FENTON, Mo., Nov. 27 /PRNewswire-FirstCall/ --
Rawlings Sporting Goods Company, Inc. (Nasdaq: RAWL) announced today that its
Board of Directors is carefully evaluating an expression of interest from a
strategic party for the potential acquisition of Rawlings. The expression of
interest contemplates a stock-for-stock transaction at a premium to Rawlings'
current share price. The expression of interest is preliminary and non-
binding and is subject to a number of conditions, including completion of due
diligence, negotiation and execution of a definitive agreement, board and
shareholder approval, and regulatory approval. The Board of Directors, with
the assistance of its financial advisor, George K. Baum & Company, and its
legal counsel, is evaluating the possibility of pursuing a transaction with
this potential acquirer as well as other strategic alternatives to increase
Primarily as a result of these developments, the Board of Directors has
adopted a new Shareholder Rights Plan. The Shareholder Rights Plan will
provide sufficient time, as well as flexibility and negotiating leverage, to
adequately evaluate strategic alternatives in an orderly manner to facilitate
enhanced value for all shareholders.
Steve O'Hara, Chairman and CEO, commented, "While there can be no
assurance that we will consummate a transaction, we believe the interest put
forward by the potential acquirer is reflective of our strategic value and
ongoing earnings improvement. The Board felt that it was in the best
interests of the Company and our shareholders to adopt the new Shareholder
Rights Plan to facilitate the proper evaluation of these recent developments.
The Shareholder Rights Plan will also ensure fair and equal treatment of all
shareholders in any acquisition transaction that may be pursued."
The Shareholder Rights Plan includes a TIDE provision under which a
committee composed solely of independent directors will periodically consider
whether retention of the Shareholder Rights Plan continues to be in the best
interests of Rawlings and its stockholders. It also includes a "Permitted
Offer" exception which allows an offer to be considered directly by
shareholders if it is a fully financed offer of cash or a publicly traded
security for all shares and is at a price and other terms which are determined
by the Board of Directors to be fair and otherwise in the best interests of
shareholders, and is accepted by the holders at least a majority of the
The other provisions of the Shareholder Rights Plan are consistent with
those in similar plans adopted by many other public companies and which
economic studies have shown produce higher takeover premiums for the benefit
of all shareholders. The Rights issued under the Shareholder Rights Plan will
be exercisable only if an acquiring person, together that person's affiliates,
associates and any group of which that person is a member (collectively, an
"Interested Stockholder") acquires, or announces a tender offer for, 15% or
more of Rawlings common stock. Each Right will initially entitle holders,
other than the Interested Stockholder, to purchase one one-thousandth of a new
series of preferred stock at an exercise price of $30. Once the Interested
Stockholder has acquired beneficial ownership in excess of the applicable
ownership threshold referenced above, each Right will entitle holders, other
than the Interested Stockholder, to purchase, at the Right's then-current
exercise price, a number of shares of Rawlings common stock having a market
value of twice the Right's exercise price. At any time within ten business
days after a person becomes an Interested Stockholder, the Rights will be
redeemable for one cent per Right at the option of the Board of Directors.
The Shareholder Rights Plan also includes a "share exchange" feature which
provides the Board with additional flexibility in responding to a hostile
takeover attempt when the Rights become exercisable. The Board will thus have
the option of exchanging, in whole or in part, each Right of each holder,
other than the Interested Stockholder, for one share of Rawlings common stock.
This provision is intended to avoid the expense of requiring Right's holders
to exercise their Rights and alleviate the uncertainty as to whether holders
will exercise their rights. The dilution to the Interested Stockholder caused
by implementation of the share exchange feature would be substantial, but not
as extensive as the dilution that would potentially occur if all holders were
to exercise the Rights after they become exercisable.
In addition, if after the Rights become exercisable, the Company is
acquired in a merger or other business combination transaction, or sells 50%
or more of its assets or earning power, to or with an Interested Stockholder
in a transaction in which all stockholders are not treated alike, each Right
will entitle its holder to purchase, at the Right's then-current exercise
price, a number of shares of the acquiring company's common stock having a
market value at the time of twice the Right's exercise price.
The Rights will be issued on December 9, 2002 to the stockholders of
record as of that date and will expire in ten years, unless earlier redeemed
or exchanged by Rawlings.
This press release contains forward-looking statements that involve risks
and uncertainties such as the results of discussion with potential acquirers,
Rawlings' plans to achieve certain cost savings and increases in earnings as
well as the anticipated benefits and expected consequences of the Shareholder
Rights Plan. There can be no assurance that any transaction will be
consummated with any potential acquirer. Rawlings undertakes no obligation to
make any further announcement regarding its consideration of strategic
alternatives until a final agreement has been signed or a decision not to
proceed with strategic alternatives is made. It is important to note that
actual results could differ materially from those expressed in such forward-
looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, a general economic slowdown, a
major league baseball strike or lockout, lower retail sale rates for Rawlings'
products, changes in Rawlings' financial position, a dramatic increase in the
price of certain raw materials such as leather and changes in the competitive
environment. Other risks and uncertainties are detailed from time to time in
Rawlings' securities filings with the Securities and Exchange Commission,
including Rawlings' report on Form 10-K filed for the year ended August 31,
2001. Any forward-looking statements speak only as of the date hereof and
Rawlings disclaims any intent or obligation to update such statements.
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SOURCE Rawlings Sporting Goods Company, Inc.