• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Superior Essex Proposes to Acquire Optical Cable Corporation for $6 Per Share in Cash; Transaction Valued at Approximately $36 Million

Posted on: Tuesday, 15 August 2006, 15:00 CDT

ATLANTA, Aug. 15 /PRNewswire-FirstCall/ -- Superior Essex Inc. , today announced that it is proposing to acquire all of the outstanding shares of Optical Cable Corporation , a leading manufacturer of fiber optic cables primarily sold into the enterprise market, for $6.00 per share in cash. Superior Essex's proposal represents a premium of almost 70% over Optical Cable's closing share price on August 14, 2006, the last trading day before Superior Essex's proposal was made public.

(Logo: http://www.newscom.com/cgi-bin/prnh/20060605/CLM056LOGO)

The proposal, which was approved by Superior Essex's Board of Directors, is valued at approximately $36 million. Superior Essex expects the combined company to be one of the industry's leading fiber optic and copper cable manufacturing companies. Superior Essex's strong commercial and telephone company relationships complement Optical Cable's strong international, military and government relationships, and the combination would result in greater diversification and substantial cross selling opportunities.

"Under our proposal, Optical Cable shareholders will receive a substantial cash premium for their shares over recent trading prices and immediate liquidity. We believe this represents a generous offer based on Optical Cable's profitability and cash flow," said Stephen Carter, chief executive officer of Superior Essex. "For Superior Essex shareholders, we believe this transaction represents an opportunity to create value and earnings accretion through diversification, growth, enhanced operating capabilities and reduced costs. We look forward to working with Optical Cable's Board and management team in a cooperative fashion to move quickly towards a definitive merger agreement."

"We expect Optical Cable's Roanoke manufacturing facility to become a valuable component of our overall fiber optic and premise cable production base," said Justin Deedy, executive vice president of Superior Essex and president of its Communications Group. "We are excited by the cross-selling opportunities among customers of Superior Essex and Optical Cable and the extension of our complementary product lines. We believe that the combined businesses would have annualized fiber and premise revenues in excess of $250 million and enhance our presence in the market."

Superior Essex would finance the transaction through cash and its existing credit facility. The Company also confirmed that it does not expect the combination to have significant contingencies other than completion of due diligence and customary conditions that would be included in a definitive merger agreement. Superior Essex believes that with cooperation from Optical Cable's Board and management, a transaction could be completed during the fourth quarter of 2006.

Below is the text of the letter that was sent today to Neil D. Wilkin, Jr., Optical Cable's chairman, president and chief executive officer:

August 15, 2006 Neil D. Wilkin, Jr. Chairman of the Board of Directors, President and Chief Executive Officer Optical Cable Corporation 5290 Concourse Drive Roanoke, Virginia 24019 Dear Neil: We are pleased to submit this proposal to combine the businesses of our companies, subject to the terms and conditions discussed below. As you know from our letters to you of March 27, 2006 and July 31, 2006 and our prior discussions, we believe a combination of our two companies would create an enterprise with significant growth opportunities and provide your shareholders with immediate liquidity at a substantial premium. Our efforts to consummate a transaction with your company reflect a deep conviction that the strategic merits of this business combination would create substantial value for your shareholders as well as for ours. Our Board of Directors has authorized us to propose the purchase of 100% of Optical Cable Corporation's outstanding capital stock for cash. Based on publicly available information, Superior Essex is prepared to offer $6.00 per share in cash to Optical Cable shareholders, which represents an almost 70% premium to the stock's closing share price on August 14, 2006 and a generous offer based on Optical Cable's profitability and cash flow. We will not require additional financing to fund the transaction and expect that the combination would have no significant contingencies other than customary conditions that would be included in a definitive merger agreement. Superior Essex is a multi-billion dollar global manufacturer of wire and cable and the leading manufacturer of communications outside plant wire and cable in the United States. A combination of Optical Cable and Superior Essex would result in a company with operations focused in complementary product lines. In addition to the compelling strategic fit of our businesses, the combination would also result in the ability to share best practices and to reduce costs and maximize the benefit of capital spending. I am confident that we would be able to integrate the cultures and processes to build a stronger, more efficient enterprise better-positioned to compete in the global telecommunications wire and cable market. Through efficient production allocation, we believe we can increase the manufacturing utilization in your Roanoke facility and provide continued employment opportunities. The competitive dynamics within our industry are changing dramatically as merger activity among customers, competitors and suppliers has sharply increased. While our offer is subject to execution of definitive documentation and confirmatory due diligence, we are ready to move quickly to consummate a friendly transaction. We would expect to be able to complete our due diligence review promptly after receiving access to the necessary information. Taking into account the legal, financial, regulatory and other requirements, we expect that the proposed transaction could close in the fourth quarter of 2006. In working with you, we are prepared and fully intend to be flexible. If through due diligence we can learn more about your specific initiatives and strategies and uncover additional benefits and synergies, we can potentially offer even further value to your shareholders. In conclusion, we would like to stress our commitment and excitement regarding the Superior Essex-Optical Cable combination. Joining our businesses together and leveraging our collective strengths would represent a unique opportunity to create a leading international fiber optic and copper cable manufacturing company. To that end, we would kindly ask for your response no later than 5:00 p.m., Eastern Time, on August 31, 2006. Very truly yours, Stephen M. Carter Chief Executive Officer Superior Essex Inc.

Superior Essex is advised in connection with the proposed transaction by SunTrust Robinson Humphrey, as financial advisors, and Troutman Sanders LLP, as outside counsel.

About Superior Essex

Superior Essex Inc., a FORTUNE 1,000 company, is one of the largest wire and cable manufacturers in the world. The Company manufactures a broad portfolio of wire and cable products with primary applications in the communications, magnet wire and related distribution markets. It is a leading manufacturer and supplier of copper and fiber optic communications wire and cable products to telephone companies, distributors and system integrators; a leading manufacturer and supplier of magnet wire and fabricated insulation products to major original equipment manufacturers (OEMs) for use in motors, transformers, generators and electrical controls; and a distributor of magnet wire, insulation, and related products to smaller OEMs and motor repair facilities. Additional information on the Company can be found on its Web site at http://www.superioressex.com/.

This press release contains forward-looking statements regarding, among other things, the proposed business combination between Superior Essex and Optical Cable and the anticipated consequences of such a transaction, and other financial and operational items relating to Superior Essex and Optical Cable. Statements made in the future tense, and statements using words such as "expects," believe," and "will" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not a guarantee of performance and are subject to a number of risks and uncertainties that could cause actual results to be materially different from those expressed or implied by such forward-looking statements and, therefore, should be carefully considered. Relevant risks and uncertainties relating to the proposed transaction discussed herein include, but are not limited to: (1) the businesses of Superior Essex and Optical Cable may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected benefits and synergies from the combination may not be realized within the expected time frame or at all; and (3) other risks described from time to time in Superior Essex's and Optical Cable's periodic reports filed with the Securities and Exchange Commission. In providing these forward-looking statements, Superior Essex does not intend, and is not undertaking any duty or obligation, to update these statements as a result of new information, future events or otherwise.

Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20060605/CLM056LOGOAP Archive: http://photoarchive.ap.org/PRN Photo Desk, photodesk@prnewswire.com

Superior Essex Inc.

CONTACT: Peggy Tharp, Director of Investor Relations of Superior EssexInc., +1-770-657-6246

Web site: http://www.superioressex.com/

Source: PRNewswire-FirstCall

More News in this Category