SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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HEXCEL CORPORATION
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(Name of Registrant as Specified In Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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0-11.
(1) Title of each class of securities to which transaction applies: ____
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computed pursuant to Exchange Act Rule 0-11 (set forth the
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As filed with the Commission on December 19, 2002
Hexcel Corporation Signs Agreements to Issue
$125 Million of Equity Securities
Proceeds will provide for payment at maturity of 7% Convertible Subordinated
Notes due August 1, 2003 and reduce senior bank debt Hexcel planning
to refinance its senior credit facility with new senior debt having a
term of four years or more
STAMFORD, Conn.--(BUSINESS WIRE)--Dec. 18, 2002-- Hexcel Corporation (NYSE/PCX:
HXL) today announced that it has entered into definitive agreements providing
for $125 million of new equity financing through the issuance for cash of a
total of 125,000 shares of a series A convertible preferred stock and 125,000
shares of a series B convertible preferred stock.
Upon the closing of the transactions, the total number of Hexcel's outstanding
common shares including shares issuable upon conversion of both of the new
convertible preferred stocks is expected to increase from approximately 38.4
million shares to approximately 88.2 million.
Hexcel said that it has agreed to issue 77,875 shares of series A convertible
preferred stock and 77,875 shares of series B convertible preferred stock to
affiliates of Berkshire Partners LLC and Greenbriar Equity Group LLC (the
"Investors") for a cash payment of approximately $77.9 million.
The series A and the series B convertible preferred stocks will be mandatorily
redeemable on January 22, 2010. Both preferred stocks will be convertible, at
the option of the holder, into common stock at a conversion price of $3.00 per
share, and will automatically be converted into common stock if the trading
price for such common stock exceeds $9.00 per share over a 60-day period after
the third anniversary of the closing. The preferred stocks will be entitled to
vote on an as converted basis with Hexcel's common stock. The series A preferred
stock will accrue dividends at a rate of 6% per annum following the third
anniversary of the issuance, which dividends may be paid in cash or added to the
accrued value of the preferred stock, at Hexcel's option. The series B preferred
stock will not accrue dividends. After giving effect to the issuances, the
Investors will own approximately 35.2% of Hexcel's outstanding voting
securities.
Hexcel has separately agreed to issue 47,125 shares of series A convertible
preferred stock and 47,125 shares of series B convertible preferred stock to
affiliates of Goldman Sachs, which currently owns approximately 37.8% of
Hexcel's outstanding common stock, for a cash payment of approximately $47.1
million. This issuance of preferred stock will enable Goldman Sachs and its
affiliates to maintain their current percentage ownership interest in Hexcel's
voting securities, consistent with their rights under the governance agreement
entered into in 2000.
At the closing of the transactions, Hexcel and the Investors will enter into a
stockholders agreement, which gives the Investors the right to nominate up to
two directors (of a total of ten) to Hexcel's board of directors and certain
other rights. Affiliates of Goldman Sachs will continue to have the right to
nominate up to three directors under the governance agreement entered into at
the time of their investment in Hexcel in 2000. The stockholders agreement and
the amended Goldman Sachs governance agreement will require that the approval of
at least six directors, including at least two directors not nominated by the
Investors or Goldman Sachs, be obtained for board actions generally. The
stockholders agreement will also prohibit the Investors from acquiring voting
securities of Hexcel in excess of 39.5% of Hexcel's outstanding voting
securities unless approved by Hexcel's board. The Investors and the affiliates
of Goldman Sachs Group, Inc. have agreed to an 18-month lock up on the
securities being issued, except for certain registered offerings.
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The issuances are sized for, and conditioned upon, the refinancing of Hexcel's
existing senior credit facility for a period of at least four years through some
combination of new senior revolving credit facilities, term loans and notes with
certain threshold maturity and covenant requirements. The transactions are also
subject to customary closing conditions, including regulatory approvals and the
approval of Hexcel's stockholders.
The proceeds from the preferred stock issuances will be used to reduce Hexcel's
bank debt and to provide for the repayment in August 2003 of its 7% Convertible
Subordinated Notes due 2003.
Mr. David E. Berges, Chairman, President and Chief Executive Officer of Hexcel,
stated, "The recapitalization will enable Hexcel to improve its financial and
operating flexibility as well as strengthen the confidence of our stakeholders.
The Company has responded to an unprecedented weakness in commercial aerospace
and electronics markets by reducing cash fixed costs by 24%. The resultant
operating earnings as well as good cash management, has allowed the Company to
reduce its debt by over $41 million in the twelve-month period ending September
30, 2002. Despite these actions, the Company continues to have a highly
leveraged capital structure and has been required to seek amendments to its
senior bank facilities. The uncertain timing of recoveries in our core markets
and the upcoming maturity of our Convertible Subordinated Notes due 2003,
followed by the expiration of our senior credit facility in 2004, led us to
pursue alternatives to reduce the Company's total leverage."
Mr. Berges continued, "With this cash infusion, we expect to be able to arrange
a new senior facility to take us well into the recovery of our markets and
assure all our lenders we are committed to meeting our obligations. As
important, we expect that our customers, suppliers, employees and shareholders
will be better able to focus on the long-term potential of the company. We are
delighted that Berkshire and Greenbriar have made such a meaningful commitment
to Hexcel. Particularly given their focus and expertise in the aerospace sector,
we are excited about the prospect of their joining the Board and contributing to
the growth of the Company."
Mr. Sanjeev Mehra, a Managing Director of Goldman Sachs, stated, "The commitment
by Goldman Sachs to an additional investment in Hexcel is an affirmation of
Goldman Sach's belief in the long term strength of the Company, its management
and market position."
Mr. Joel S. Beckman, a Managing Partner of Greenbriar Equity Group, stated "We
consider Hexcel to be a premier supplier to the aerospace industry and are
enthusiastic about our investment and the company's prospects." Mr. Robert J.
Small, a Managing Director of Berkshire Partners, added, "We believe that Hexcel
has an outstanding product offering and management team, and is well-positioned
to participate in an industry upturn."
An independent committee of Hexcel's board unanimously approved the investment
by Berkshire Partners and Greenbriar Equity Group as well as the investment by
the Goldman Sachs investors. The Goldman Sachs investors have, subject to
certain conditions, committed to vote their shares of common stock in favor of
the transactions. The transactions are anticipated to be completed in the first
half of 2003.
Hexcel will host a conference call at 11am EST on Thursday, December 19, 2002 to
discuss the transactions and respond to questions. The telephone number for the
conference call is (719) 867-0680 and the confirmation code 793185. The call
will be simultaneously hosted on Hexcel's web site at
www.hexcel.com/investors/index.html. Replays of the call will be available on
the web site for approximately seven days.
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Hexcel Corporation is the world's leading advanced structural materials company.
It designs, manufactures and markets lightweight, high reinforcement products,
composite materials and engineered products for use in commercial aerospace,
space and defense, electronics, general industrial and recreation applications.
Berkshire Partners is an active investor in the private equity market managing
approximately $3.5 billion of equity capital. Through its 18-year investment
history, Berkshire has invested in over 70 companies with a primary focus on
building solid, growth-oriented companies in conjunction with strong,
equity-incented management teams. Berkshire invests in a number of industries
including manufacturing, retailing, transportation, communications and business
services. Additional information may be found at www.berkshirepartners.com.
Greenbriar Equity Group LLC is focused exclusively on making private equity
investments in the global transportation industry, including companies in
freight and passenger transport, commercial aerospace, automotive, logistics,
and related sectors. Greenbriar and Berkshire Partners LLC have entered into a
strategic joint venture and co-investment agreement to address transportation
and related investment opportunities. Greenbriar manages $700 million of
committed limited partner capital and co-investment commitments and, together
with Berkshire, has access to more than $1 billion for investment in privately
negotiated equity investments within the transportation industry. Additional
information may be found at www.greenbriarequity.com.
GS Capital Partners is the current primary investment vehicle of Goldman Sachs
for making privately negotiated equity investments. The current GS Capital
Partners fund was formed in July 2000 with total committed capital of $5.25
billion, $1.5 billion of which was committed by Goldman Sachs and its employees,
with the remainder committed by institutional and individual investors.
Disclaimer of Forward-Looking Statements
This press release contains statements that are forward looking, including
statements relating to the anticipated growth of most of the markets the company
serves. These statements are not projections or assured results. Actual results
may differ materially from the results anticipated in the forward looking
statements due to a variety of factors, including but not limited to, changing
market conditions, increased competition, product mix, and currency exchange
rate changes. Additional risk factors are described in the company's filings
with the SEC. The company does not undertake an obligation to update its
forward-looking statements to reflect future events or circumstances.
Hexcel Corporation (the "Company") and certain persons may be deemed to be
participants in the solicitation of proxies relating to the proposed transaction
among the Company, Berkshire Partners LLC and Greenbriar Equity Group LLC and
the proposed transaction among the Company and affiliates of Goldman Sachs
Group, Inc. (together, the "Transactions"). The participants in such
solicitation may include the Company's executive officers and directors, none of
whom own in excess of 1% of the Company's common stock. Further information
regarding persons who may be deemed participants will be available in the
Company's proxy statement to be filed with the Securities and Exchange
Commission in connection with the Transactions.
This press release is not a proxy statement. The Company has not yet filed a
proxy statement in connection with the solicitation of proxies relating to the
proposed Transactions. Stockholders of the Company will receive such a statement
and a proxy card in connection with the solicitation. STOCKHOLDERS OF THE
COMPANY ARE ADVISED TO READ THE STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION. Such statement (when available) and other
relevant documents may also be obtained, free of charge, on the
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Securities and Exchange Commission's website (http://www.sec.gov) or by
request by contacting Investor Relations Department, Hexcel Corporation, Two
Stamford Plaza, 281 Tresser Boulevard, 16th Floor, Stamford, Connecticut
06901-3238.
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