Aeroflex Incorporated (Nasdaq: ARXX) announced today that it has
received from Veritas Capital a non-binding proposal, subject to due
diligence and other conditions, for a leveraged recapitalization of
Aeroflex in which Aeroflex's stockholders would receive a cash
dividend of $14 per share and retain in the aggregate 21.2% of the
fully diluted common equity in a significantly leveraged Aeroflex.
Under the proposal, Veritas Capital and co-investors to be identified
would acquire convertible preferred stock of Aeroflex, which on an as
converted fully diluted basis would represent 78.8% of Aeroflex's
common stock, and the proceeds from the issuance of the convertible
preferred stock and other proposed debt and equity financing would be
used to fund payment of the cash dividend. The proposed transaction
also contemplates various conditions to consummation of a definitive
transaction, including approval by Aeroflex's stockholders. Aeroflex
said that there is no assurance that the proposal from Veritas Capital
will result in a definitive proposal, a definitive agreement or a
consummated transaction.
Aeroflex's Board of Directors, after consultation with its outside
counsel and independent financial advisors, has determined in good
faith and in its reasonable judgment, in accordance with Aeroflex's
merger agreement with affiliates of General Atlantic and Francisco
Partners, that the proposed leveraged recapitalization is a bona fide
acquisition proposal that constitutes or could reasonably be expected
to lead to a "superior proposal" (as that term is defined in the
merger agreement) that is reasonably capable of being consummated and
that accordingly Veritas Capital is an "excluded party" (as that term
is defined in the merger agreement). Aeroflex intends to continue to
have discussions and participate in negotiations with respect to the
leveraged recapitalization proposal. In the opinion of Aeroflex, in
the event that Aeroflex were to terminate the merger agreement to
permit it to enter into a transaction agreement with Veritas Capital,
it would be required to pay to an affiliate of General Atlantic and
Francisco Partners up to $22.5 million as a break-up fee and
reimbursement of expenses. General Atlantic and Francisco Partners
have informed Aeroflex that they disagree with the conclusion of
Aeroflex's Board of Directors that the non-binding proposal results in
Veritas Capital or any additional co-investors being deemed an
excluded party. General Atlantic and Francisco Partners also have
informed Aeroflex that they disagree with the Aeroflex Board's
determination that the non-binding proposal from Veritas Capital could
reasonably be expected to lead to a superior proposal because, among
other things, the equity financing necessary to complete the proposed
transaction has not been fully committed. In the event that Veritas
Capital is determined not to be an excluded party, the break-up fee
and expense reimbursement payable to General Atlantic and Francisco
Partners in the event that Aeroflex were to terminate the merger
agreement to permit it to enter into a transaction agreement with
Veritas Capital would instead be an amount up to $37.5 million.
Aeroflex stressed that the merger agreement with affiliates of
General Atlantic and Francisco Partners remains in effect, does not
contain any financing or due diligence conditions and that those
affiliates would have the right under the merger agreement to be
advised of the proposed terms of any alternative acquisition proposal
and an opportunity to propose to Aeroflex improvements to the terms of
the merger agreement before Aeroflex would be permitted to terminate
the merger agreement to permit it to enter into a transaction
agreement providing for an alternative acquisition proposal.
Aeroflex's Board of Directors has not changed its recommendation
regarding the proposed merger with an affiliate of General Atlantic
and Francisco Partners and expects to mail the proxy materials
relating to the proposed merger by the end of next week for
consideration at Aeroflex's previously announced special meeting of
stockholders scheduled for May 30, 2007.
About Aeroflex
Aeroflex Incorporated (Nasdaq: ARXX) is a global provider of high
technology solutions to the aerospace, defense, cellular and broadband
communications markets. The Company's diverse technologies allow it to
design, develop, manufacture and market a broad range of test,
measurement and microelectronic products. The Company's common stock
trades on the Nasdaq National Market System under the symbol ARXX and
is included in the SAP Small Cap 600 index. Additional information
concerning Aeroflex Incorporated can be found on the Company's Web
site: www.aeroflex.com.
Forward Looking Statements
This release contains forward-looking statements, which are
subject to various risks and uncertainties. Discussion of risks and
uncertainties that could cause actual results to differ materially
from management's current projections, forecasts, estimates and
expectations is contained in the Aeroflex's filings with the SEC.
Specifically, Aeroflex makes reference to the section entitled "Risk
Factors" in its annual and quarterly reports. In addition to the risks
and uncertainties set forth in Aeroflex's SEC reports or periodic
reports, the proposed transaction mentioned in this release could be
affected by, among other things, the occurrence of any event, change
or other circumstances that could give rise to the termination of the
merger agreement; the outcome of any legal proceedings that may be
instituted against Aeroflex and others related to the merger
agreement; failure to obtain stockholder approval or any other failure
to satisfy other conditions required to complete the merger, including
required regulatory approvals; risks that the proposed transaction
disrupts current plans and operations and the potential difficulties
in employee retention as a result of the merger; the amount of the
costs, fees, expenses and charges related to the merger and the
execution of certain financings that will be obtained to consummate
the merger; and the impact of the substantial indebtedness incurred to
finance the consummation of the merger.
Additional Information and Where to Find It
In connection with the proposed merger, Aeroflex will file a
definitive proxy statement with the SEC. The definitive proxy
statement and a form of proxy will be mailed to the stockholders of
Aeroflex. BEFORE MAKING ANY VOTING DECISION, AEROFLEX'S STOCKHOLDERS
ARE URGED TO READ THE PROXY STATEMENT REGARDING THE MERGER CAREFULLY
AND IN ITS ENTIRETY BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED MERGER. Aeroflex's stockholders will be able to
obtain, without charge, a copy of the proxy statement (when available)
and other relevant documents filed with the SEC from the SEC's website
at http://www.sec.gov. Aeroflex's stockholders will also be able to
obtain, without charge, a copy of the proxy statement and other
relevant documents (when available) by directing a request by mail or
telephone to Corporate Secretary, Aeroflex Incorporated, 35 South
Service Road, P.O. Box 6022, Plainview, New York 11803, telephone:
(516) 694-6700, or from Aeroflex's website, http://www.aeroflex.com.
Participants in the Solicitation
Aeroflex and its directors and officers may be deemed to be
participants in the solicitation of proxies from Aeroflex's
stockholders with respect to the merger. Information about Aeroflex's
directors and executive officers and their ownership of Aeroflex's
common stock is set forth in the proxy statement for Aeroflex's 2006
Annual Meeting of Stockholders, which was filed with the SEC on
October 5, 2006. Stockholders may obtain additional information
regarding the interests of Aeroflex and its directors and executive
officers in the merger, which may be different than those of
Aeroflex's stockholders generally, by reading the proxy statement and
other relevant documents regarding the merger, when filed with the
SEC.
