LSB Industries Inc., Oklahoma City, said on Aug. 26 that it has set Sept. 22 as the date for a special meeting of stockholders to approve its proposed stock exchange agreement announced in July (GM July 23, p. 29). Those holding shares as of Aug. 2 will be eligible to vote. The meeting will be held virtually via live webcast at 8:30 am Central Daylight Time.
A definitive proxy statement was also filed with the U.S. Securities and Exchange Commission.
Under the terms of the agreement, and assuming a closing date of Sept. 27, 2021, LSB would exchange, at the expected closing, approximately $310 million of preferred stock held by Eldridge Industries LLC, Greenwich, Conn., into an equivalent value of LSB common stock based on an exchange price of $6.16, which is equal to the 30-day volume weighted average price as of the date of the exchange agreement. In connection with the transaction, stockholders will receive a special dividend in the form of 0.30 shares of LSB common stock for every share owned as of the record date, with any such dividend received by Eldridge reducing the consideration payable to them in the exchange transaction.
The LSB Board of Directors unanimously recommends that stockholders vote for the transactions contemplated by the exchange agreement with Eldridge, as well as the other proposals set forth in the proxy statement.
“We expect this transformative transaction to simplify our capital structure, lower our cost of capital, and provide us with greater financial flexibility to pursue growth initiatives,” said LSB President and CEO Mark Behrman. “Given the favorable nitrogen industry dynamics we are currently experiencing, we believe that now is an opportune time to execute this transaction, particularly given our intention to refinance our senior secured notes and opportunities we believe exist to drive organic growth, including our entry into the rapidly emerging blue/green ammonia and clean energy markets.
“Additionally, we regularly evaluate M&A prospects that we believe could be accretive to earnings as a result of the increased scale and expanded production capabilities that they would provide us,” he continued. “We believe that the exchange of this preferred stock into common stock and the overall simplification of our capital structure, including the potential refinancing of our senior secured notes, will enhance our ability to generate profitable growth and greater long-term value for our shareholders.”
The proposed exchange agreement is expected to be consummated after receipt of the required approvals by the stockholders and the satisfaction or waiver of certain other conditions as specified in the agreement. Assuming a transaction closing date of Sept. 27, 2021, and issuance of the special dividend, LSB will have approximately 88.8 million shares outstanding, approximately 61 percent of which will be held by Eldridge.