TriMas To Spin Off Cequent Businesses - Update

(RTTNews) - Engineered and applied products maker TriMas Corp. (TRS), said Monday its board has approved a plan to pursue a tax-free spin-off of all of its Cequent businesses into a new stand-alone, publicly traded company as part of efforts to spur growth and enhance shareholder value. The transaction is expected to be completed by mid-2015.

Cequent makes custom-engineered towing, trailer and cargo management products, and other accessories, and generated revenues of about $614 million for the trailing 12 month period ended September 2014.

Explaining the rationale for the spin-off, TriMas CEO Dave Wathen said the move was a commitment to enhance shareholder value through the active management of its business portfolio and organizational focus.

"We believe the spin-off will provide both companies greater flexibility to focus on their distinct growth and margin improvement strategies within their respective core markets, enabling them to further improve competitiveness," Wathen said.

Mark Zeffiro, the current executive vice president and chief financial officer of TriMas, will serve as CEO of the new entity, and TriMas Chairman Samuel Valenti III will participate on the new company's board to support the transition.

Upon completion of the transaction, the new Cequent company will consist of TriMas' current Cequent Americas and Cequent APEA segments.

Meanwhile, post separation, TriMas is expected to have a higher growth and margin profile and be a more focused, diversified engineered products company, consisting of the Packaging, Aerospace, Energy and Engineered Components segments. These segments reported annual revenue of about $855 million for the trailing 12 month period ended September 2014.

TriMas expects to complete the transaction by distributing all of the shares of the new Cequent company to TriMas shareholders, who will initially own 100 percent of the shares.

It is expected that the transaction will be tax-free to TriMas' U.S. shareholders, subject to the receipt of an opinion regarding the tax-free nature of the transaction.

The company estimates third party and legal entity reorganization-related expenses to be about $20 million to effect the transaction, and such costs will be incurred over the next several quarters.

Wells Fargo Securities is serving as financial advisor and Jones Day is serving as legal advisor to TriMas.

In September, TriMas, based in Bloomfield Hills, Michigan, cut its earnings outlook for 2014, citing mainly external market pressures and operational challenges in its Energy and Aerospace businesses. The company also agreed to buy Allfast Fastening Systems Inc for nearly $360 million in a bid to strengthen its aerospace business.

TriMas shares are trading at $31.27, down $0.59 or 1.85%, on the Nasdaq.