Da-Lite Announces Merger with Chief and Sanus!

In what is potentially a huge merger in the custom installation industry, Da-Lite has initiated an agreement to combine with both Sanus and Chief - whose parent company is Milestone AV Technologies. That would put a very large manufacturer of projection screens together with a company that innovates and designs some of the world's best television, display and projector mounting systems. Both companies combined employ around 1000 people all over the world in 8 primary locations.

Milestone is currently based in Savage, Minnesota and was formed a relatively short time ago by the merger of Chief Manufacturing and Sanus Systems (2004, we believe). Under the merger agreement, Da-Lite would continue to operate out of Warsaw, IN as a subsidiary of Milestone. Richard Lundin would be slated to continue in his role as president of Da-Lite.

The merger agreement has already been drafted and signed by all parties and the completion of the merger is expected to be completed by the first week in May. So how did it go down, you ask... That's a lot of tech talk, so we'll quote the release for the nitty gritty:

The merger will be funded under a new credit facility at Milestone. The transaction will trigger a Change of Control (“CoC”) under Da-Lite’s $94.2MM principal amount outstanding 12-1/2% Senior Notes due 2015 (the “12-1/2% Notes”). According to the terms of the indenture governing the 12-1/2% Notes, holders will be offered a right to sell their notes back to Da-Lite subsequent to closing at the 101% CoC price. In addition, Da-Lite intends to exercise the “equity claw” provision under the 12-1/2% notes and repurchase up to the maximum original principal amount of such notes permitted under the “equity claw” provision (i.e., at least 65% of the original $105 million principal amount of such notes is required to remain outstanding after such repurchase) at the 112-1/2% equity claw price. Otherwise, the 12-1/2% Notes are expected to remain outstanding.

With the agreement, Da-Lite is actually under obligation to make a "free cash flow offer" to purchase a portion of the 12-1/2% Notes on the terms and subject to the conditions set forth in the indenture (the “Free Cash Flow Offer”) at the 103% Free Cash Flow Offer Price. The Company intends to make the Free Cash Flow Offer pursuant to an offer to purchase and related documents.

Yeah... clear as mud to us as well... Hit up our forums to let us know what you think.