CITATION CORPORATION
2 Office Park Circle, Suite 204
Birmingham, AL 35223
Contact: Stanley B. Atkins
205-871-5731
Fax: 205-871-5772
October 28, 1999
Citation proposes Merger
BIRMINGHAM, Alabama - Citation Corporation (Nasdaq: CAST) today announced that it has filed with the Securities and Exchange Commission its amended definitive proxy statement/prospectus regarding its proposed merger with RSJ Acquisition Co., an affiliate of Kelso & Company.
The proxy statement/prospectus will be mailed in the near future to all stockholders of record on August 27, 1999, each of whom will be entitled to vote on the proposed merger at a special meeting of stockholders to be reconvened on November 30, 1999.
Under the amended merger agreement, RSJ Acquisition Co. agreed to purchase approximately 94% of the outstanding shares of Citation for $17.00 per share, with the remaining approximately 6% of the outstanding shares to be retained by existing stockholders (either at their election or on a pro rata basis). At the requirement of Kelso & Company, certain existing stockholders, including the Company's founder and chairman, T. Morris Hackney, and others, have agreed to vote in favor of electing to receive shares in the "new" Citation.
As a result of these elections, all stockholders electing to receive cash for their shares should receive all cash at closing, while stockholders may elect to retain stock (subject to proration and a 10,000 share minimum election) if they desire to do so. Citation's Board of Directors recommends that stockholders not elect to retain stock in the proposed merger.
As previously announced, the revised transaction provides for financing to replace a rule 144A offering of $200 million of senior subordinated notes, which was withdrawn due to market conditions. This revised financing is being provided by $135 million of senior subordinated debt committed by Donaldson, Lufkin & Jenrette, Chase Securities and First Union Capital Markets. A senior credit facility of $360 million provided by a consortium of banks led by Chase Manhattan had previously been committed and the terms of that commitment have been reaffirmed.
In addition, Kelso & Company also agreed to increase its equity commitment to Citation by $50 million, from $190 million to $240 million, and the price at which RSJ would purchase approximately 94% of the common stock of Citation has been reduced to $17.00 from $18.10. The reduction in the merger consideration and amendment to the merger agreement were necessitated by the financing changes.
The proxy statement/prospectus being mailed to stockholders discusses these and other amendments to the merger agreement in greater detail. Citation's Board of Directors recommends that stockholders vote to adopt the merger agreement, as amended.
Citation Corporation is a metal components supplier to capital and durable goods industries. The company currently operates 20 manufacturing divisions in 10 states and employs more than 7,000 employees.
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Note: This press release contains certain forward-looking statements, which Citation Corporation is making in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties. Actual results could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including, but not limited to, the successful closing of the proposed transaction and risks associated with acquisitions generally. Certain of these risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission.
Any offering of securities in connection with the merger will be made only by means of a prospectus.