Heelys also announced that, before entering into the merger agreement with Sequential, the company's board of directors unanimously determined that the merger agreement constitutes a "superior proposal" under the terms and provisions of the company's previously-announced asset purchase agreement dated Oct. 22, 2012 among The Evergreen Group Ventures, LLC, the company and its subsidiaries.
Heelys has terminated the Evergreen Purchase Agreement, and the company has agreed to pay Evergreen a termination fee, which, pursuant to the Merger Agreement, will be reimbursed by Sequential.
"The Sequential transaction represents an attractive outcome and is in the best interest of Heelys stockholders," said Tom Hansen, Heelys President and CEO. "Their all-cash offer provides our stockholders with a fixed cash value and eliminates the need to proceed with the previously announced Plan of Dissolution."
Yehuda Shmidman, CEO of Sequential, commented, "We are excited to be adding the Heelys brand to our portfolio. Heelys is recognized globally as a pioneer of skate shoes, and with its brand DNA rooted in innovation and skate, we see the potential for expansion in the future as a global lifestyle brand." Mr. Shmidman added, "Fitting with Sequential's brand-management business model, we have identified our long-term worldwide licensing partner for the core category of footwear, and will announce the partner and the team managing the Heelys brand shortly."
Tengram Capital Partners advised Sequential on the transaction. William Sweedler, Managing Partner of Tengram and Chairman of Sequential, stated, "The Sequential model is simple: find great brands and marry them with equally great operating licensees to build on their core DNA. The acquisition of Heelys represents the second transaction completed by Sequential Brands Group since Tengram's involvement with the company began earlier this year, and we are excited about the pipeline of opportunities to add more brands to Sequential's portfolio in the future."
The proposed merger with Sequential, which is subject to customary closing conditions, including receipt of Heelys stockholder approval, is expected to close in the first quarter of 2013. In connection with the Merger Agreement, Capital Southwest Venture Corporation and another stockholder of the Company, who collectively hold approximately 35.1% of the issued and outstanding shares of the company's common stock, have entered into voting agreements with Sequential pursuant to which they have agreed, among other things, to vote their shares in favor of the merger.
The company's Special Meeting of Stockholders scheduled for December 13, 2012 to consider and vote upon, among other things, the transactions contemplated by the Evergreen Purchase Agreement, the change of the company's name and the dissolution of the company pursuant to a Plan of Liquidation and Dissolution ("Plan of Dissolution"), has been canceled. The company's stockholders are instructed to disregard the company's previously filed proxy statement and related solicitation materials regarding the Evergreen Purchase Agreement, the name change, and the dissolution of the company pursuant to the Plan of Dissolution.
Additional information regarding the Sequential Transaction will be included in a proxy statement the company intends to file with the Securities and Exchange Commission and distribute to its stockholders. The company's proxy statement will include information regarding the timing of a Special Meeting of the company's stockholders to adopt the Merger Agreement.
Roth Capital Partners, LLC is serving as exclusive financial advisor to Heelys and has delivered a fairness opinion in connection with the merger. Gardere Wynne Sewell LLP is serving as legal advisor to Heelys. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to Sequential.
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