ModusLink Announces $30 Million Investment Agreement with Steel Partners Holdings L.P.
Steel Holdings agrees to acquire 7.5 million ModusLink shares at
$4 per share, representing 45% premium Company announces settlement with Handy & Harman Ltd. in relation
to upcoming annual meeting of stockholders
ModusLink Global Solutions(TM),Inc. (NASDAQ:
MLNK) today announced that it has entered into an investment agreement
with Steel Partners Holdings L.P. (NYSE: SPLP, “Steel Holdings”), which
together with certain affiliates, including Handy & Harman Ltd. (NASDAQ:
HNH, “Handy & Harman”) (together, the “Steel Group”), beneficially owns
14.9 percent of ModusLink’s outstanding shares.
Under the terms of the agreement, Steel Holdings would purchase 7.5
million newly issued shares of common stock at a price of $4.00 per
share, representing a cash investment in the Company, before fees and
expenses, of $30 million. The $4.00 purchase price per share represents
a 45 percent premium to the closing market price for ModusLink common
stock on Friday, February 8, 2013.
In addition, at the closing of the transaction the Company would issue
Steel Holdings warrants to acquire 2.0 million shares at an exercise
price of $5.00 per share. In addition, the Steel Group may purchase up
to approximately 1.4 million shares of ModusLink’s outstanding common
stock, subject to proportionate adjustment. If all stock is purchased
and all warrants are exercised as permitted under the agreement, the
Steel Group would own approximately 32.6 percent of ModusLink’s
outstanding shares. The investment is subject to certain enumerated
closing conditions, including shareholder approval of the investment
pursuant to Nasdaq Listing Rule 5635(b) and the election of two Steel
Group designees to the ModusLink board of directors at the Company’s
2012 Annual Meeting of Stockholders (the “Annual Meeting”).
In connection with the investment agreement, ModusLink also announced
that it has reached a settlement agreement with Handy & Harman in
relation to the Annual Meeting. Under the terms of the settlement
agreement, ModusLink has agreed to nominate and solicit proxies solely
for the Steel Group representatives Warren G. Lichtenstein and Glen M.
Kassan for election at the Annual Meeting as Class I directors. Mr.
Lichtenstein is Chairman of the Board of Directors of Handy & Harman and
Chairman of the Board and Chief Executive Officer of the general partner
of Steel Holdings. Mr. Kassan is Vice Chairman of the Board of Directors
of Handy & Harman and Managing Director at Steel Partners LLC. Handy &
Harman has agreed to withdraw its preliminary proxy statement and to end
its proxy solicitation, and has entered into certain other standstill
arrangements with the Company.
Upon consummation of the investment, ModusLink Directors Edward E.
Lucente and Joseph M. O’Donnell would step down from the Board, and
current Chairman Francis J. Jules and Director and Audit Committee
Chairman Michael J. Mardy, whose terms on the Board conclude at the
Annual Meeting, would each be reappointed to the Board as Class II
directors. In addition, at that time, Mr. Lichtenstein would be
designated Chairman of the Board of the Company. The size of the Board
would be fixed at seven directors immediately following the Annual
Meeting.
ModusLink expects to announce the date and location of the Annual
Meeting in connection with the filing of its definitive proxy statement
concerning the transaction which will, in addition to seeking the
election of the Steel Group representatives and approval of the
investment, seek approval of the declassification of the Company’s Board
of Directors such that the annual election of all directors would take
place beginning at the 2013 annual meeting. The Board is submitting this
latter proposal in response to the approval at the 2011 annual meeting
of a shareholder proposal urging such change.
“The commitment of new capital from Steel Holdings at a significant
premium to the recent price of ModusLink shares is a strong vote of
confidence in ModusLink’s future by our largest stockholder,” said Mr.
Jules. “The investment also validates the recent strategic changes and
improvements the Company has undertaken, and further strengthens the
Company’s balance sheet. We are also pleased to reach an agreement where
the Company will be nominating Warren Lichtenstein and Glen Kassan, two
highly qualified nominees, for election to ModusLink’s board of
directors at our upcoming annual meeting. The Board looks forward to the
opportunity to work with Warren and Glen to increase stockholder value.”
“We have worked constructively with ModusLink to reach these agreements
and are excited by the opportunity to invest further in the Company’s
future and to contribute significantly to the creation of value for all
ModusLink stockholders,” said Mr. Lichtenstein. “I believe ModusLink has
considerable potential for value creation as evidenced by Steel
Holdings’ investment. I also believe that Glen and I are well suited to
help the Company towards that objective and we look forward to working
with the rest of the Board and ModusLink management to that end.”
Complete details of the investment agreement and settlement agreement
will be contained in the Company’s Current Report on Form 8-K, which
will be filed with the Securities and Exchange Commission.
Goldman, Sachs & Co. is serving as financial advisor and Latham &
Watkins LLP is serving as legal counsel to ModusLink. Olshan Frome
Wolosky LLP is serving as legal counsel to Steel Holdings and Handy &
Harman.
About Warren G. Lichtenstein
Warren G. Lichtenstein has served as the Chairman of the Board and Chief
Executive Officer of the general partner of Steel Holdings, a global
diversified holding company that owns and operates businesses and has
significant interests in leading companies in a variety of industries,
including diversified industrial products, energy, defense, banking, and
food products and services, since July 15, 2009. He is also the Chairman
and Chief Executive Officer of Steel Partners LLC, a subsidiary of Steel
Holdings, and has been associated with Steel Partners LLC and its
affiliates since 1990. Mr. Lichtenstein has served as Chairman of the
Board of Handy & Harman, a diversified global industrial company, since
July 2005. He is a Co−Founder of Steel Partners Japan Strategic Fund
(Offshore), L.P., a private investment partnership investing in Japan,
and Steel Partners China Access I LP, a private equity partnership
investing in China. He also co−founded Steel Partners II, L.P., a
private investment partnership that is now a wholly−owned subsidiary of
Steel Holdings, in 1993. Mr. Lichtenstein has served as a director of
GenCorp Inc., a manufacturer of aerospace and defense products and
systems with a real estate business segment, since March 2008. He has
served as a director of SL Industries, Inc. (“SLI”), a company that
designs, manufactures and markets power electronics, motion control,
power protection, power quality electromagnetic and specialized
communication equipment, since March 2010. From May 2001 to November
2007, Mr. Lichtenstein served as a director (formerly Chairman of the
Board) of United Industrial Corporation (“United Industrial”), a company
principally focused on the design, production and support of defense
systems, which was acquired by Textron Inc.
About Glen M. Kassan
Glen M. Kassan is a Managing Director and operating partner of Steel
Partners LLC, a global management firm, and has been associated with
Steel Partners LLC and its affiliates since August 1999. Mr. Kassan
served as the Vice President, Chief Financial Officer and Secretary of a
predecessor entity of Steel Holdings from June 2000 to April 2007. Mr.
Kassan has served as a director of Handy & Harman since July 2005, as
the Vice Chairman of the Board since October 2005 and as Chief Executive
Officer from 2005 to 2012. He has served as a director of SLI since
January 2002 and its Chairman of the Board since May 2008. He previously
served as SLI’s Vice Chairman of the Board from August 2005 to May 2008,
its President from February 2002 to August 2005, its interim Chief
Executive Officer from June 14, 2010 to June 29, 2010 and its interim
Chief Financial Officer from June 14, 2010 to August 30, 2010. He was a
director of United Industrial from October 2002 to November 2007.
About ModusLink Global Solutions
ModusLink Global Solutions Inc. (NASDAQ: MLNK) executes comprehensive
supply chain and logistics services that improve clients’ revenue, cost,
sustainability and customer experience objectives. ModusLink is a
trusted and integrated provider to the world’s leading companies in
consumer electronics, communications, computing, medical devices,
software, luxury goods and retail. The Company’s operating
infrastructure annually supports more than $80 billion of its clients’
revenue and manages approximately 470 million product shipments through
more than 30 sites in 15 countries across North America, Europe, and the
Asia/Pacific region. For details on ModusLink’s flexible and scalable
solutions visit www.moduslink.com
and www.valueunchained.com,
the blog for supply chain professionals.
ModusLink Global Solutions is a registered trademark of ModusLink Global
Solutions, Inc. All other company names and products are trademarks or
registered trademarks of their respective companies.
Important Additional Information
ModusLink, its directors and certain of its executive officers and
employees are participants in a solicitation of proxies in connection
with its 2012 annual meeting of stockholders (the “2012 Annual
Meeting”). Important information concerning the identity and interests
of these persons is available in ModusLink’s preliminary proxy statement
filed with the Securities and Exchange Commission (the “SEC”) on
December 21, 2012, as amended on January 7, 2013. ModusLink plans to
file with the SEC and mail to its stockholders a definitive proxy
statement in connection with the 2012 Annual Meeting. Information
regarding the identity of the participants, and their direct or indirect
interests, by security holdings or otherwise, is set forth in the
preliminary proxy statement and ModusLink’s Annual Report on Form 10-K
for the year ended July 31, 2012. To the extent holdings of ModusLink
securities have changed since the amounts printed in the preliminary
proxy statement for the 2012 Annual Meeting, such changes have been or
will be reflected on Statements of Change in Ownership on Form 4 filed
with the SEC.
Copies of ModusLink’s preliminary proxy statement, any other relevant
documents and other materials filed with the SEC concerning ModusLink,
when filed, may be obtained free of charge at http://www.sec.gov
and http://www.ir.moduslink.com.
Stockholders should carefully read the proxy statement and the
accompanying proxy card when they become available before making any
voting decision.
Forward-Looking Statements
This press release contains forward-looking statements, which address a
variety of subjects including, for example, the consummation and impact
of the announced transaction and the Company’s prospects for creating
value for stockholders. All statements other than statements of
historical fact, including without limitation, those with respect to the
Company’s goals, plans, expectations and strategies set forth herein are
forward-looking statements. The following important factors and
uncertainties, among others, could cause actual results to differ
materially from those described in these forward-looking statements: the
announced transaction is subject to certain enumerated closing
conditions and there can be no assurance that such conditions will be
met and the transaction will be consummated; the Company’s success,
including its ability to meet its revenue, operating income and cost
savings targets, maintain and improve its cash position, expand its
operations and revenue, lower its costs, improve its gross margins,
reach and sustain profitability, reach its long-term objectives and
operate optimally, depends on its ability to execute on its business
strategy, including the investment and costs savings plan and the
continued and increased demand for and market acceptance of its
services; global economic conditions, especially in the technology
sector are uncertain and subject to volatility; demand for our clients’
products may decline or may not achieve the levels anticipated by our
clients; the Company's management may face strain on managerial and
operational resources as they try to oversee the expanded operations;
the Company may not realize the expected benefits of its restructuring
and cost cutting actions; the Company may not be able to expand its
operations in accordance with its business strategy; the Company’s cash
balances may not be sufficient to allow the Company to meet all of its
business and investment goals; the Company may experience difficulties
integrating technologies, operations and personnel in accordance with
its business strategy; the Company derives a significant portion of its
revenue from a small number of customers and the loss of any of those
customers could significantly damage the Company’s financial condition
and results of operations; the Company frequently sells to its supply
chain management clients on a purchase order basis rather than pursuant
to contracts with minimum purchase requirements, and therefore its sales
and the amount of projected revenue that is actually realized are
subject to demand variability; risks inherent with conducting
international operations; tax rate expectations are based on current tax
law and current expected income and may be affected by the jurisdictions
in which profits are determined to be earned and taxed, changes in
estimates of credits, benefits and deductions, the resolution of issues
arising from tax audits with various tax authorities, including payment
of interest and penalties and the ability to realize deferred tax
assets; the potential tax benefits represented by the net operating loss
carryforwards may not be realized and the tax benefit preservation plan
may not be effective in preserving those benefits; the mergers and
acquisitions and IPO markets are inherently unpredictable and liquidity
events for companies in the Company’s venture capital portfolio may not
occur; and increased competition and technological changes in the
markets in which the Company competes. For a detailed discussion of
cautionary statements that may affect the Company’s future results of
operations and financial results, please refer to the Company's filings
with the Securities and Exchange Commission, including the Company's
most recent Annual Report on Form 10-K and Quarterly Reports on Form
10-Q. Forward-looking statements represent management's current
expectations and are inherently uncertain. We do not undertake any
obligation to update forward-looking statements made by us.
