SOLICITING MATERIAL
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN CONSENT STATEMENT
SCHEDULE 14A INFORMATION
CONSENT STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)
Filed by the
Registrant þ
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Check the appropriate box:
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Preliminary Consent Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) |
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Definitive Consent Statement |
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Definitive Additional Materials |
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Soliciting Material Under Rule 14a-12 |
BAIRNCO CORPORATION
(Name of Registrant as Specified in Its Charter)
BAIRNCO CORPORATION
(Name of Persons(s) Filing Consent Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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and state how it was determined): |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
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On January 24, 2007, Bairnco Corporation issued the following press release:
BAIRNCO CORPORATION
300 PRIMERA BOULEVARD, SUITE 432
LAKE MARY, FLORIDA 32746
(407) 875-2222
PRESS RELEASE
BAIRNCO CORPORATION FILES DEFINITIVE PROXY STATEMENT
Board Advises Shareholders to Protect Their Investment
And Reject Steel Partners Opportunistic Efforts to Take Control of the Company
Lake Mary, Florida, January 24, 2007 Bairnco Corporation (NYSE: BZ) today filed a definitive
proxy statement with the Securities and Exchange Commission advising stockholders to reject Steel
Partners efforts to replace Bairncos board as part of its plan to acquire Bairnco at an
inadequate price of $12.00 per share. Following is the full text of the letter to investors that
is included within the proxy statement:
Dear Fellow Stockholder:
On June 22, 2006, Steel Partners, L.P. (Steel Partners), through a wholly owned
subsidiary BZ Acquisition Corp., announced an unsolicited tender offer to purchase all of
the issued and outstanding common stock of Bairnco Corporation for $12.00 per share in cash,
without interest, subject to a number of significant conditions (the Offer).
After a thorough review of this Offer, Bairncos existing strategic business plan, and other
strategic alternatives, the Companys Board of Directors determined that the Offer is
inadequate, opportunistic and not in the best interests of all of the Companys
stockholders. Accordingly, the Companys Board has recommended that you reject the Offer and
not tender your shares.
Protect Your Interests Do Not Support Steel Partners
We strongly urge you to reject Steel Partners efforts to replace your Board. As part of its
plan to acquire Bairnco at a price that the Board of Directors has determined to be
inadequate and not in the best interests of all of Bairncos stockholders, Steel Partners
recently commenced a process to solicit your written consents to take control of your Board
by removing the directors that you have elected and replacing them with a slate of nominees
that have been handpicked by Steel Partners.
Your Board Has and Will Continue to Act in the Best Interests of the Company and All of its
Stockholders
The Companys existing Board of Directors is open-minded, independent and better suited to
act in the best interests of ALL the Companys stockholders than Steel Partners slate of
handpicked nominees. Your current Board has always upheld its fiduciary duty to act in the
best interests of ALL of the Companys stockholders and will continue to do so. There is no
guarantee that Steel Partners slate of nominees would act in a similar manner due to the
ties these nominees have to one another and their affiliations with Steel Partners, which
has an interest in the Offer that is not the same as that of the Companys other
stockholders. In essence, a vote for Steel Partners slate of nominees is a vote to give
away control of the Company without getting a control premium, or an adequate price for
your stock.
The Offer Dramatically Undervalues Bairnco
The Board believes that Steel Partners $12.00 per share Offer dramatically undervalues
Bairnco and would deny stockholders value that is rightfully yours:
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Management has undertaken significant value-enhancing initiatives over the last year
that are expected to result in annual EBITDA for 2007 of $23.0 to $24.1 million, an
increase of approximately 46% to 54% over 2006 annual EBITDA (see financial note
below). Steel Partners Offer does not reflect this increase in value. |
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These initiatives include product and marketing programs that are driving
positive sales trends in our Arlon Electronic Materials and Kasco divisions, the
successful start-up of a new production facility in China, ongoing cost reduction
programs, and the acquisition of Atlanta SharpTech, which was accretive to earnings
in the fourth quarter of 2006 and is expected to be accretive to earnings in 2007. |
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The benefits of these initiatives have already begun to bear fruit, with the
Companys unaudited 2006 diluted earnings per share increasing 38.3% over 2005 to
$0.65 per share, which exceeded our guidance for the year. The Company has also
tightened earnings per share guidance for 2007 to a range of $1.10 to $1.20. |
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The Board has approved an increase of 43% in the quarterly cash dividend to
$0.10 per share from $0.07 per share, based on the Companys strong financial
condition, the demonstrated contributions from the Atlanta SharpTech acquisition in
the fourth quarter of 2006 and the positive outlook for the Companys performance. |
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The price-earnings multiples implied by the $12.00 Offer further illustrate the
inadequacy of Steel Partners Offer, which not only fails to reflect current market
values but also lacks a control premium. The Offer represents valuation multiples of
10.0 to 10.9 times Bairncos expected 2007 EPS of $1.10 to $1.20, as compared to
average multiples of 17.5 and 18.4 times projected 2007 earnings for companies in the
S&P 600 Small Cap and Russell 2000 indices. |
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Steel Partners $12.00 per share Offer is well below Bairncos current trading price
levels and over 14% lower than the recent 52-week high of $14.00 per share. |
Note: All earnings and net income numbers exclude the impact of professional fees
related to the Offer and Steel Partners consent solicitation and certain related matters
and a tax benefit from an increased basis for income tax accounting purposes in certain real
property and related improvements booked during the third quarter of 2006.
We urge you to protect your investment in Bairnco and reject Steel Partners efforts to take
control of your Company. In order to do so, do not sign Steel Partners gold consent card.
If you have previously signed a gold consent card, you may revoke that consent by signing,
dating and mailing the enclosed WHITE Consent Revocation Card immediately. Finally, even if
you have not signed Steel Partners consent card, you can show your support for your Board
by signing, dating and mailing the enclosed WHITE Consent Revocation Card. Regardless of the
number of shares you own, your revocation of consent is important. Please act today.
We appreciate your continued support.
On Behalf of the Board of Directors,
Sincerely,
Luke E. Fichthorn, III,
Chairman and CEO
Bairnco Corporation
IMPORTANT INFORMATION
Bairnco filed a Solicitation/Recommendation Statement on Schedule 14D-9 (as amended from time to
time, the Schedule 14D-9) with the Securities and Exchange Commission (SEC) on
July 6, 2006, regarding Steel Partners unsolicited tender offer for all the outstanding shares of
Stock of Bairnco for $12.00 per share, net to the sellers in cash, without interest (the
Offer). Bairncos stockholders should read the Schedule 14D-9 (including any amendments
or supplements thereto) because these documents contain important information relating to the Offer
and the related consent solicitation.
On January 12, 2007, Steel Partners filed a definitive consent solicitation statement with the SEC
relating to Steel Partners solicitation of consents of Bairncos stockholders to, among other
things, remove all of Bairncos current directors and replace them with Steel Partners nominees.
On January 24, 2007, Bairnco filed a definitive consent revocation statement on Form DEF 14A (as
amended from time to time, the Consent Revocation Statement) with the SEC to counter
Bairncos consent solicitation and intends to mail the Consent Revocation Statement to the
Bairncos stockholders beginning on January 25, 2007. Bairncos stockholders should read the
Consent Revocation Statement (including any amendments or supplements thereto) because it contains
additional information important to the stockholders interests in the Offer and the related
consent solicitation.
The Schedule 14D-9, the Consent Revocation Statement and other public filings made by Bairnco with
the SEC are available free of charge at the SECs website at www.sec.gov. Bairnco will
provide a copy of these materials free of charge at its website at www.bairnco.com.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Certain of Bairncos directors, officers and employees may be deemed to be participants in the
solicitation of Bairncos stockholders. Information regarding the names and interests of these
persons is contained in the preliminary consent revocation statement (including any amendments or
supplements thereto).
GAAP RECONCILIATION
Bairnco defines EBITDA as income from continuing operations plus (i) interest expense, (ii) income
taxes, and (iii) depreciation and amortization expense. Bairnco has historically used EBITDA to
assess performance. Bairnco believes that the use of certain adjusted, non-GAAP financial measures
such as EBITDA, allows management and investors to evaluate and compare core operating results from
ongoing operations from period to period in a more meaningful and consistent manner. In addition,
Bairnco believes that excluding the unusual professional fees related to the Offer and Steel
Partners consent solicitation and certain related matters (the
Offer Fees) and a tax benefit from an increased
basis for income tax accounting purposes in certain real property and related improvements booked
during the third quarter of 2006 (the Property Tax
Benefit) more clearly reflects the performance of the Company and permits a
consistent comparison of financial statistics across periods. EBITDA as calculated by Bairnco is
not necessarily comparable to similarly titled measures reported by other companies. In addition,
EBITDA is not prepared in accordance with GAAP, and should not be considered as an alternative to
income from continuing operations, operating profit, net cash provided by continuing operations or
Bairncos other financial
information determined under GAAP, and should not be considered as a measure of profitability or
liquidity of Bairnco.
The following table reconciles income from continuing operations to adjusted EBITDA and income from
continuing operations to adjusted income from continuing operations for each of the respective
periods:
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Historical |
Forecast |
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2003A |
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2004A |
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2005A |
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2006A |
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2007F |
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Income from Continuing Operations |
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$ |
2.6 |
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$ |
5.1 |
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$ |
3.6 |
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$ |
5.0 |
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$ |
7.4 |
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- |
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$ |
8.2 |
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Interest Expense (Income) |
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0.8 |
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0.6 |
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0.1 |
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0.7 |
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1.6 |
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- |
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1.5 |
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Income Taxes |
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1.2 |
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2.4 |
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1.9 |
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0.4 |
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4.3 |
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- |
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4.7 |
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Depreciation & Amortisation |
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7.8 |
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7.7 |
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7.5 |
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7.4 |
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8.7 |
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- |
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8.7 |
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EBITDA |
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$ |
12.4 |
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$ |
15.8 |
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$ |
13.1 |
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13.5 |
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22.0 |
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- |
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23.1 |
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Offer Fees |
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2.2 |
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1.0 |
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- |
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1.0 |
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Adjusted EBITDA |
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$ |
12.4 |
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$ |
15.8 |
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$ |
13.1 |
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$ |
15.7 |
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$ |
23.0 |
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- |
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$ |
24.1 |
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Income from Continuing Operations |
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$ |
2.6 |
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$ |
5.1 |
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$ |
3.6 |
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$ |
5.0 |
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$ |
7.4 |
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- |
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$ |
8.2 |
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Offer Fees, net of tax benefit |
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1.4 |
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0.7 |
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- |
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0.7 |
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Property Tax Benefit |
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(1.6 |
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- |
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Adjusted Income from Continuing Operations |
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$ |
3.8 |
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$ |
5.2 |
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$ |
3.6 |
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$ |
4.8 |
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$ |
8.1 |
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- |
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$ |
85 |
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Weighted average diluted common shares outstanding |
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7,391 |
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7,569 |
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7,613 |
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7,387 |
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7,400 |
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- |
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7,400 |
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Adjusted diluted earnings per share from continuing operations |
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$ |
0.51 |
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$ |
0.69 |
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$ |
0.47 |
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$ |
0.65 |
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$ |
1.10 |
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- |
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$ |
1.20 |
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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES REFORM ACT OF 1995
Statements in this press release referring to the expected future plans and performance of the
Corporation are forward-looking statements. Actual future results may differ materially from such
statements. Factors that could affect future performance include, but are not limited to, changes
in US or international economic or political conditions, such as inflation or fluctuations in
interest or foreign exchange rates; the impact on production output and costs from the availability
of energy sources and related pricing; changes in the market for raw or packaging materials which
could impact the Corporations manufacturing costs; changes in the product mix; changes in the
pricing of the products of the Corporation or its competitors; the market demand and acceptance of
the Corporations existing and new products; the impact of competitive products; the loss of a
significant customer or supplier; production delays or inefficiencies; the ability to achieve
anticipated revenue growth, synergies and other cost savings in connection with acquisitions and
plant consolidations; the costs and other effects of legal and
administrative cases and proceedings, settlements and investigations; the costs and other effects
of complying with environmental regulatory requirements; disruptions in operations due to labor
disputes; and losses due to natural disasters where the Corporation is self-insured. While the
Corporation periodically reassesses material trends and uncertainties affecting the Corporations
results of operations and financial condition in connection with its preparation of its press
releases, the Corporation does not intend to review or revise any particular forward-looking
statement referenced herein in light of future events.
ADDITIONAL INFORMATION ABOUT BAIRNCO
Bairnco Corporation is a diversified multinational company that operates two distinct businesses
Arlon (Electronic Materials and Coated Materials segments) and Kasco (Replacement Products and
Services segment). Arlons principal products include high technology materials for the printed
circuit board industry, cast and calendered vinyl film systems, custom-engineered laminates and
special silicone rubber compounds and components. Kascos principal products include replacement
band saw blades for cutting meat, fish, wood and metal, and on site maintenance primarily in the
meat and deli departments. Kasco also distributes equipment to the food industry in France.
CONTACTS:
Kenneth L. Bayne, Bairnco Corporation
Telephone: (407) 875-2222, ext. 227
Kim Levy or Shannon Provost, Sard Verbinnen & Co
Telephone: (212) 687-8080
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