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KATY INDUSTRIES, INC. CONCLUDES THAT CARROLL FAMILY MERGER PROPOSAL WARRANTS FURTHER CONSIDERATION

 ELGIN, Ill., Sept. 21 /PRNewswire/ -- Katy Industries, Inc. (NYSE: KT) announced today that the special committee of the board previously appointed to evaluate the merger proposal from the members of the Carroll Family, based on information currently available to it, and after consultation with the Special Committee's financial advisors, has concluded that the $29.00 merger proposal from the Rosecliff/Pensler Group previously announced, while subject to satisfactory completion of due diligence and other contingencies, has sufficient financial credibility to merit further exploration. The existing merger agreement between Katy and a Carroll Family holding company to purchase the shares of Katy not owned by members of the Carroll Family pursuant to a merger at a price of $25.75 per share was made on the basis of complete access to Katy's confidential information. In light of the foregoing, the special committee determined that it can no longer assure the board that the board will be able to continue to rely on the special committee's recommendation that the board of directors recommend to Katy stockholders approval of the $25.75 offer.
 At a special meeting of the Katy board on Sept. 19, 1993, the Carroll Family advised the board of Katy that, in light of the foregoing, the family believes it is extremely unlikely the merger with the Carroll Family company would be consummated prior to Sept. 30, 1993, and therefore the family intends to exercise its right to terminate the existing Merger Agreement after Sept. 30, 1993. The merger agreement between Katy and the Carroll Family's company provides that it could be terminated by either party, if not in breach of the Agreement, if the merger has not been consummated by Sept. 30. Since it was clear that the Rosecliff/Pensler Group could not complete its work and be prepared to enter into a binding agreement by Sept. 30, 1993, the board of Katy requested that the Carroll Family agree to amend the merger agreement to extend the termination date until Oct. 29, 1993.
 The Carroll Family has not yet responded to the request to amend the merger agreement to extend the termination date. The Carroll Family has advised the board of Katy, as the family has consistently stated throughout the process, the family is not interested in selling its majority interest in Katy. If the Carroll Family terminates the merger agreement, the board of directors intends to allow the Rosecliff/Pensler Group to conduct due diligence, but stockholders of Katy must be aware that to the extent the Carroll Family (who own 52.6 percent of the outstanding stock of Katy) take steps to oppose any transaction with Rosecliff/Pensler, including voting against a merger proposal by such group, there is no assurance that a transaction can even be entered into with the Rosecliff/Pensler Group or consummated if entered into. In addition, stockholders should also be aware that the Rosecliff/Pensler proposal is subject to several significant contingencies, including satisfactory completion of due diligence, entering into definitive financing commitments and negotiation of a definitive merger agreement and there is no assurance that a transaction will be entered into with the Rosecliff/Pensler Group in light of such significant contingencies, most of which are beyond Katy's control.
 If the Carroll Family exercises its right to terminate the merger Agreement after Sept. 30, 1993, the board of Katy intends to actively explore opportunities that may exist to realize potentially greater shareholder values through management initiatives, divestitures, strategic acquisitions, share repurchases, increased dividends or other restructuring alternatives.
 Katy said the Sept. 27, 1993, special meeting of shareholders to vote upon the merger agreement would not be held.
 Katy's board also declared its regular quarterly dividend of 6-1/4 cents per share payable Oct. 20, 1993, to shareholders of record at the close of business on Sept. 30, 1993.
 Katy Industries, Inc. is a diversified corporation with interests in industrial machinery, industrial components and consumer products.
 -0- 9/21/93
 /CONTACT: Paul Kurowski, secretary of Katy Industries, 708-697-8900/
 (KT)


CO: Katy Industries, Inc. ST: Illinois IN: MAC SU: TNM

TS -- NY038 -- 4158 09/21/93 12:18 EDT
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Publication:PR Newswire
Date:Sep 21, 1993
Words:686
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