Kelso to pay $160 million for 45% of MagneTek.Kelso to pay $160 million for 45% of MagneTek MagneTek Inc., a $1.1-billion (sales) Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. manufacturer, last week disclosed a near one-half stake will be purchased by New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. merchant banker Kelso & Co. Inc. MagneTek and Kelso announced Jan. 30 a series of transactions valued at about $160 million that would give Kelso about 45 percent of the voting common stock. Much of the stock is indirectly owned by former employees of investment banker Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. Drexel Burnham Lambert Drexel Burnham Lambert was a major Wall Street investment banking firm, which first rose to prominence and then was driven into bankruptcy in the 1980s by its involvement in illegal activities in the junk bond market, driven by Drexel employee Michael Milken. Inc. They were original investors in MagneTek and would undoubtedly earn hefty profits: shareholder equity increased 18-fold since 1985, ranking MagneTek the most profitable company for its investors in Los Angeles County, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Forbes magazine. Money raised from Kelso will be used to retire debt, said officials at MagneTek, which makes motors, lighting ballasts and generators. "We've been highly leveraged - more than other major electronic equipment companies - and that's been one of the concerns of the financial community," said MagneTek Vice President Robert Murray Robert Murray is the name of:
"This puts us in a better light, relative to our peer group," said Frank Perna Jr., president and chief executive. The current debt-to-equity ratio debt-to-equity ratio The relationship between long-term funds provided by creditors and funds provided by owners. A firm's debt-to-equity ratio is calculated by dividing long-term debt by owners' equity. Both items are shown on the balance sheet. of 2.9-to-1 would fall to about 2-to-1, said officials. Competitors include Emerson Electric and North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Philips. "Management's not changing, the company's not changing, and the objectives are not changing," said Perna. Kelso would place two members on an eight-member board. Officials at Kelso declined to comment. Kelso is a private firm established more than 20 years ago. It has sponsored and invested in 35 transactions with a total value of more than $7.5 billion. They include steel distributor Earle M. Jorgensen Co. - across town from MagneTek in Lynwood - and toilet maker American Standard. MagneTek was created in 1986 as a private venture to buy the magnetics division of Litton Industries Named after inventor Charles Litton Sr., Litton Industries was a large defense contractor in the United States, bought by the Northrop Grumman Corporation in 2001. Inc. in Beverly Hills. With six big acquisitions by mid-1987, and several more since, MagneTek's revenues have more than quintupled in five years. The Kelso deal aims at cashing out some original investors. Their continued holding - an "overhang" - effectively discourages new investors who are wary of a large sell-off on an unknown date, said sources. MagneTek went public in 1989 at $12 a share and has traded in the $8-to-$14 range. The stock rose 75 cents to $12.875 after the Jan. 30 announcement. Under the agreement, 4.58 million authorized but unissued shares of common stock would be sold to Kelso for about $15 a share. Another 7.9 million shares would be sold by two limited partnerships, in turn, owned by ex-Drexel staff. Another 600,000 to 1.6 million shares of shares from unidentified investors would also be sold for $10 a share. MagneTek was formed by The Spectrum Group Inc., a private investment and management firm run by Andrew G. Galef, 57, who is now MagneTek's board chairman. |
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