Aeroflex considers recapitalization proposal from Veritas; General Atlantic, Francisco deal moves forward

By Lisa Kerner

Charlotte, N.C., April 19 - Aeroflex Inc. received a non-binding proposal from Veritas Capital for a leveraged recapitalization of Aeroflex giving the company's stockholders a cash dividend of $14.00 per share.

In addition, stockholders would keep a total of 21.2% of the fully diluted common equity in a significantly leveraged Aeroflex, a company news release stated.

The proposal calls for Veritas Capital and co-investors to acquire convertible preferred stock of Aeroflex representing 78.8% of Aeroflex's common stock. Proceeds would be used, along with additional proposed debt and equity financing, to fund the cash divided.

Aeroflex's stockholders will vote on the $1 billion transaction at a special meeting of stockholders on May 20.

The company's board determined that the proposed leveraged recapitalization is a bona fide acquisition proposal that could reasonably be expected to lead to a "superior proposal" than the merger agreement still in effect with affiliates of General Atlantic and Francisco Partners.

Aeroflex is required to pay a break-up fee of between $22.5 million and $37.5 million plus expenses if it terminates the merger agreement with General Atlantic and Francisco Partners in order to enter into a transaction agreement with Veritas Capital.

On March 30, Aeroflex announced details of the proposed $780 million senior secured credit facility that will be used to help fund its buyout by General Atlantic and Francisco Partners. The facility consists of a $60 million revolver, a $475 million first-lien term loan and a $245 million second-lien term loan.

Aeroflex is a Plainview, N.Y., provider of high technology services to the aerospace, defense, cellular and broadband communications markets.

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