JO Acquisition Corp., formed by Helen Johnson-Leipold, Chairman and CEO of Johnson Outdoors, to take Johnson Outdoors into the private sector, has filed its preliminary proxy statement with the SEC. Currently, Johnson-Leipold and the participating shareholders of JO Acquisition Corp. represent roughly 76.5% of the combined Class A and Class B votes. At least 80% of this combined entity must vote in favor of the acquisition for the going-private transaction to take place. Additionally, a majority of the Class A common stock-holders and a separate majority of the Class B common stock-holders must vote for the transaction. Helen Johnson-Leipold and the participating shareholders of JO Acquisition Corp. own 45.4% of the outstanding Class A common stock and 95.9% of the outstanding Class B common stock. For the final vote, at least 66.66% of the shareholders not involved in JO Acquisition Corp. must vote in favor of the transaction.
Should the merger go through, JO Acquisition Corp. has received a commitment letter from GE Capital, providing financing of up to $142.0 million and 27.0 million. These funds will be used to pay the $20.10 per share merger consideration and related fees and expenses. The funds will also refinance some existing debt, and provide a portion of the working capital needs. Should the merger not go through, JO Acquisition Corp. is entitled to a $3 million reimbursement.
In other news, the Johnson Outdoors first fiscal quarter net sales gain was driven by the Marine Electronics and Outdoor Equipment business units. The going-private transaction added $0.9 million to JOUT expenses. Excluding this expense and the $0.2 million in quarterly expenses related with Sarbanes-Oxley, JOUT would have posted a net income of roughly $0.1 million.
In Outdoor Equipment, JOUT is forecasting a 40% drop in volume in the military tent segment for fiscal 2005, and the competitive bidding environment makes it increasingly difficult for the company to win contracts. In response, Johnson Outdoors is focusing on the consumer and commercial tent markets.
The Watercraft division is still bleeding red ink, but the company feels that it is headed in the right direction. The $3.1 million allocated by JOUT to restructure the division is largely spent. With solid improvements to margins and operating profits, the company does not see the need to spend more.
The Diving division was also a drag on total sales due to weakness throughout the entire industry. Reversing this downward trend is JOUTs “top priority,” but at the same time the company wants to protect dealers by reducing gray market activity and closeouts.
Marine Electronics sales improved through all channels, but the recent Hummingbird acquisition pulled margins down slightly.