000."
WHAT HAS THE COACHMEN BOARD BEEN DOING ABOUT IT?
POISON PILLS, GOLDEN PARACHUTES, EXECUTIVE-FRIENDLY STOCK OPTION PLANS
While the Coachmen Board has (i) rebuffed our attempts to discuss a
mutually beneficial transaction that will increase shareholder value and (ii)
watched the decline of its earnings and share price, it:
-- has extended a "poison pill" that further entrenches the existing
executives.
-- has approved Change in Control Agreements offering rich rewards to
family members and others -- golden parachutes.
-- now seeks your approval to adopt a stock incentive plan that will reward
the same family members and others and dilute current stockholders'
interests.
POISON PILL. In October 1999, the Coachmen Board replaced an expiring
shareholder rights plan with one which became effective in January of this
year (the "poison pill"). If triggered, the rights plan would cause any
person deemed an "acquiring person" to suffer substantial dilution. It is
troubling to us that an under-performing Board has so much discretion over who
can and cannot participate in the process to increase shareholder value. We
believe the Board should redeem the poison pill immediately, in the best
interests of all shareholders.
CHANGE IN CONTROL AGREEMENTS. As described on page 9 in Coachmen's March
27, 2000 Proxy Statement delivered to you, Coachmen has entered into "Change
in Control Agreements" with certain executive officers and other employees.
If there is a change in control of Coachmen and these employees leave for
certain specified reasons, these individuals can receive a huge, and we think
unjustified, financial payment. Based upon information in Coachmen's Proxy
Statement, we believe that many millions of dollars could be paid out under
these golden parachutes -- and that approximately $3.0 million could be paid
to members of the Corson family.
EXECUTIVE-FRIENDLY STOCK INCENTIVE PLAN. On top of these golden
parachutes, the Coachmen Board is now asking you to authorize an additional
1.0 million shares in its 2000 Omnibus Stock Incentive Plan. We believe that
this is another attempt by executive officers to increase their personal
compensation without making a reciprocal increase in their accountability for
the financial performance (or under-performance) of Coachmen. Some of the
individuals who are eligible for benefits under this plan include the very
same executives who have continually refused to negotiate with us.
AGAIN, PLEASE USE COACHMEN'S PROXY CARD FOR ITS SHAREHOLDER MEETING
TO SEND A MESSAGE THAT COACHMEN SHOULD AGREE TO A MERGER WITH THOR
Coachmen shareholders need to send a strong message to Coachmen executives
that Coachmen should agree to a merger with Thor. The upcoming annual meeting
of Coachmen, currently scheduled for May 4, 2000, presents a timely
opportunity for shareholders to send a strong message to the Coachmen Board.
WE STRONGLY URGE YOU TO:
-- WITHHOLD AUTHORITY TO VOTE FOR ALL NAMED DIRECTOR NOMINEES, and
-- vote AGAINST approval of Coachmen's 2000 Omnibus Stock Incentive
Program.
By voting on the proxy card provided by Coachmen to WITHHOLD ALL NOMINEES
for directors and voting AGAINST the approval of the 2000 Omnibus Stock
Incentive Program, you can encourage the Coachmen Board to do what is right
and maximize your investment value. THIS IS YOUR LAST CHANCE THIS YEAR TO
SEND THAT MESSAGE.
If you have already voted in any other way and now wish to change your
vote, please call D.F. King & Co. at 212-493-6920 for instructions on how to
easily change your vote. Likewise, if you have any questions on these
procedures, please also call D.F. King.
Thank you for your support.
Sincerely,
THOR INDUSTRIES, INC.
Wade F.B. Thompson, Chairman
IT IS IMPORTANT THAT YOUR VOICE BE HEARD BY COACHMEN'S BOARD
* * *
This press release includes "forward-looking statements" that involve
uncertainties and risks. There can be no assurance that actual results will
not differ from Thor's expectations. Factors which could cause materially
different results include, among others, the success of new product
introductions, the pace of acquisitions and cost structure improvements,
competitive and general economic conditions, and the other risks set forth in
Thor's filings with the Securities and Exchange Commission. In some cases,
such forward-looking statements may be identified by terminology such as
"may," "will," "could," "should," "expects," "intends" or "believes" or the
negative of such terms or other comparable terminology.
This press release and certain other communications made by or on behalf
of Thor may constitute a solicitation. Thor intends to make a preliminary
filing with the Securities and Exchange Commission of proxy materials. Thor
has not yet filed such materials. Shareholders are advised to read the proxy
statement and other documents related to any proxy solicitation by Thor when
they become available because they will contain important information. When
completed, a definitive proxy statement and related proxy materials will be
mailed to shareholders of Coachmen and will be available at no charge on the
Securities and Exchange Commission's website at http://www.sec.gov.
Thor and certain other persons named below may be deemed to be
"participants" (as such term is defined in Schedule 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Schedule 14A")) in any
solicitation. The participants in this solicitation may include the following
executive officers of Thor: Wade Thompson and Peter Orthwein. As of the date
of this communication, Thor and Peter Orthwein may be deemed the beneficial
owner of 466,300 and 300 shares of common stock of Coachmen, respectively, and
Mr. Thompson and Mr. Orthwein may be deemed to beneficially own approximately
4,535,930 and 639,100 shares of Thor common stock, respectively.
In addition to any solicitations that may be made by any of the above-
referenced persons, Thor has retained D.F. King & Co., Inc. ("D.F. King &
Co."), BMO Nesbitt Burns Corp. ("BMO Nesbitt Burns") and Barry Vogel to act as
advisors.
D.F. King & Co. is a proxy solicitor that may provide solicitation
services with respect to banks, brokers, institutional investors and
individual shareholders for which it will receive customary compensation.
Employees of D.F. King & Co. may communicate in person, by telephone or
otherwise with persons who are shareholders of Coachmen.
BMO Nesbitt Burns is an investment banking firm that provides a range of
financial services for institutional and individual clients. In connection
with the engagement of BMO Nesbitt Burns as a financial advisor to Thor, Thor
anticipates that with respect to any solicitation the following employee of
BMO Nesbitt Burns may communicate in person, by telephone or otherwise with a
limited number of institutions, brokers or other persons who are shareholders
of Coachmen for the purpose of assisting in such proposed solicitation:
Steven Knoop. BMO Nesbitt Burns does not believe that it or any of its
directors, officers, employees or affiliates is a "participant" as defined in
Schedule 14A or that Schedule 14A requires the disclosure of participant
information regarding BMO Nesbitt Burns. BMO Nesbitt Burns will not receive
any fee for, or in connection with, such solicitation activities, apart from
the fees to which they are otherwise entitled under the terms of their
engagement. Thor has agreed to pay BMO Nesbitt Burns customary compensation
for acting as financial advisor to Thor in this transaction and has agreed to
provide BMO Nesbitt Burns and certain persons related to BMO Nesbitt Burns
with customary indemnification against certain liabilities, including certain
liabilities under the federal securities laws, arising out of this engagement.
An affiliate of BMO Nesbitt Burns provides commercial lending services to
Thor. In the ordinary course of its business, BMO Nesbitt Burns may trade
securities of Coachmen or Thor for its own account and the accounts of its
customers, and accordingly, may at any time hold a long or short position in
such securities. BMO Nesbitt Burns has informed Thor that, as of the date
hereof, it does not hold any shares of common stock of Coachmen for its own
account. BMO Nesbitt Burns and/or certain of its affiliates may have voting
and dispositive power with respect to certain shares of common stock of
Coachmen held in asset management, brokerage and other accounts. BMO Nesbitt
Burns and each of its affiliates disclaim beneficial ownership of such shares.
In addition to any solicitations that may be made by any of the above-
referenced persons, Thor has retained Mr. Vogel as an advisor. In connection
with his engagement, Thor anticipates that Mr. Vogel may communicate in
person, by telephone or otherwise with a limited number of institutions,
brokers or other persons who are shareholders of Coachmen for the purpose of
assisting in the proposed solicitation. Mr. Vogel will not receive any fee
for, or in connection with, such solicitation activities, apart from the fees
to which he is otherwise entitled under the terms of his engagement. Thor has
agreed to pay Mr. Vogel a fee as compensation for acting as an advisor to Thor
in this transaction. Mr. Vogel and members of his immediate family
beneficially own 14,400 shares of common stock of Coachmen.