Last week, Banta Corporation announced in a SEC filing that the company is reorganizing to consolidate its five printing divisions into two and plans to either sell or close five of its printing facilities that are either not meeting profitability expectations or can be consolidated into other Banta operations. The reorganization will eliminate more than 500 jobs, or about 6 percent of the company’s workforce, Banta said in the filing.
In the same document, Banta says its Board of Directors has approved payment of a special cash dividend of $16 per share and that it will borrow money to the pay the special dividend, which is payable November 21 to shareholders of record on November 10. This dividend is in addition to the Company’s regular quarterly dividend of 18 cents per common share payable November 1.
The moves are viewed as a means of boosting shareholder value in the company in light of the unsolicited bid made last month by Stamford, Connecticut, printing company Cenveo Inc. to acquire Menasha, Wisconsin-based, Banta Corp. for approximately $1.1 billion. Cenveo was offering $46 per share in cash.
Today, Cenveo chairman and CEO Robert Burton Sr. renewed its bid and, in a letter to the company’s shareholders, said that if Banta continued to reject the offer, Cenveo “will have no choice but to explore alternative ways to successfully complete this transaction.”
The company plans to finance the special cash dividend through a combination of cash on hand and debt financing. Banta says in the filing that it has already secured $415 million in new debt financing from UBS Securities LLC. Fifty-six million dollars of the financing will be used to refinance existing longterm debt.
In his letter to Banta’s shareholders, Burton criticized Banta’s plans to close plants, cut 500 jobs and offer a special dividend as a means of boosting shareholder value, characterizing the plans as “outrageous.”
In its filing, Banta says it expects to save $27 million in 2007 and about $35 million in 2008 due to the reorganization and closing of the plants. The Company also will incur approximately $9 million of pre-tax charges in 2006 and $19 million of pre-tax charges in 2007.
“In order to position the business for long-term sustained profitability, Banta is also initiating significant changes in its supply-chain management business,” said CEO Stephanie Streeter in the SEC filing, adding that the company expects to see a decline in revenue and margins in 2007 due to the investments and changes the company is making to appropriately configure the company for future growth. “However, both revenue and margins are expected to rise significantly in 2008 and beyond as these business model enhancements take hold,” she added.