<PAGE> 1
FOR IMMEDIATE RELEASE
Contacts: Jill Burchill
Chief Financial Officer
December 19, 2000 507/663-8294
Sheldahl, Inc. [email protected]
1150 Sheldahl Road
Northfield, MN 55057 Jennifer Weichert for Sheldahl
Weichert Financial Relations, Inc.
651/261-5330
[email protected]
Troy McCombs for IFT
Coltrin and Associates
212/221-1616
[email protected]
SHELDAHL ANNOUNCES REVISED MERGER AND TRANSACTION TERMS AND WEAK FIRST QUARTER
Northfield, MN, - December 19, 2000 - Sheldahl Inc. (NasdaqNM: SHEL) and
International Flex Technologies Inc. ("IFT") announced today that they have
agreed to revise the terms of their previously announced Merger Agreement under
which Sheldahl will acquire IFT concurrently with an equity and debt investment
in Sheldahl by Morgenthaler Partners ("Morgenthaler"), Ampersand Ventures
("Ampersand") and Molex Incorporated ("Molex") in exchange for shares of common
stock, shares of a new series of preferred stock, subordinated debt and
warrants. The new terms include the following:
- Sheldahl will issue approximately 9.7 million shares of Sheldahl
common stock in exchange for all outstanding equity securities of
IFT and will assume approximately $12.7 million in IFT debt;
- Morgenthaler (IFT's majority shareholder) and Ampersand will invest
$25 million in equity capital in exchange for approximately 9.8
million shares of Sheldahl common stock and shares of a new series
of Sheldahl preferred stock that is convertible into approximately
8.1 million shares of Sheldahl common stock; and
- Molex, a Sheldahl shareholder, customer and joint venture partner,
will join Morgenthaler and Ampersand in purchasing an aggregate of
$6.5 million of Sheldahl subordinated debt and warrants to purchase
approximately 1.5 million shares of Sheldahl common stock
As a result of these transactions, Morgenthaler, other IFT stockholders and
Ampersand will collectively hold securities representing ownership of
approximately 58% of Sheldahl on a fully diluted basis (assuming conversion of
all Sheldahl convertible securities). In addition, Molex will own approximately
7% of Sheldahl on a fully diluted basis.
The transactions are expected to be completed by the end of the calendar year.
Shareholder approval will not be required as the Company has received an
exception from such requirement from Nasdaq. The transactions continue to be
subject to customary closing conditions, further negotiations and execution of
amendments to definitive agreements acceptable to the parties. Therefore, there
can be no assurance that the transactions will be completed by the end of the
calender year, or at all. In the event these transactions do not close, the
financial viability of Sheldahl would be seriously jeopardized. This release and
all subsequent SEC filings related to the transactions will be available on the
Company's website at www.sheldahl.com.
-more-
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SHELDAHL ANNOUNCES REVISED
MERGER AGREEMENT TERMS
AND WEAK FIRST QUARTER
Page Two.
In addition, Sheldahl announces weak sales for the first quarter ended December
1, 2000. "While first quarter final results are still being completed, we did
experience weaker sales in the Core Business than anticipated," said Sheldahl
President Edward L. Lundstrom. "The continuing uncertainty about the Company's
future along with the early end of life of a key data communications program has
resulted in a loss of approximately $4 million in Core Business revenue. Core
Business sales of approximately $27.4 million are about 18% lower than last year
and about 11% lower than last quarter. This program loss will continue to have
an impact on the Company until at least our third fiscal quarter when we expect
replacement programs to be in place. This decline was partially mitigated by
cost controls and while we expect earnings to be slightly better than last
quarter, they will not meet expectations," added Mr. Lundstrom.
"Despite the weak first quarter at Sheldahl, we are still excited about this
merger and are focused on completing the transactions," said Donald R. Friedman,
President and Chief Executive Officer of IFT.
Upon completion of the merger, the combined company will operate under the
Sheldahl name as a publicly traded concern, with IFT operating as a wholly owned
subsidiary of Sheldahl. The new Board of Directors will include three of the
current directors of Sheldahl, three designees of Morgenthaler, Ampersand and
IFT, and one representative from Molex.
"The improved liquidity afforded by our investment partners clearly paves the
road for us to finish the development and commercialization of our new products
while we simultaneously grow the Core Business and improve profitability,"
Lundstrom continued. "Sheldahl's Board and I fully support these transactions.
We believe this is in our shareholders' best interests and provides for the best
opportunities for growth and advancement for our employees."
International Flex Technologies Inc. is a leading producer of fine-line, high
quality flexible circuits for sale to the electronics, data communications and
medical markets. The Company, headquartered in Endicott, New York, has
operations in Stamford, Connecticut and sales offices worldwide. Information on
IFT can be found on the World Wide Web at http://www.internationalflex.com.
Morgenthaler Partners is a private equity investment firm with offices in
Cleveland, Ohio and Menlo Park, California, with approximately $1.0 billion
under management. Information on Morgenthaler can be found on the World Wide Web
at http://www.morgenthaler.com.
Ampersand Ventures is a private equity investment firm with offices in
Wellesley, Massachusetts and San Diego, California, with approximately $350
million in capital under management. Information on Ampersand Ventures can be
found on the World Wide Web at http://www.ampersandventures.com.
-more-
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SHELDAHL ANNOUNCES REVISED
MERGER AGREEMENT TERMS
AND WEAK FIRST QUARTER
Page Three.
Molex Incorporated is a 62-year-old manufacturer of electronic, electrical and
fiber optic interconnection products and systems; switches; value-added
assemblies; and application tooling. Based in Lisle, Illinois, USA, the Company
operates 52 manufacturing facilities in 19 countries and employs approximately
17,650 people. For more information please go to http://www.molex.com.
Sheldahl, Inc. is a leading producer of high-density substrates, high-quality
flexible printed circuitry, and flexible laminates primarily for sale to the
automotive electronics and data communications markets. The Company, which is
headquartered in Northfield, Minnesota, has operations in Northfield; Longmont,
Colorado; South Dakota; Toronto, Ontario, Canada; and Chihuahua, Chih., Mexico.
Its sales offices are located in Detroit, Michigan, Hong Kong, China; Singapore;
and Mainz, Germany. As of September 1, 2000, Sheldahl employed approximately 800
people. Sheldahl's common stock trades on the Nasdaq National Market tier of the
Nasdaq Stock Market under the symbol: SHEL. Sheldahl news and information can be
found on the World Wide Web at http://www.sheldahl.com.
The discussion above contains statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements by their nature
involve substantial risks and uncertainties as described by Sheldahl's periodic
filings. Actual results may differ materially depending on a variety of factors,
including, but not limited to the following: the achievement of Sheldahl's
projected operating results, the ability of Sheldahl to successfully obtain
waivers from its lenders for defaults on its debt covenants, the achievement of
efficient volume production and related sales revenue results at Longmont, the
ability of Sheldahl to identify and successfully pursue other business
opportunities and Sheldahl not completing the transactions described above.
Additional information with respect to the risks and uncertainties faced by
Sheldahl may be found in, and the prior discussion is qualified in its entirety
by, the Risk Factors contained in the Company's filings with the Securities and
Exchange Commission including Sheldahl's Annual Report, Form 10-K for the fiscal
year ended September 1, 2000, and other SEC filings. Sheldahl does not undertake
any obligation to update any such factors or to publicly announce developments
or events relating to the matters described herein.
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