SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14A-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [x]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement [ ] Confidential, for Use of the
[ ] Definitive Additional Materials Commission Only (as permitted)
[x] Soliciting Material Pursuant to by Rule 14a-6(e)(2)
Rule 14a-11(c) or Rule 14a-12
JUNO LIGHTING, INC.
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(Name of Registrant as Specified In Its Charter)
Lens Investment Management, LLC
Ram Trust Services, Inc.
Robert B. Holmes
John B. Goodrich
Nell Minow
Robert A.G. Monks
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: Common
Stock, $.01 par value, of Juno Lighting, Inc.
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(2) Aggregate number of securities to which transaction applies: Not
applicable.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): Not
applicable.
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(4) Proposed maximum aggregate value of transaction: Not applicable.
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(5) Total Fee Paid: Not applicable.
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: Not applicable.
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(2) Form, Schedule or Registration Statement No.: Not applicable.
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(3) Filing Party: Not applicable.
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(4) Date Filed: Not applicable.
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May 7, 1999
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May 7, 1999
To Our Fellow Shareholders of Juno Lighting, Inc.:
The Lens Group is the beneficial owner of approximately 7.2% of the outstanding
shares of common stock of Juno Lighting, Inc. ("Juno" or the "Company"). We have
serious doubts about whether Juno's announced transaction to be acquired by
Fremont Investors I, LLC ("Fremont Investors") is the best possible deal for the
shareholders. We have outlined below both our cause for concern and what we see
as a viable alternative to the Fremont Investors' deal. As we consider the best
way for us to raise these concerns, we would be grateful for your thoughts.
CAUSES FOR CONCERN:
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THE PRICE: What is the value to us of the Fremont Investors' deal?
o The headline of Juno's March 26, 1999 press release announcing
the deal says "Juno Lighting, Inc. Announces $25.00 Per Share
Recapitalization Merger...."
o Read the fine print and you will see that you are by no means
being offered $25 per share in cash.
o The Fremont Investors' deal provides that 12.9% of Juno's shares
of common stock must be retained by the public shareholders.
Accordingly, if you elect
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The "Lens Group" consists of Lens Investment Management, LLC, Ram Trust
Services, Inc., Robert B. Holmes, John B. Goodrich, Nell Minow and Robert
A.G. Monks. The Lens Group has filed a preliminary proxy statement with the
Securities and Exchange Commission ("SEC") with respect to the solicitation
of proxies in connection with Juno's 1999 annual meeting of shareholders
for the election of Mr. Monks and Ms. Minow as directors of Juno and an
amendment to Juno's by-laws which, effective one year after such approval,
would prohibit more than one "inside director" from serving on Juno's Board
of Directors. The Lens Group is not seeking your vote at this time. Juno
has not yet announced a time, place or date for the 1999 annual meeting.
The Lens Group will send shareholders a final proxy statement, including a
proxy card, at the earliest practicable date following such announcement.
However, it now appears likely that the Fremont Investors' deal will be
submitted to shareholders for approval at a special meeting before the
annual meeting is held.
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NY2:\449929\03\9N6103!.DOC\58531.0006
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to receive cash for all your shares, you may nevertheless be
required to retain a continuing equity interest or "stub" for the
balance. In other words, you might receive, in effect, as little
as $21.775 per share in cash plus the stub.
o What is the value of the stub?
o The Company's preliminary registration statement
relating to the Fremont Investors' deal, which was
filed with the SEC on April 14, 1999 (Juno's "SEC
Filing"), doesn't offer much guidance.
o According to Juno's SEC Filing, Juno's financial
advisor, William Blair & Company, L.L.C. ("Blair"), who
delivered an opinion as to the fairness of the
transaction, used a valuation of $25 per share for the
deal ($21.78 in cash and $3.22 for the stub) but does
not set forth an actual estimate of the value of the
stub. The Company is also silent on this matter.
o Juno's SEC Filing makes clear that no dividends are
expected to be paid after the acquisition transaction
(as opposed to dividends paid for the last two quarters
at the rate of $.40 per share per annum).
o Further, the Company states in the SEC Filing that,
following the merger, there may be a significant
decrease in liquidity of the stock which means, to us,
that shareholders may experience difficulties selling
shares or obtaining prices that reflect their value.
o It gets worse.
o As a condition to the Fremont Investors' deal,
shareholders must approve the 1999 Stock Award and
Incentive Plan, which would allow up to 940,000
additional shares of common stock to be issued by Juno
to management pursuant to option grants.
o If options for all those shares are issued, they would
represent approximately 28% of the common stock after
the deal (assuming 2.4 million shares remain
outstanding) and over 12% of the common stock on a
fully-diluted basis.
o We ask: Whose interest is being served by making
approval of the option plan a condition to the deal?
THE PROCESS: Why did a financial buyer, not a strategic buyer, end up
with the deal?
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o Fremont Investors is a financial buyer, with no other investment
in Juno's industry. We believe that a strategic buyer, who could
realize operating synergies, would be able to pay a higher price.
o We understand that at least one potential strategic buyer, who
Juno itself includes in its peer group, was never contacted to
make a bid.
o Juno did not have an open public auction but shopped itself
privately and selectively.
o Could it be that Juno, governed by a management-controlled Board
of Directors, did not want to see the executives' jobs threatened
by a sale to an industry competitor?
AN ALTERNATIVE: Return cash to the shareholders and then publicly auction the
Company.
o Juno can borrow modestly against the strength of its operating
business and real estate assets. Based upon Juno's estimate of
1999 earnings before interest, taxes and depreciation ("EBITDA")
contained in Juno's SEC Filing, we believe it should be able to
borrow from banks $100 million at an assumed interest rate of
8.0% per annum with 5-1/2 year amortization and have EBITDA
interest coverage of 6.1x.
o Juno can combine the proceeds of this borrowing with
approximately $110 million of excess cash and marketable
securities which we estimate that the Company will have on its
balance sheet by the end of its fiscal year,(1) and repurchase,
through a self-tender or otherwise, 8.4 million shares
(approximately 45% of the outstanding stock) at $25 per share.
o Juno can then carefully and professionally arrange for a public
auction of the business. Based on Juno's estimates of fiscal 1999
sales and EBITDA contained in Juno's SEC Filing and taking into
account the effects of the use of cash and borrowings as
described above(2) and certain assumptions necessary to derive
estimated net income,(3) we estimate that earnings per share
would be approximately $2.29 on the remaining 10.2 million shares
outstanding. Based on the trading multiples of Juno's peers (an
average of approximately 14X earnings per share),(4) plus a
modest 5% premium for control, the equity of the business should
be worth $342.9 million. With approximately 10.2 million shares
remaining outstanding, the value per share would equate to
$33.63.(5)
o Based on the foregoing, if a current shareholder sold 45% of his
or her shares to Juno in the stock buy-back and the balance in
connection with a sale of the Company at the value estimated
above, he or she would receive, on a blended basis, $11.29 per
share in cash upon the buy-back and $18.44 per share in cash upon
the sale of the business; or $29.73 per share in total.(6)
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If you share our concerns about the Fremont Investors' deal, we urge you to let
Juno's Board of Directors know as soon as possible. The Company's address and
telephone number are: Juno Lighting, Inc., 1300 S. Wolf Road, Des Plaines,
Illinois 60017-5065; (847) 827-9880. According to Juno's SEC filing, its current
directors are Robert S. Fremont, Thomas W. Tomsovic, Julius Lewis, Allan Coleman
and George M. Ball.
We also would like to hear what you think of our alternative, which would give
existing shareholders significant cash and continuing control over Juno pending
an ultimate sale, and whether you would be willing to support a "just vote no"
effort. PLEASE CALL OR E-MAIL RICK BENNETT OF LENS (TEL.: (207) 775-4296;
E-MAIL: RBENNETT @LENS-INC. COM).
Juno is our company and we have the final word. The deal cannot go forward
without shareholder approval, and we, the shareholders, do not have to approve
any deal that is not in our interest. We look forward to hearing from you.
Sincerely yours,
LENS INVESTMENT MANAGEMENT LLC
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1 The Company had approximately $103.7 million of cash and marketable
securities on its balance sheet as of February 28, 1999, as reported in
its Quarterly Report on Form 10-Q for the fiscal quarter ended on such
date. Based upon Juno's estimate of 1999 EBITDA contained in Juno's SEC
Filing, we anticipate that such amount will increase to approximately
$117 million by November 30, 1999.
2 This consisted of the following pro forma adjustments for fiscal 1999:
additional interest expense of approximately $8.1 million; reduced
interest and dividend income of approximately $5.0 million; and an
income tax rate of approximately 40%.
3 In preparing our estimate of fiscal 1999 net income, we subtracted from
the estimate of fiscal 1999 EBITDA contained in Juno's SEC Filing
(approximately $50.6 million), our estimates of (i) depreciation and
amortization (we used $3.8 million as compared with actual depreciation
and amortization of approximately $3.7 million for fiscal 1998), (ii)
net interest and dividend income (we used approximately $5.1 million,
representing four times the actual result for the first quarter of
fiscal 1999) and (iii) income taxes (we estimated approximately $18.7
million based on our estimate of $51.9 million of fiscal 1999 pre-tax
income taxable at a 36% rate, as compared with actual income taxes of
$14.6 million in fiscal 1998).
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4 We have assumed that Juno's "peers" consist of the following five
publicly traded companies in the lighting industry which, according to
Juno's SEC Filing, were used by Blair, Juno's financial advisor, in its
analysis: Advance Lighting Technology, Inc., Genlyte Group Inc.,
Holophane Corp., LSI Industries Inc. and SLI, Inc. The average
price/earnings multiple was computed based upon earnings per share
estimates for fiscal 1999 from First Call Corporation and the closing
share prices as of April 30, 1999. In addition, for purposes of
computing such average, the highest price/earnings multiple (Advance
Lighting Technology Inc. - 50.0x) and the price/earnings multiple for
Genlyte Group Inc. (for which a First Call Corporation estimate was not
available) were excluded.
5 We note that the average multiple of market equity value plus book
value of total debt less cash and equivalents ("enterprise value") to
trailing 12-month EBITDA of the same "peers" used above was 9.2x as of
April 30, 1999. Using such multiple plus a modest 5% premium for
control, the equity of Juno should be worth approximately $313.1
million after the buy-back. With approximately 10.2 million shares
remaining outstanding after the buy-back, the value per share would
equate to $30.71.
6 Based on the enterprise value/EBITDA analysis set forth in the
immediately preceding footnote, if a current shareholder sold 45% of
his or her shares to Juno in the stock buy-back and the balance in
connection with a sale of the Company at the value estimated in such
footnote, he or she would receive, on a blended basis, $11.29 per share
in cash upon the buy-back and $16.84 per share in cash upon the sale of
the business; or $28.13 in total.
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