Lear Siegler Doubtful of AFG’s Finances, to Pursue Own Plans
Lear Siegler said Thursday it intends to go ahead with its restructuring plans because it does not believe that the AFG Partners investment group can finance its $85-a-share bid for the Santa Monica conglomerate.
Lear Siegler, which has interests in aerospace, automotive equipment and specialty glass, said in a letter to AFG Partners that “you have failed to demonstrate your ability to finance any such transaction at $85 or any other value.”
A Lear Siegler spokesman said the company is continuing to study its options, which include a recapitalization, the sale of certain businesses or a merger.
A spokesman for AFG Partners had no comment.
AFG Partners was formed by Irvine glassmaker AFG Industries and by Wagner & Brown, an oil and gas partnership based in Midland, Tex. The partnership owns 4.7% of Lear Siegler’s shares.
As previously reported, AFG Partners said it would finance its proposed $1.5-billion acquisition of Lear Siegler with $250 million of their own money and a combination of approximately $600 million in junk bond financing and $800 million in bank borrowings. AFG Partners said Wednesday that, if Lear Siegler rejects its offer, it is willing to assist the Santa Monica firm in a restructuring by purchasing certain businesses or by taking a larger stake in the company. AFG Partners previously expressed interest in Lear Siegler’s glass and automotive operations.
Lear Siegler’s stock closed Thursday at $79.25, a drop of $2.75 a share, in New York Stock Exchange trading. Analysts said the decline indicated that investors doubted that AFG Partners could finance the deal.
Lear Siegler also noted in its letter to AFG Partners that it had previously offered the investment group access to confidential corporate information under certain conditions, such as an agreement not to use the information to buy shares on the open market. The agreement does not prevent AFG Partners from launching a tender offer, Lear Siegler said. AFG Partners previously said that the terms of the confidentiality agreement would make it impossible to continue a bid for the firm.
