Cytec to redeem Series A and B Preferred Stock.WEST PATERSON West Paterson (păt`ərsən), borough (1990 pop. 10,982), Passaic co., NE N.J., a suburb of Paterson; inc. 1914. Electric, electronic, and photographic products are made in the borough. , N.J.--(BUSINESS WIRE)--August 17, 1995--Cytec Industries Inc. (NYSE NYSE See: New York Stock Exchange :CYT) announced today that it has signed an agreement with American Cyanamid American Cyanamid was a large, diversified, American chemical manufacturer. Lederle Laboratories, maker of Centrum and Stresstabs vitamins, was Cyanamid's pharmaceutical division. Davis & Geck was the company's medical device division. Company, a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of American Home Products Corp. (NYSE:AHP AHP Assistant House Physician. ), providing for the early redemption by Cytec of its Series A Cumulative Adjustable Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. and Series B Cumulative Convertible Preferred Stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". held by American Cyanamid Company. Darryl D. Fry, Chairman of the Board, President and Chief Executive Officer of Cytec stated: "This transaction achieves one of Cytec's primary objectives and represents significant progress in Cytec's program to optimize its capital structure." James P. Cronin, Vice President and Chief Financial Officer, indicated that "Funding for these redemptions will be a combination of cash, bank borrowings under our revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility and the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of a public offering of approximately 3.55 million shares of Cytec common stock. The redemption of the preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. will eliminate the annual dividend requirement of $14.6 million and have a corresponding positive effect, less interest expense effect, on earnings. In addition, it is anticipated that the increase in outstanding common shares will provide additional liquidity to trading in Cytec's stock. This agreement represents a very positive step for Cytec." The agreement provides for separate closings for each of the Series. Cytec will redeem Series A for $90 million plus accrued dividends. The closing for Series A is anticipated to occur within ten days. Series B is convertible into approximately 5.55 million shares of Cytec common stock and will be redeemed for cash equal to the underlying value of approximately 2 million shares of common stock at approximately $50.81 per share representing the average closing price of Cytec common stock for the ten trading days immediately preceding the signing of the agreement and of approximately 3.55 million shares of common stock valued at the public offering price less American Home's share of selling expenses; plus $12 million representing the value of Series B over the value of the underlying common stock; plus accrued dividends. For a two year period following the closing on Series B, American Cyanamid will be entitled to a further payment, equal to the takeover premium on up to approximately 2 million shares of common stock, in the event of an acquisition of greater than 50% of Cytec's common stock by a third party. The closing for Series B is anticipated to occur in the latter part of the year after completion of the public offering. Upon closing, the excess of the purchase price of Series B over the related book value will have no effect on net income of Cytec but will reduce earnings per share as the excess is accounted for as a preferred stock dividend and, therefore, will result in Cytec incurring a large one-time loss on an earnings per common share basis. The redemption of the preferred stock is subject to certain conditions, including agreement by Cytec's bankers to lend it a portion of the purchase price, and, in the case of the redemption of Series B, a successful public offering of approximately 3.55 million shares of Cytec common stock. Cytec Industries Inc. develops, manufactures and markets specialty chemicals and materials worldwide. The company also manufactures a variety of building block chemicals that are used internally and marketed externally. Cytec operates 36 manufacturing, research and development, and distribution facilities primarily in the United States, Canada, Mexico, the United Kingdom and the Netherlands. The Company employs approximately 4,000 people in the United States and approximately 1,000 people in other countries. CONTACT: Cytec Industries Inc. Kumar Shah, 201/357-3298 (analyst) or George Yuro, 201/357-3319 |
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