Curtiss-Wright Corporation
Script for Conversations with Analysts and Institutional Investors
Curtiss-Wright has entered into an agreement in principle with our largest
shareholder, Unitrin that will allow Unitrin to spin-off to its shareholders its
ownership position in Curtiss-Wright in a tax-free manner. Unitrin owns
approximately 44% of the Company's outstanding shares.
As part of the transaction, subject to the consummation of the transaction,
Curtiss-Wright will be making a special dividend to its non-Unitrin shareholders
in the amount of 25 cents per share shortly before the spin-off is to occur.
Recapitalization
1. In order for the transaction to be tax-free to Unitrin shareholders,
we have agreed to establish an additional class of common stock, Class
B, having the right to elect 80% of the Curtiss-Wright Board. This will
be the only difference in what will be two classes of Curtiss-Wright
common stock. The shares of common stock owned by Unitrin will be
converted into the Class B stock and would be entitled to elect a
minimum of 80% of the Board of Directors of the company. The remainder
of our existing common stock, which is owned by non-Unitrin
shareholders, would have the ability to elect no more than 20% of the
Board.
2. The Class B stock, which is the class that would elect 80% of the
Curtiss-Wright Directors, would be issued to Unitrin in exchange for
all of the shares of Common Stock that it currently holds. Unitrin
would then distribute its 4.4 million shares of Class B stock to its
stockholders.
3. Other than the rights with respect to the election of the Board,
the two classes of stock would be identical in all other aspects.
It is important to note that two separate votes are required to approve the
recapitalization. First, the merger agreement providing for the recapitalization
must be adopted by a majority of Curtiss-Wright's shareholders. In addition, the
recapitalization must be approved by more than 50% of Curtiss-Wright's
non-Unitrin shareholders voting on the matter. In addition the transaction is
subject to Unitrin's receipt of a letter ruling from the Internal Revenue
Service with respect to the tax-free status of the distribution to Unitrin
shareholders.
We believe that the distribution of Unitrin's Curtiss-Wright shares will have
positive long-term benefits:
1. Since 1976, Unitrin has held a significant portion of Curtiss-Wright stock.
Unitrin's long-term investment strategy has resulted in a significant
portion of Curtiss-Wright's stock being removed from circulation. Due to
the size of Unitrin's investment and its investment approach, we believe
that Unitrin's ownership has had a negative impact on the liquidity of our
stock. The contemplated distribution of Unitrin's position to a broader
ownership base is expected to improve our stock's liquidity. This may
increase its attractiveness to a broader investor base.
2. The addition of Unitrin's shareholders, which number approximately 8,000,
would represent a significant increase in our shareholder base, which now
numbers about 3,800. The improvement in the liquidity of the stock and in
the size of our shareholder base is expected to attract new sell side
analysts in the investment community to follow our stock. The Company views
this as a positive aspect to the transaction since it would increase market
awareness of Curtiss-Wright and likely lead to a number of new investors as
they become aware of our name.
3. A particular issue that has been raised historically by institutional
investors is the lack of float that exists in the stock. The spin-off of
the Unitrin position will improve float and is expected to improve interest
in Curtiss-Wright by institutional investors.
4. An increase in our shareholder base and the exposure we have in the
investment community is expected to improve our ability to raise capital in
the future when the need arises. This would apply to both equity and debt
financing.
5. It is our understanding that other companies that have completed
similar transactions have over the long-term experienced improved stock
price performance relative to market benchmarks.
It should be noted that for all practical purposes, with an ownership position
of 44%, Unitrin has the ability to be very influential in determining the
outcome of issues that are placed before the shareholders for a vote. As a
matter of fact, the new structure will only impact voting rights regarding the
selection of Board Members. It will actually improve shareholder representation
as it applies to all other issues. By eliminating Unitrin's concentrated
ownership, the voting influence of all other shareholders will actually improve.
In connection with its approval of the recapitalization and spin-off, the
Curtiss-Wright Board also announced adoption of a stockholders' rights plan. The
plan has been implemented to enhance the ability of Curtiss-Wright's Board to
protect the interests of stockholders in the event of an unsolicited proposal to
acquire a significant interest in the Company at a price that does not reflect
its fair value. In connection with, and to be effective upon completion of the
recapitalization and spin-off, Curtiss-Wright will also seek shareholder
approval of a series of corporate governance-related changes to its certificate
of incorporation, including among other things, the classification of its Board
of Directors into three classes serving staggered three-year terms, the
elimination of the stockholders' ability to act by written consent or call a
special meeting, and the requirement of a two-thirds vote of shareholders to
amend certain provisions of the Restated Certificate of Incorporation and the
by-laws Approval of these amendments by a majority of our shareholders will also
be a condition to the recapitalization.
We feel that this proposed transaction would be beneficial to the Company and
its shareholders over the long term by improving the trading characteristics of
Curtiss-Wright's stock in the marketplace.