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Banta Seeks Dividend Deal As It Battles Cenveo

19 Oct 2006

Banta is looking to dole out $390 million as a special dividend to shareholders as it continues to fend off buyout offers from Cenveo.

Banta is looking to dole out $390 million as a special dividend to shareholders as it continues to fend off buyout offers from Cenveo. The $515 million senior secured credit facility to finance the dividend hit the market last Tuesday backed by UBS. The deal consists of a six-year, $50 million revolver and a seven-year, $465 million term loan, according to a banker. Price talk is LIBOR plus 2%.

But the status of the deal could come into question if Cenveo keeps applying buyout pressure. One investor looking at the deal wondered if Cenveo's offers would impact Banta's proposed loans. "I just don't know enough about where the offer from Cenveo stands. I would think that Banta would only use this facility if they successfully fend off the overture from Cenveo," he said.

A Banta spokesman said the dividend is not being done to sway shareholder opinion, but rather is something the company has looked at for a long time and the board decided now was the time to return cash to its shareholders.

Cenveo, a provider of print and visual communications, initially proposed to acquire the company on Aug. 8 for $46 per share and published the proposal letter as a press release. At that point, Banta's stock was at a 52-week low of $33.80, according to the company's Web site. Stephanie Streeter, Banta's ceo, replied the next day that the proposal was an "ambiguous request" and Cenveo's actions were "inexplicable," according to company releases. The following week, on Aug. 16, Banta replied again, stating that the "purported offer" was "illusory" and merited no further discussion. Both Cenveo and Banta have now released all communications as press releases.

On Sept. 5, Robert Burton Sr., Cenveo's ceo, replied to Banta's Aug. 16 letter claiming that Banta's board and advisors did not do its homework and Burton would take it upon himself to bring Banta's shareholders up-to-date on the proposal, according to another release. The letter stated that Cenveo increased its offer to $47 per share and questioned whether Banta's board members needed to ask themselves if they could provide "$47 per share in value given industry conditions and the recent financial setbacks of the company." Burton said, "I believe our fully financed, all cash proposal provides significantly more certainty of value when compared to Banta's long-term strategic plan." The letter went on to further criticize Banta's announced $3 million cost savings plan. Calls to Robert Burton Jr., senior v.p. of investor relations at Cenveo, were not returned.

Since then, a series of releases back and forth and a conference call have made the situation even pricklier. Banta keeps rebuffing Cenveo and Burton maintains that Streeter and Banta's board decision to continually "hide behind [their] poison in [Burton's] view 110% un-American." Banta has authorized management, along with its financial advisor UBS, to explore potential strategies for maximizing shareholder value, including remaining independent, joint ventures, mergers, acquisitions or the sale of the company. It said it does not plan to disclose developments until a final decision is made.

Cenveo's last offer was for $50 per share, or $34 per share if the company takes out the special dividend described above. Banta published a release rejecting the $47 offer again that same day. It has not publicly responded to Cenveo's $50 per share offer.

19 Oct 2006