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NOVAMETRIX MEDICAL SYSTEMS INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other than the Registrant)
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NOVAMETRIX
MEDICAL SYSTEMS INC.
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November 19, 1996
Dear Fellow Stockholders:
By now you will have received another communication from the dissident 13D
Group. Their letters to you continue to show either a misunderstanding of the
facts or a deliberate distortion of them.
The 13D Group's latest communication purports to quote us as saying that the
Company will be able to meet its obligations following the Andros merger only
"[i]f all our predictions, projections and estimates as to the future of the
merged company come true."
The "quotation" is a pure fabrication. What we actually advised the Group
during a meeting on November 13, 1996, was that at CURRENT run rates, Novametrix
and Andros are generating sufficient cash flow not only to service the Andros
debt but also to provide a substantial surplus. We are not mortgaging our future
to speculative predictions of growth or efficiencies, but are relying on the
demonstrated historical operating performance of the two companies.
The 13D Group's latest communication also says that "the Company did not
report in its proxy statement to shareholders" that if the Andros merger goes
through, the Company will guarantee $42 million of Andros' bank debt.
In fact, the Company's proxy statement clearly discloses the amount of
Andros' debt and states that one of the conditions to consummation of the merger
is the restructuring of the Andros debt, "WHICH MAY INCLUDE THE COMPANY ACTING
AS GUARANTOR OR CO-BORROWER UNDER ANDROS' CREDIT FACILITIES." In addition, on
November 1, 1996, we sent all stockholders a letter with a summary of the Andros
merger, which notes that "[T]HE COMPANY ASSUMES APPROXIMATELY $42 MILLION OF
ANDROS DEBT."
As we have explained to the 13D Group, the Andros debt is an integral
component of a deal of this type. It is this debt -- which can be serviced from
Andros' own historical cash flow -- that makes the transaction possible for a
company of our size.
The 13D Group also suggests that Institutional Shareholder Services ("ISS")
"ignore[d]" the Company's assumption of the Andros debt when it independently
endorsed the merger. In fact, ISS specifically considered the Company's
assumption of the Andros debt and the 13D Group's stated opposition to that
aspect of the merger. ISS concluded that while the debt is "substantial . . . ,
we see no evidence that it is unserviceable."
ISS is the nation's leading shareholder advisory group, and we believe its
independent endorsement of the merger, after it discussed the position of the
13D Group with Paul Cote, is highly significant.
We do not doubt the sincerity of the 13D Group's opposition to the merger. We
believe, however, that their opposition is based on an erroneous belief that the
Company can be sold today for a substantial premium over its market price. We
are not aware of any potential acquiror at such a price, and none has come
forward over the last three months, although this would be the ideal time for a
bidder to do so.
WE URGE YOU NOT TO SIGN THE 13D GROUP'S GREEN PROXY CARD.
We believe the Andros merger provides the clearest and best way to enhance
stockholder value over both the short and the long term.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE THE WHITE PROXY CARD FOR THE
ANDROS MERGER, FOR THE COMPANY'S NOMINEES FOR CLASS A DIRECTORS, AND FOR THE
OTHER PROPOSALS IN THE COMPANY'S PROXY STATEMENT. PLEASE COMPLETE, SIGN, DATE
AND RETURN THE WHITE PROXY CARD THAT WAS ENCLOSED WITH OUR PROXY STATEMENT, OR
THE ADDITIONAL WHITE PROXY CARD ENCLOSED HEREWITH.
Thank you for your continued support.
Sincerely yours,
William J. Lacourciere
Chairman of the Board,
President and Chief
Executive Officer
This document contains forward-looking statements concerning post-merger
operations of Novametrix. There are many factors that could cause actual results
to differ materially from those in the forward-looking statements herein,
including difficulties in integrating the operations of Andros and Novametrix,
changes in the health care industry, more stringent regulation of medical device
manufacturers, uncertainties regarding patents and other proprietary rights,
intense competition and foreign currency fluctuations. No assurance can be given
that Novametrix will fully realize the cost savings and revenue opportunities it
expects from the merger. Novametrix does not presently intend to update publicly
the foregoing forward-looking statements.