SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): March 31,1997
Thermal Industries, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-9790 25-1145753
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
301 Brushton Avenue, Pittsburgh, PA 15221-2168
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (412)244-6400
Item 5. Other Events.
On March 31, 1997, Thermal Industries, Inc. issued a Press
Release announcing that its Board of Directors had received an unsolicited
letter containing a merger proposal from Hicks, Muse, Tate & Furst
Incorporated ("Hicks Muse"). Filed as item 7(c)(99)(a) is a copy of the press
release and as item 7(c)(99)(b) is a copy of the letter from Hicks
Muse.
Item 7. Financial Statements and Exhibits
(c) Exhibits
The following exhibits are filed herewith:
Exhibit No. Description
99(a) - Press Release
99(b) - Letter dated 3/29/97 from Hicks Muse
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THERMAL INDUSTRIES, INC.
Dated: March 31, 1997 By: /s/ David S. Rascoe
David S. Rascoe
President
Exhibit Index
Exhibit No. Description Reference
99(a) Press Release Filed herewith
99(b) Hicks Muse Letter Filed herewith
Exhibit 99(a)
3/31/97
Contact: Eric Rascoe (412-244-6400)
FOR IMMEDIATE RELEASE
Thermal Industries Receives Unsolicited Merger Proposal from
Hicks Muse;
Calls Special Shareholders Meeting to Vote on HIG Merger
PITTSBURGH -- March 31, 1997 -- Thermal Industries, Inc.
("Thermal") (NASDAQ: THMP) announced today that its Board of
Directors received a letter from Hicks, Muse, Tate & Furst
Incorporated ("Hicks Muse") dated March 27, 1997 stating that
Hicks, Muse, Tate & Furst Equity Fund III, L.P. is prepared to
offer $19.00 per share in cash for all outstanding shares of
Thermal (the "Hicks Muse Proposal"). The Hicks Muse Proposal is
conditioned on satisfactory completion of due diligence which
Hicks Muse stated it would complete within 10 days after being
permitted access to nonpublic information regarding Thermal, but
is not conditioned upon third party financing. Hicks Muse stated
its belief that there would be no regulatory uncertainty involved
in a transaction between Thermal and Hicks Muse. Hicks Muse also
stated that upon completion of confirmatory due diligence and
lawful termination of Thermal's agreements with H.I.G. Investment
Group, L.P. ("HIG"), Hicks Muse would be prepared to enter into
agreements with Thermal containing terms and conditions
substantially similar to the agreements which Thermal presently
has with affiliates of HIG, except that Thermal's principal
shareholders (David H. Weis and Eric Rascoe) would not be
required to enter into an Indemnity and Fee Agreement or related
Escrow Agreement. Hicks Muse requested a response from Thermal's
Board of Directors by April 2, 1997.
Thermal is a party to an Agreement and Plan of Merger dated
January 6, 1997 with affiliates of HIG (the "HIG Merger"), and
its principal shareholders are parties to an Indemnity and Fee
Agreement with affiliates of HIG. Under the terms of the HIG
Merger, Thermal shareholders will receive $15 per share in cash.
The principal shareholders of Thermal, who own more than 50%
of Thermal's common stock, have informed Thermal's Board of
Directors that they intend to vote for the HIG Merger and would
not intend to vote in favor of any Hicks Muse transaction because
they believe that HIG would represent a better strategic fit for
Thermal and that the HIG Merger would be better for Thermal's
employees and the communities in which Thermal is located.
Thermal's Board has determined to take no action with respect to
the Hicks Muse Proposal, has called a special shareholders
meeting for May 13, 1997 to vote on the HIG Merger (Thermal's
Board having previously approved the HIG Merger) and has set
April 18, 1997 as the record date for voting on the HIG Merger.
The Board made its determination and took these actions because
of (i) the position of the principal shareholders regarding the
HIG Merger and the Hicks Muse Proposal, (ii) the importance of
avoiding exposing the Company to paying a substantial fee to HIG
pursuant to the HIG Merger agreement and (iii) uncertainty
regarding the effect upon the Hicks Muse Proposal, including
whether the $19 per share offered price would be reduced, if
Thermal became obligated to pay a significant fee to HIG pursuant
to the HIG Merger agreement.
The HIG Merger agreement contains provisions which obligate
Thermal to pay to HIG $5 million and reimburse its expenses up to
$500,000 in the event that the HIG Merger is not consummated
because (i) Thermal's Board authorizes or recommends or Thermal
enters into another acquisition agreement or agreement in
principle, or Thermal's Board fails to recommend, withdraws or
adversely modifies its recommendation of the HIG Merger or
terminates the HIG Merger agreement due to a third party
acquisition proposal, (ii) Thermal's Board or its principal
shareholders fail to call a special shareholders meeting to vote
on the HIG Merger or (iii) Thermal's shareholders approve a third
party acquisition transaction, or in the event that on or before
May 30, 1997 a third party acquires more than 50% of the common
stock of Thermal. The HIG Merger agreement also provides that if
the HIG Merger is not consummated because the shares held by
Thermal's principal shareholders are not voted for the HIG Merger
at Thermal's special shareholders meeting and the $5 million
break-up fee and expense reimbursement described in the foregoing
sentence is not owed by Thermal to HIG, Thermal is obligated to
pay $1 million to HIG. Thermal filed with the Securities and
Exchange Commission a copy of the HIG Merger agreement as an
exhibit to its January 7, 1997 Form 8-K and is filing a Form 8-K
with respect to the Hicks Muse Proposal which will have as an
exhibit the Hicks Muse letter received by Thermal's Board of
Directors.
Thermal anticipates mailing proxy materials to its
shareholders regarding the HIG Merger immediately following the
record date for the special shareholders meeting.
Exhibit 99(b)
Hicks, Muse, Tate & Furst Incorporated
March 27, 1997
Lawrence D. Stuart, Jr.
Managing Director
Principal
Board of Directors
Thermal Industries, Inc.
301 Brushton Avenue
Pittsburgh, PA 15221-2168
Gentlemen:
Hicks, Muse, Tate & Furst Equity Fund III, L.P. (the "Fund") is prepared to
offer $19.00 per share in cash for all the outstanding common stock of Thermal
Industries, Inc. ("Thermal"). We believe your shareholders would find the offer
extremely attractive as it would represent a premium of approximately 60% to
Thermal's trading price prior to the announcement of your agreement with
H.I.G. Investment Group, L.P. ("H.I.G.") and a 27% premium to the $15 per share
offer made by H.I.G.
We have conducted an extensive analysis of Thermal based on publicly
available information. While our proposal is subject to confirmation through
appropriate due diligence that our understanding of Thermal based on publicly
available information is accurate, we expect that such due diligence will
confirm our view of Thermal and its prospects. We would complete our due
diligence in 10 days. We would be willing to enter into an appropriate
confidentiality agreement to facilitate this process. This offer is not
conditioned upon receipt of third party financing, and we believe that there
would be no regulatory uncertainty involved in this transaction.
Upon completion of our confirmatory due diligence and lawful termination
of Thermal's agreements with H.I.G., we would be prepared to enter into
agreements with Thermal on terms and conditions substantially similar to those
contained in Thermal's agreements with H.I.G.. However, we would not require
that your two major shareholders enter into the Indemnity and Fee Agreement
and related Escrow Agreement.
By way of background, Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse")
is a Dallas-based private investment firm. Founded in 1989, Hicks Muse has
completed or has pending approximately 60 transactions totaling in excess of $10
billion in transaction value. The Fund has capital commitments in excess of $2
billion.
We would be pleased to meet with you at an early date to discuss our thoughts
on this matter. We are very interested in Thermal and look forward to speaking
to you soon. In view of the importance of this matter, we request your response
by no later than April 2, 1997.
Very truly yours,
HICKS, MUSE, TATE & FURST INCORPORATED
By: /s/ Lawrence D. Stuart, Jr.
Lawrence D. Stuart
Managing Director
