Amendment to General Statement of Beneficial Ownership — Schedule 13D
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 13D/A Amendment to General Statement of Beneficial 23± 83K
Ownership
2: EX-1 Underwriting Agreement 2± 6K
3: EX-2 Plan of Acquisition, Reorganization, Arrangement, 1 6K
Liquidation or Succession
4: EX-3 Articles of Incorporation/Organization or By-Laws 3± 11K
EX-3 — Articles of Incorporation/Organization or By-Laws
Exhibit B:
No. 3 shareholder makes surprise bid for GenCorp
Mark Larson Staff writer
Published: November 11, 2004
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A New York City hedge fund and major investor in GenCorp Inc. blasted
the company's leadership on Thursday and made an unsolicited offer to
acquire it for a price that values the defense and aerospace
manufacturer at more than $770 million.
Calling GenCorp's moves this week to sell more than 8.6 million shares
of stock and up to $75 million in convertible debt "another example of
the incorrect and misguided business decisions (that) its board
continues to make," Steel Partners II LP sent a letter to GenCorp's
board making the buyout offer at $17 a share.
Steel declined any further comment.
A GenCorp spokeswoman was unavailable for comment Thursday morning.
However, Rancho Cordova-based GenCorp acknowledged in a press release
Thursday that it had received a letter from Steel Partners "seeking to
enter into negotiations to acquire all of the shares of the company for
$17 a share."
GenCorp said it is meeting with advisers to consider its answer, and
"will publicly advise its stockholders of its response."
The move and the reasons behind it found favor with another major
investor in GenCorp. Mario Gabelli, whose Gabelli Asset Management Inc.
is the largest private shareholder in GenCorp, also criticized this
week's financing moves backed by the company and chairman Terry Hall.
"Terry Hall's proposal is the catalyst that sparked it off," said
Gabelli, whose funds hold 17.8 percent of the common stock. Gabelli said
Hall's latest move would "give away 20 percent of the company" at an
estimated $14 a share. He said he's glad Steel Partners stepped up with
a $17 a share offer.
"I would resign, if I was Terry, for doing what he did," Gabelli said.
"Maybe we should listen to Steel Partners as to why they think this
company is worth at least $17 (a share)."
Gabelli also fumed over GenCorp's selloff this year of its long-troubled
auto parts division, which he said was undervalued by hundreds of
millions of dollars. "Someone should stand up and say, 'This is not an
airline.' "
Now GenCorp's board "is obliged to say, 'Let's re-examine' " Hall's
latest proposal, Gabelli said, and give an ear to Steel Partners.
An activist investor
There were early hints of a possible move by Steel Partners. In January
2003, The Daily Deal reported that Warren Lichtenstein, head of Steel
Partners, might seek board representation at GenCorp or propose changes
to the company's capitalization and operations.
At that point, Steel Partners owned 6.3 percent. Later stock buys
boosted its stake to 8.3 percent, as of GenCorp's February proxy
statement. The size makes Steel Partners the third-largest owner of
GenCorp, behind Gabelli and the GenCorp Employee Savings Plans.
Lichtenstein, contacted early this year by The Business Journal about
his intentions in buying up GenCorp stock, declined comment.
Trigger
The trigger for the buyout offer, Steel Partners said, was GenCorp's
announcement Monday that it would privately offer up to $75 million of
convertible debt and publicly offer 8.6 million shares of common stock.
The company now has about 45 million shares outstanding.
Steel called the move "unnecessary, dilutive and not in the best
interests of the company's shareholders."
Steel's complaints include:
* "Many mistakes (GenCorp) has made in allocating the company's capital
and the poor job it has done managing the day-to-day operations of the
company's various businesses," including the managing and this year's
selloff of the GDX Automotive division;
* Compensation agreements with employees, including severance agreements
with 10 officers and bonuses paid for "less then stellar" performances;
* "A game of gin rummy" of buying and selling businesses "with no clear
corporate strategy and with very poor results" -- Steel Partners
estimated that GenCorp lost $300 million on the GDX sale;
* The decision to sell debt -- when GenCorp was already taking steps to
sell its Fine Chemicals division, for an estimated value of more than
$120 million -- as an example of a wrongheaded move to raise capital.
"The board should be focusing on maximizing the return on the company's
existing capital and not raising additional capital."
Steel asserts in its statement that GenCorp's shares are "undervalued"
and that the issuance of new equity "is not in the best interests of the
company's stockholders."
Steel indicated that it had pushed to no avail for corporate governance
reforms at GenCorp. In exchange, Steel offered to curtail its power as a
major shareholder by capping the number of shares it could own and by
agreeing not "to commence a proxy contest or otherwise influence the
board."
Steel ended its letter with a threat: "If the board decides not to
seriously consider our proposal and proceeds with the financings, Steel
Partners will consider nominating a slate of directors for election at
the next annual meeting of stockholders."
Shares of GenCorp shot up as much as 25 percent in heavy trading
Thursday on news of the takeover bid, to more that $17 a share. It
closed at a 52-week record of $17.50 per share, up 24 percent or $3.35
for the day.
Copyright(c) American City Business Journals Inc.
All rights reserved.
Dates Referenced Herein and Documents Incorporated by Reference
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