THE DIAL CORP BOARD GIVES FINAL AUTHORIZATION FOR SPIN-OFF OF FINANCIAL BUSINESSES TO SHAREHOLDERS
THE DIAL CORP BOARD GIVES FINAL AUTHORIZATION FOR SPIN-OFF
OF FINANCIAL BUSINESSES TO SHAREHOLDERS
PHOENIX, Ariz., Nov. 21 /PRNewswire/ -- John W. Teets, chairman, president and chief executive officer of the Dial Corp (NYSE: DL), said today that the board of directors of the company gave final approval to a restructuring plan that will spin off Dial's commercial lending and mortgage insurance businesses to its shareholders.
"The plan will enable Dial to focus on its core businesses, consumer products and services. It should also enable each company to pursue separate growth opportunities to maximize shareholder returns," Teets said. "It is our determination to continue to deliver increasing value to our shareholders and build on our strong position in consumer products and services," he added.
The plan includes:
-- The formation of a new company named GFC Financial Corporation composed of (1) Greyhound Financial Corporation, an investment-grade commercial finance company; (2) Greyhound European Financial Group, based in London; and (3) Verex Corporation, Dial's mortgage insurance company in the United States.
-- The consideration of strategic alternatives for the company's Transportation Manufacturing and Services Parts business. This group is a leader in both the manufacture of intercity coaches and municipal transit systems buses and in the distribution of service parts. Among the alternatives the company intends to pursue for this business is the possibility of a spin-off to Dial shareholders in 1992.
-- A restructuring charge to redeploy assets, streamline and reshape certain operations and write down certain assets, which will be taken to improve productivity and reduce costs. It is anticipated that these actions will enhance the long-term financial performance of both Dial and the newly established financial business, GFC Financial Corporation. Depending on the final amount of the write-off, the Dial Corp profits should improve by up to $20 million per year ($.50 per share) and GFC Financial Corporation earnings should increase by up to $8 million annually ($.20 per Dial share). In addition, Verex, which has been carried by the Dial Corp as a discontinued operation, may be reclassified as a continuing operation as a result of the spin-off and will explore writing new business. Verex's operations are profitable and its outlook is good, with 1992 net income expected to be in the $14 to $16 million range ($.35 to $.40 per Dial share), adding to GFC Financial's earnings.
The company will proceed promptly to (1) file a proxy statement and GFC Financial Corporation registration statement with the Securities and Exchange Commission; (2) complete the necessary loan and credit agreements with its banks and confirm credit ratings with the rating agencies; (3) obtain an appropriate order of the Wisconsin Commissioner of Insurance and other necessary regulatory approvals; and (4) hold a meeting of its stockholders for final approval of the proposals. The company currently plans that all the steps can be accomplished by or near the end of January 1992.
The board's approval of the spin-off is subject to the reconfirmation of the companies' investment-grade ratings by the rating agencies, modification in and/or refinancing of existing credit agreements for both companies, and the approval of shareholders. The plan was previously announced and preliminary approval given by the board on Oct. 29, 1991. The ongoing discussion with both the banks and rating agencies have bolstered management's confidence that conditions will be met.
Because the restructuring plan calls for reshaping certain operations and a write-down of certain assets, Dial anticipates a special charge to earnings of both Dial and GFC Financial. This one- time charge, including restructuring and other items, has not been finally determined, but is estimated to be in the aggregate up to $145 million after-tax ($3.65 per Dial share) plus estimated transaction costs of $35 million ($.88 per share). The potential one-time charge and estimated transaction costs reflect certain increases over the initial estimates to be absolutely sure that each company is adequately reserved.
/CONTACT: William H. Peltier of Dial, 602-207-5812; or Gregory W. Miller, 212-484-7404, for Dial/
(DL) CO: The Dial Corp; GFC Financial Corporation ST: Arizona IN: SU: GK-OS -- NY066 -- 5941 11/21/91 13:35 EST