Document rBoXq95d2zN4N0knn1N0w20KJ

CMm CHEMICAL MANUFACTURERS ASSOCIATION Charles W. Van Vlack Vice President-Secretary April 13, 1990 Mr. Vincent A. Carlarco Chairman of the Board, President and Chief Executive Officer Crompton & Knowles Corporation One Station Place Metro Center Stamford, CT 06902 Dear Vince: Enclosed is the following background information we discussed at Boca Raton last week. o An updated list through April of all the new companies recruited since June, 1987. o An updated version of the 1989/90 membership recruitment program we "adopted" at the November Membership Committee meeting. o An updated version of the full list of potential membership prospects. o An agenda and related materials for the April 24 New Jersey CIC meeting. I will talk to you next week. Sincerely Enclosures CMA 175290 2501 M Street, NW, Washington, DC 20037 202-887-1108 Telex 89617 (CMA WSH) jJ/flL V,!ui=TbA~ft &Ms*- /9<P? Avery Agrees to Sale Of Uniroyal Chemical To a Buy-Out Group By a Wall Stkiet Journal Staff Reporter NEW YORK-Avery Inc. said It agreed to sell Its Uniroyal Chemical Co. to a man agement-led group for $240 million and the assumption of $560 million of debt. Uniroyal Chemical President Robert Mazaika heads the management group, which is backed by Drexel Burnham Lam bert Inc. The securities firm Is to arrange financing for the transaction, which is ex pected to close by Aug. 31. Avery Is a Triangle Industries Inc. affil iate that wasn't included in the packaging company's sale to a French concern. Pechlney S.A. Nelson Peltz, Avery chairman and chief executive officer, and Peter W. May, president and chief operating officer, bought back Triangle's non-packaging as sets and the Triangle name from Pechlney for $225 million. The two men aren't partic ipating in the leveraged buy-out, an Avery spokesman said. Uniroyal Chemical makes pesticides, the controversial apple-growth regulator Alar, rubber additives and other chemical products. It had been on the block since January 1968. At the time, Avery said it planned to sell the chemical unit "because high price-earnings multiples in the spe cialty chemical industry had frustrated its strategy of growing the company through acquisition." But the bidders other than management were Interested only in pieces of the company. In a leveraged buy out, a small group of investors acquires a company largely with debt that ultimately is paid with funds generated by the ac quired company. Avery bought Unlroyal Chemical from Uniroyal Inc. in October 1986 for $710 mil lion. which it financed through $910 million of high-yield, high-risk "junk" bonds. Tri angle paid $75 million for its Initial interest in Avery. Trian Holdings Inc., a successor to Triangle and owned by Messrs. Peltz and May, holds about 80% of the 56 million Avery Class A shares on a fully diluted basis. Avery said that when the Uniroyal Chemical sale is completed, it expects to be debt-free and to have $20 million to $25 million in cash "and no other material as sets or liabilities." Avery, initially a coal company, said it was considering possible options, including acquiring another busi ness or liquidating. If it were to liquidate when the sale is completed, Avery said its liquidation value would be about 35 cents to 45 cents a share. A l .J lu <7 CMA 175291 Uniroyal LBO^ Progresses; Avery in Talks ' Avery Inc. said last week that it has entered into negotiations for the sale of its Uniroyal Chemical Company sub sidiary to a group led by Uniroyal Chem ical management and backed by Drexel Burnham Lambert Inc. Avery said it is looking to sell Uniroyal, its largest asset, for a price of $800 million to 8810 million, consisting of $240 million to $250 million in cash awl the assumption of $560 million in debt Avery bought Uniroyal Chemical in 1986 from Uniroyal Inc. for 8710 million. However last January Avery announced its intention to sell Uniroyal Chemical, citing problems converting it into a multinational player in the specialties industry, in part because the _ high price earnings multiples of specialties " companies had frustrated its strategy of growing through acquisitions.- * Avery, whose leading shareholder is Trian gle Industries, says that if the potential sale to management is consummated by March 21,1989, at the expected price, it will have no Continued on Page 35 Uniroyal LBO OjndriuedfromPaga ; outstanding debt and cash of 845 to 855 mil tfi lion. Avery will then contemplate acquiring V* ` another business or Uqridating. Sr: Meanwhile, Avery announced results for Its fiscal year endingSeptember $0. Uniroyal tales In 1988 Increased to 8734 mfllioo from 8890 million, while operating profits rose 17 percent to 8*5.9 million. > Crop protection sales grew Aarply as a * -*---------irtoriri* <fafwiwt for miti* tide, fungicide and plant growth regulator sales. Rubber additives, EPDM and urethane prepolymer sales all progressed overseas. Domestically, specialty margins in creased, while elastomer margins dropped ue to raw material price increases. Uniroyal also experienced domestic volume and mar ket share growth in rubber additives, plastic additives and polymer inhibitors. US elastomer sales benefited from good growth in the EPDM, urethane prepolymer and nitrile rubber markets. CMA 175292