Sheldahl, International Flex Technologies and Morgenthaler Partners Continue Talks
22 August 2000
Sheldahl, International Flex Technologies and Morgenthaler Partners Continue Talks
NORTHFIELD, Minn., Aug. 22 Sheldahl, Inc. announced today that exclusive discussions
with International Flex Technologies and their majority owner Morgenthaler
Venture Partners ("Morgenthaler") are continuing on an exclusive basis. The
exclusive discussions, initially scheduled to terminate August 7, 2000, have
once again been extended until August 30, 2000. Due diligence and
negotiations are proceeding. In the event a transaction is not consummated,
the Company will immediately proceed to initiate other alternatives to
strengthen its cash flow and financial position.
A series of announcements have been issued to keep shareholders abreast of
developments as they occur. On June 26, 2000, the Company announced the
signing of an exclusivity agreement whereby Sheldahl would acquire IFT in
exchange for shares of Sheldahl's common stock. In addition Morgenthaler
Partners and other potential investors proposed to infuse approximately
$40 million in new capital into Sheldahl in exchange for shares of a new
series of Sheldahl's convertible preferred stock.
Related to these continuing discussions, on August 15, 2000, Sheldahl
announced that Morgenthaler invested $2 million in the Company through a debt
instrument that is convertible under certain circumstances into common stock
or, in the event Morgenthaler and the Company consummate the equity
transaction currently being negotiated and previously announced, then the debt
will be convertible into shares of the new series of Sheldahl's convertible
preferred stock to be issued in that transaction.
In addition, on August 7, 2000, the Company also announced an initial
extension of the exclusivity agreement and stated that it expects earnings for
its fiscal 2000 fourth quarter to be below analysts' expectations but slightly
improved over last quarter and fourth quarter last year. Softer than expected
sales in Sheldahl's Core business is driving the reduced expectations and will
result in the earnings shortfall and continued cash tightness. Fourth quarter
and full year results are expected to be released at the end of September
2000.
Morgenthaler is a private equity investment firm with offices in
Cleveland, Ohio and Menlo Park, Calif., with approximately $1 billion under
management.
Sheldahl is a leading producer of high-density substrates, high-quality
flexible printed circuitry, and flexible laminates primarily for sale to the
automotive electronics and data communications markets. The Company, which is
headquartered in Northfield, Minn., has operations in Northfield; Longmont,
Colo.; South Dakota; Toronto, Ontario, Canada; and Chihuahua, Chih., Mexico.
Its sales offices are located in Detroit, Mich.; Hong Kong, China; Singapore;
and Mainz, Germany. Currently, Sheldahl employs approximately 800 people.
Sheldahl's common stock trades on the Nasdaq National Market tier of the
Nasdaq Stock Market under the symbol: SHEL. In its fiscal year ended
August 27, 1999, Sheldahl reported revenues of $122.1 million. Sheldahl news
and information can be found on the World Wide Web at http://www.sheldahl.com
The discussion above contains statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements by their nature
involve substantial risks and uncertainties as described by Sheldahl's
periodic filings. Actual results may differ materially depending on a variety
of factors, including but not limited to the following: the achievement of
Sheldahl's projected operating results, the ability of Sheldahl to
successfully obtain waivers from its lenders for any defaults on its debt
covenants, the achievement of efficient volume production and related sales
revenue results at Longmont, the ability of Sheldahl to identify and
successfully pursue other business opportunities, and Sheldahl not entering
into an agreement with respect to a transaction or any such transaction not
being consummated. Additional information with respect to the risks and
uncertainties faced by Sheldahl may be found in, and the prior discussion is
qualified in its entirety by, the Risk Factors contained in the Company's
filings with the Securities and Exchange Commission, including Sheldahl's
Annual Report, Form 10-K for the fiscal year ended August 27, 1999, Forms 10-Q
for the quarters ended November 26, 1999; February 25, 2000, May 26, 2000 and
other SEC filings. Sheldahl does not undertake any obligation to update any
such factors or to publicly announce developments or events relating to the
matters described herein.