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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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JUNO LIGHTING, 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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[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, $.01 par value, of Juno Lighting, Inc.
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(2) Aggregate number of securities to which transaction applies:
Not applicable.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
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Presentation to
INSTITUTIONAL SHAREHOLDER SERVICES
Juno Lighting, Inc.
June 14, 1999
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JUNO LIGHTING, INC.
Agenda
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- - History
- - The Process
- - Benefits of the Merger
- - The Option Plan
- - Timing of the Transaction
- - Stand-Alone Value
- - The Lens "Alternative"
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JUNO LIGHTING, INC.
History
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- - The company was formed in 1976 by its current Chairman and CEO, Robert
Fremont, who previously founded Halo Lighting
- - Juno is a leading designer, assembler and marketer of recessed and track
lighting fixtures, as well as a line of exit and emergency lighting
fixtures
- - Juno has a strong history of sales and profit growth by focusing on
value-added, profitable niche products and providing exceptional customer
service
- - Juno is also considered an industry leader in product innovation and
design
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JUNO LIGHTING, INC.
The Process
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- - Juno hired two investment banking firms, Goldman Sachs and William Blair,
to run a process over the last year to maximize shareholder value
- - Juno evaluated a number of alternatives, including a share repurchase
program
- - Juno contacted 78 potential buyers, which included 45 strategic and 33
financial buyers
- - The auction process was not closed to any logical potential buyer; all
buyers that were thought by Juno and its advisors to have a potential
interest in the company were approached
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JUNO LIGHTING, INC.
The Process (continued)
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- - No other bidder in this process was willing to enter into a transaction
with a per share price equal to or better than the Fremont merger
consideration
- - After the transaction with Fremont Partners was announced on March 26,
1999, any party that wished to do so could bid a higher price; so far, no
party has done so
- - Lens has claimed that it knows of one potential strategic buyer that was
not invited to make a bid for Juno
- - Lens never provided Juno with the names of any potential buyers when asked
to do so and, so far, Lens' phantom buyer has not come forward
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JUNO LIGHTING, INC.
Benefits of the Merger
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- - Fremont Partners will purchase 87.1% of Juno's common stock for $25 per
share in cash with the remaining 2.4 million shares, or 12.9%, being
exchanged for new publicly traded Juno common shares valued by Blair at
$25 per share
- - Juno shareholders have the right to elect cash or stock, subject to
proration
- - Juno stockholders will receive a 22% premium over the Juno closing price
of $20.50 per share on March 26, 1999, the day of the merger announcement
- - Juno stockholders will receive $25 per share in cash for a minimum of
87.1% of their shares and possibly for all of their shares
- - William Blair valued the newly issued shares at $25 per share using both a
price earnings multiple analysis and a discounted cash flow analysis
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JUNO LIGHTING, INC.
Benefits of the Merger (continued)
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- - The transaction was structured as a recapitalization with certain of
Juno's existing shares remaining outstanding in order to avoid substantial
future goodwill charges
- - Fremont Partners intends to appoint independent directors to the new board
of directors of Juno
- - Fremont Partners will make a $106 million equity investment and will be
incentivized to maximize the equity value of all Juno shareholders
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JUNO LIGHTING, INC.
The Option Plan
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- - The option plan was instituted at the insistence of Fremont Partners, with
no input from the current management of Juno, and will replace the
Company's existing plan that was approved by stockholders and has been in
place since 1983
- - Bob Fremont and all non-employee directors are not participants in the
current Juno option plan
- - This option plan, involving up to 12% of the fully diluted common equity
of Juno, is very standard in this type of leveraged recapitalization
transaction
- - Fremont Partners, which is investing $106 million and has substantial
experience in this type of transaction, believes that this type of option
plan will maximize Juno's future equity value for all shareholders
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JUNO LIGHTING, INC.
The Option Plan (continued)
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- - A committee of Juno's Board consisting of non-employee directors will
grant these options at fair market value over time based on performance
- - Bob Fremont will step down as Chairman and CEO and will not benefit from
the new option plan
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JUNO LIGHTING, INC.
Timing of the Transaction
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- - The stock market is at an all time high, the economy is strong and
interest rates are low
- - Juno believes that the timing of a sale could not be better
- - Bob Fremont, whose family owns approximately 8% of Juno's outstanding
common stock, will be selling his shares in the transaction
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JUNO LIGHTING, INC.
Stand-Alone Value
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- - The transaction represents an attractive multiple of Juno's latest twelve
months EBITDA
- Lens claims that the average lighting industry enterprise value to
EBITDA multiple is 10.4x and that Juno should trade at least at
this multiple as a stand-alone entity
- As of 5/31/99, the date Lens used for its analysis, the peer group
(1) of companies comparable to Juno was trading at an average of
8.7x EBITDA. Genlyte, Holophane and LSI, the three companies that
we believe are most comparable to Juno, were trading at 5.1x, 7.4x
and 7.3x, respectively.
- Prior to the announcement of the transaction with Fremont Partners,
Juno was trading at an enterprise value to EBITDA multiple of 6.8x
- - Juno received a fairness opinion from William Blair that the transaction
is fair from a financial point of view to Juno's shareholders
(1) These "peers" are The Genlyte Group Incorporated, Holophane Corporation,
LSI Industries Inc. and SLI, Inc. The multiple for Advanced Lighting
Technologies of 91.5x has been excluded as not meaningful.
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JUNO LIGHTING, INC.
The Lens "Alternative"
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- - Lens is not offering Juno stockholders anything for their shares
- - Juno has considered the Lens alternative but believes that it is flawed
and not in the best interests of shareholders
- - Lens has proposed that Juno repurchase 45% of its shares outstanding at
$25 per share to be followed by a possible public auction of Juno at a
sales price in excess of $25 per share for the remaining stock
- - We believe that a share buyback would have no effect on the value of Juno
- Lens itself admits that the value of Juno should be based on
enterprise value as a multiple of EBITDA -- Juno's EBITDA would be
the same after the 45% share repurchase as before
- This multiple is not effected by any share buyback
- A valuation analysis focused on leveraged P/E multiples is
inappropriate
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JUNO LIGHTING, INC.
The Lens "Alternative" (continued)
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- - No shareholder would sell shares back to Juno at $25 per share if they
felt that they would get a higher share price in a sale of Juno following
the buyback
- - The Lens alternative could result in shareholders getting $25 per share
for 45% of their shares at some undetermined point in the future rather
than an immediate $25 per share for at least 87.1% of their stock in the
Fremont transaction
- - A buyback would discourage any potential strategic buyers from buying Juno
in a stock transaction because it would prevent pooling-of-interest
accounting treatment for a significant period of time
- - Remember, after contacting 78 potential buyers, no one was willing to
enter into a transaction equal to or better than the Fremont transaction
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JUNO LIGHTING, INC.
Conclusion
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- - The Juno board of directors believes that the transaction with Fremont
Partners is in the best interests of shareholders
- - Juno has explored strategic alternatives for a year and contacted 78
potential buyers through a comprehensive and orderly auction process --
this is the best proposal Juno has received
- - If the transaction is not consummated, there can be no assurance that Juno
will be able to enter into an alternative transaction of equal value
- - The market price of Juno's common stock may decline substantially if the
merger is not consummated