ANNOUNCEMENT
Date: December 3, 2007
To: Raven Certified Applicators and Sales Representatives
Cohesant Materials Customers
From: Stewart Nance, RLS Inc. Ted Williams, Cohesant Materials Inc.
Re: Cohesant Sells GlasCraft Subsidiary
Today Cohesant announced that it has signed an agreement to sell its GlasCraft subsidiary to Graco Inc. This transaction will be completed following shareholder approval in early 2008. In concert with this transaction, the company will drop “Technologies” from its legal name and will be known as Cohesant Inc. The new Cohesant will focus solely on its infrastructure protection and renewal businesses.
Cohesant Inc. will simplify its legal structure to more accurately reflect how the company’s businesses are organized:
- A new legal entity, RLS Inc., will be created to focus on providing solutions to the municipal market. RLS Inc. will have ownership and responsibility for the Raven brands and for the Raven Certified Applicator network. RLS will also represent the AquataPoxy and CuraFlo Spincast brands in the municipal market. RLS has already begun spreading this message to the market. Stewart Nance will serve as the Acting President of RLS Inc.
- Cohesant Materials has been merged into CIPAR Inc. and will be part of “new” Cohesant. This subsidiary will continue to manufacture Cohesant’s CuraPoxy, Raven and AquataPoxy products, and other materials for RLS and CuraFlo Franchising. It will also continue to sell direct any non-exclusive AquataPoxy products to markets not served by CuraFlo and RLS.
- CIPAR’s Rehabilitation Services division will be consolidated into CuraFlo Services Inc. This division operates company owned franchises in Vancouver and Cleveland, as well as CuraFlo Spincast Services. Brian LeMaire will continue to serve as President of CuraFlo Services Inc. As President of CuraFlo’s largest Franchisee, Brian will continue to provide peer technical, sales and other advice regarding the operation of a CuraFlo business to our other dealers and franchisees.
- CuraFlo Franchising Inc. will be responsible for managing and supporting its CuraFlo’s franchisees and licensed dealers. Tom Fihe will continue to be responsible for the day to day operations of this business unit and his franchising team will be responsible for supporting all of CuraFlo’s franchisees and dealers.
Morris H. Wheeler will continue to serve as CEO of Cohesant Inc. and the rest of the Cohesant management team will be largely unchanged. Joanne Hughes, formerly the President of the Raven division, will join the Cohesant management team as a Director of Business Development. Joanne will also have responsibility for Technical Sales and Marketing.
Cohesant will be headquartered in Cleveland, OH along with CuraFlo Franchising and CuraFlo Services. The RLS business unit will remain headquartered in Tulsa, OK. Cohesant’s business and contractual commitments with Raven Certified Applicators, CuraFlo Franchisees, CuraFlo Dealers, and Cohesant Materials customers are unaffected by these organizational changes.
We believe there is significant opportunity for profitable growth in the pipe rehabilitation, infrastructure renewal and corrosion protection markets. The divestiture of GlasCraft is an important strategic move that will position Cohesant to focus exclusively on serving these markets. We are confident this focus will enable us to move more quickly to capitalize on market opportunities, and to better respond to the needs of our customers.
If you have any questions or concerns about this announcement please contact us. We thank you for your patronage and look forward to a long and prosperous relationship with you as we work together to bring superior solutions to our customers.
Frequently Asked Questions about Cohesant’s Sale of its GlasCraft Subsidiary
Q: I own Cohesant Technology shares, either in my 401K or in a brokerage account, what happens to these Cohesant Technologies shares?
A: Cohesant had recently consolidated all of its infrastructure protection and renewal operations under the umbrella of its CIPAR subsidiary. As part of the sale of GlasCraft, Cohesant will spin-off its CIPAR subsidiary by declaring a taxable dividend of one share of CIPAR for each share of Cohesant common stock outstanding. The resulting public company, which will initially be registered under the Securities Exchange Act and will be quoted on the over-the-counter market, will be known as Cohesant Inc.
At the closing, you will receive cash and a share of “new” Cohesant for every Cohesant share that you own at the time of Closing, including Cohesant shares held in your 401K account. The cash amount will be at least $9.05 and may be as much as $9.55 cents per share.
The share of “new” Cohesant will have a value for tax purposes, and after closing the public market will establish a fair market value for the share of “new” Cohesant. Nobody can know for sure what this fair market value will be, but Cohesant has received an opinion from investment bankers that the value of CIPAR for tax purposes is $6.6 million dollars. This means that as a minimum, the share of “new” Cohesant represents $1.79 per share of taxable income.
Q: Will the “new” Cohesant be a public Company?
A: Yes. At the Closing, “new” Cohesant will be an SEC registered company which will trade on the over-the-counter market. This new public company will consist only of the consolidated infrastructure renewal and protection businesses, RLS, CuraFlo Franchising, CuraFlo Services and Cohesant Materials.
Q: Am I getting a share of "new" Cohesant in addition to the minimum $9.05 per share cash payment?
A: Yes. The fair market value of the "new " Cohesant share will be determined by the public market, but the tax value for the spin-off has been determined to be $6.6 million. Additional information relevant to the valuation of the shares will be included in the Proxy Statement.
Q: What businesses are included in the spin-off as part of "new" Cohesant?
A: All of the businesses in Cohesant's two other subsidiaries, CIPAR Inc. and Cohesant Materials Inc. will be part of the spin-off.
Q: When will there be more information regarding the Transaction?
A: In connection with the proposed merger with Graco Inc, the Company will file a proxy statement with the SEC. Stockholders and investors are advised to read the proxy statement when it becomes available because it will contain important information about the merger and the Company. Stockholders and investors may obtain a free copy of the proxy statement (when available) and other documents filed by the Company with the SEC at the SEC’s web site at www.sec.gov or on the Cohesant Website.
Q: Will Morris Wheeler be the CEO of Cohesant following the transaction? Will Rob Pawlak be the CFO? Will Mort Cohen be the Chairman? Will the Board of Directors change?
A: It is currently anticipated that Morris H. Wheeler will serve as CEO of “new” Cohesant Inc. and the rest of the Cohesant management team will be largely unchanged. Additional details regarding the transaction will be disclosed in the Proxy Statement.
Q: Will Cohesant Headquarters remain in Indianapolis?
A: Cohesant corporate headquarters will move from Indianapolis to Beachwood, OH at the Closing. As a result, we will relocate to Cleveland many functions currently located in Indianapolis. In addition, the agreement with Graco specifies that certain Cohesant employees will remain with the GlasCraft business. We will be discussing relocation on a case by case basis with affected employees. This relocation of headquarters will not affect employees at our business unit offices outside of Indianapolis.
In connection with the proposed merger with Graco Inc, the Company will file a proxy statement with the SEC. Stockholders and investors are advised to read the proxy statement when it becomes available because it will contain important information about the merger and the Company. Stockholders and investors may obtain a free copy of the proxy statement (when available) and other documents filed by the Company with the SEC at the SEC’s web site at www.sec.gov or on the Cohesant Website.