Sheldahl Announces Revised Merger and Transaction Terms and Weak First Quarter
19 December 2000
Sheldahl Announces Revised Merger and Transaction Terms and Weak First Quarter
NORTHFIELD, Minn., Dec. 19 Sheldahl Inc.
and International Flex Technologies Inc. ("IFT") announced today that they
have agreed to revise the terms of their previously announced Merger Agreement
under which Sheldahl will acquire IFT concurrently with an equity and debt
investment in Sheldahl by Morgenthaler Partners ("Morgenthaler"), Ampersand
Ventures ("Ampersand") and Molex Incorporated ("Molex") in exchange for shares
of common stock, shares of a new series of preferred stock, subordinated debt
and warrants. The new terms include the following:
-- Sheldahl will issue approximately 9.7 million shares of Sheldahl common
stock in exchange for all outstanding equity securities of IFT and will
assume approximately $12.7 million in IFT debt;
-- Morgenthaler (IFT's majority shareholder) and Ampersand will invest
$25 million in equity capital in exchange for approximately 9.8 million
shares of Sheldahl common stock and shares of a new series of Sheldahl
preferred stock that is convertible into approximately 8.1 million
shares of Sheldahl common stock; and
-- Molex, a Sheldahl shareholder, customer and joint venture partner, will
join Morgenthaler and Ampersand in purchasing an aggregate of
$6.5 million of Sheldahl subordinated debt and warrants to purchase
approximately 1.5 million shares of Sheldahl common stock
As a result of these transactions, Morgenthaler, other IFT stockholders
and Ampersand will collectively hold securities representing ownership of
approximately 58% of Sheldahl on a fully diluted basis (assuming conversion of
all Sheldahl convertible securities). In addition, Molex will own
approximately 7% of Sheldahl on a fully diluted basis.
The transactions are expected to be completed by the end of the calendar
year. Shareholder approval will not be required as the Company has received
an exception from such requirement from Nasdaq. The transactions continue to
be subject to customary closing conditions, further negotiations and execution
of amendments to definitive agreements acceptable to the parties. Therefore,
there can be no assurance that the transactions will be completed by the end
of the calendar year, or at all. In the event these transactions do not
close, the financial viability of Sheldahl would be seriously jeopardized.
This release and all subsequent SEC filings related to the transactions will
be available on the Company's website at http://www.sheldahl.com
In addition, Sheldahl announces weak sales for the first quarter ended
December 1, 2000. "While first quarter final results are still being
completed, we did experience weaker sales in the Core Business than
anticipated," said Sheldahl President Edward L. Lundstrom. "The continuing
uncertainty about the Company's future along with the early end of life of a
key data communications program has resulted in a loss of approximately
$4 million in Core Business revenue. Core Business sales of approximately
$27.4 million are about 18% lower than last year and about 11% lower than last
quarter. This program loss will continue to have an impact on the Company
until at least our third fiscal quarter when we expect replacement programs to
be in place. This decline was partially mitigated by cost controls and while
we expect earnings to be slightly better than last quarter, they will not meet
expectations," added Mr. Lundstrom.
"Despite the weak first quarter at Sheldahl, we are still excited about
this merger and are focused on completing the transactions," said Donald R.
Friedman, President and Chief Executive Officer of IFT.
Upon completion of the merger, the combined company will operate under the
Sheldahl name as a publicly traded concern, with IFT operating as a wholly
owned subsidiary of Sheldahl. The new Board of Directors will include three
of the current directors of Sheldahl, three designees of Morgenthaler,
Ampersand and IFT, and one representative from Molex.
"The improved liquidity afforded by our investment partners clearly paves
the road for us to finish the development and commercialization of our new
products while we simultaneously grow the Core Business and improve
profitability," Lundstrom continued. "Sheldahl's Board and I fully support
these transactions. We believe this is in our shareholders' best interests
and provides for the best opportunities for growth and advancement for our
employees."
International Flex Technologies Inc. is a leading producer of fine-line,
high quality flexible circuits for sale to the electronics, data
communications and medical markets. The Company, headquartered in Endicott,
N.Y., has operations in Stamford, Conn. and sales offices worldwide.
Information on IFT can be found on the World Wide Web at
http://www.internationalflex.com
Morgenthaler Partners is a private equity investment firm with offices in
Cleveland, Ohio and Menlo Park, Calif., with approximately $1.0 billion under
management. Information on Morgenthaler can be found on the World Wide Web at
http://www.morgenthaler.com
Ampersand Ventures is a private equity investment firm with offices in
Wellesley, Mass. and San Diego, Calif., with approximately $350 million in
capital under management. Information on Ampersand Ventures can be found on
the World Wide Web at http://www.ampersandventures.com
Molex Incorporated is a 62-year-old manufacturer of electronic, electrical
and fiber optic interconnection products and systems; switches; value-added
assemblies; and application tooling. Based in Lisle, Ill., USA, the Company
operates 52 manufacturing facilities in 19 countries and employs approximately
17,650 people. For more information please go to http://www.molex.com
Sheldahl, Inc. 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. As of September 1, 2000,
Sheldahl employed approximately 800 people. Sheldahl's common stock trades on
the Nasdaq National Market tier of the Nasdaq Stock Market under the symbol:
SHEL. 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 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 completing
the transactions described above. 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 September 1,
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.