National Gypsum Approves Buy-Out

National Gypsum said Tuesday that its independent directors approved a revised plan for a management-led investor group to take the company private through a leveraged buy-out valued in excess of $1 billion.

The company also said it agreed in principle to a settlement of five class-action lawsuits that were filed against the company by certain shareholders who had asserted that the buy-out group’s original offer, announced Nov. 25, was inadequate.

Terms of the proposed settlement were not disclosed, but the company said the agreement was subject to court approval.

The group led by executives of National Gypsum, a maker of products and services for the construction industry, initially offered $40.50 in cash and $17 face amount of new debt securities for each of National Gypsum’s about 22.8 million common shares outstanding.

Worth $1.1-Billion

Industry analysts had given the bid a current market value of about $50 a share, or $1.1 billion.

Under the revised offer, stockholders would receive $41 in cash and the $17 face amount of new debt securities for each of their shares, but the bonds’ terms also would be changed.

The newly proposed debt securities would carry a maturity of 18 years, pay no interest for the first five years and thereafter would pay interest at an annual rate of 15.5%. The original plan called for the bonds to mature in 20 years and to pay annual interest of 15%.

National Gypsum’s common stock climbed 75 cents a share to $45.75 in New York Stock Exchange composite trading Tuesday.

The buy-out group is led by National Gypsum Chairman John P. Hayes, Vice Chairman John M. Thompson Jr. and President and Chief Operating Officer James R. Voisinet.

The proposed purchase remains subject to the group raising the necessary financing and to approval by National Gypsum’s stockholders.

In a leveraged buy-out, the purchase is made with mostly borrowed funds that are repaid with money from the target company’s operations or the sale of its assets.