Item 1.01
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Entry into a Material Definitive Agreement.
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On
October 21, 2007, Goodman Global, Inc. (the
Company
) entered into an Agreement and Plan of Merger (the
Agreement
) with Chill Holdings, Inc., a Delaware corporation (
Parent
), and Chill
Acquisition, Inc., a Delaware corporation and wholly-owned subsidiary of Parent (
Merger Sub
), pursuant to which, among other things, Parent agreed to acquire all of the issued and outstanding shares of common stock, $0.01 par
value per share (the
Common Stock
), of the Company. Under the terms of the Agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and a wholly-owned subsidiary of
Parent (the
Merger
). Parent and Merger Sub are affiliates of Hellman & Friedman LLC.
Pursuant to the
Agreement, at the effective time of the Merger, each issued and outstanding share of Common Stock, other than any (i) shares owned by Parent, Merger Sub, the Company or its subsidiaries and (ii) shares owned by any stockholders who are
entitled to and who properly exercise appraisal rights under Delaware law, will be converted into the right to receive $25.60 in cash, without interest (the
Merger Consideration
). In addition, the restrictions applicable to each
restricted share of Common Stock, other than any restricted share that is subject to an alternative arrangement specifically agreed to between Parent and the holder thereof, shall immediately lapse, and at the effective time, each share of Common
Stock will be converted into the right to receive the Merger Consideration. All options to acquire shares of Common Stock outstanding under the Companys 2004 Stock Option Plan and 2006 Incentive Award Plan, in each case other than any such
option that is subject to an alternative arrangement specifically agreed to between Parent and the holder thereof, will vest immediately prior to the effective time, and the holders of such options will be entitled to receive an amount of cash equal
to the excess, if any, of the Merger Consideration over the exercise price per share of Common Stock subject to such option.
In connection with the Merger, the Company has agreed to commence a tender offer and consent
solicitation to repurchase all of the Companys outstanding Senior Floating Rate Notes due 2012 and 7
7
/
8
%
Senior Subordinated Notes due 2012 (collectively, the
Notes
). Details with respect to the self tender offer and consent solicitation will be set forth in tender offer documents to be prepared and filed with the SEC and distributed
to the holders of the Notes. The Company has agreed to call for redemption (with redemption to occur on the earliest date permitted under the applicable indenture) all Notes not tendered and accepted for payment.
Consummation of the Merger is not subject to a financing condition, but is subject to various other conditions, including approval by the Companys
stockholders, expiration or termination of all waiting periods required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the requirement that the Company and its subsidiaries, on a consolidated basis, shall have realized not less than
$255 million in EBITDA (as defined in the Agreement) for the fiscal year ended December 31, 2007, and other customary conditions.
In
connection with the Merger, Parent has entered into separate voting agreements (the
Voting Agreements
) with certain entities controlled by Apollo Management V, L.P. and the Goodman family, who collectively own approximately 54% of
the outstanding Common Stock, pursuant to which, among other things, the stockholders party thereto have agreed to vote their shares of Common Stock in favor of the approval of the Merger, the approval and adoption of the Agreement and against any
competing proposal.
Prior to the closing of the Merger and except as permitted in the Agreement, the Company has agreed not to solicit,
participate in discussions regarding, or furnish information in connection with, any alternative acquisition proposal.
The Agreement
contains specified termination rights, including if the Companys Board of Directors changes its recommendation to the stockholders in connection with a superior proposal (as defined in the Agreement) or approves a superior proposal, and
provides that, upon the termination of the Agreement, under specified circumstances, the Company will be required to pay a termination fee of $55.7 million. If the Agreement is terminated in connection with a superior proposal, the Voting Agreements
will also terminate. In addition, if the Merger is not completed due to Parents inability to complete the financing for the transaction, then the Company has the option to either (x) receive a termination fee of $75 million, plus an
additional $5 million of expenses, or (y) seek damages for willful breach, up to $139.2 million.
2
The foregoing description of the Agreement is a summary only, does not purport to be complete and is
qualified in its entirety by reference to the Agreement, which is filed as Exhibit 2.1 hereto and is incorporated herein by reference. The Agreement has been attached to provide investors with information regarding its terms. It is not intended to
provide any other factual information about the Company, Parent or Merger Sub.
Important Additional Information Regarding the Merger will be Filed with
the SEC:
In connection with the proposed Merger, the Company will file a proxy statement with the Securities and Exchange Commission (the
SEC
). INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER AND THE PARTIES TO THE MERGER. Investors and security holders
may obtain a free copy of the proxy statement (when available) and other relevant documents filed with the SEC from the SECs website at http://www.sec.gov. The Companys security holders and other interested parties will also be able to
obtain, without charge, a copy of the proxy statement and other relevant documents (when available) by directing a request by mail or telephone to Goodman Global, Inc. Investor Relations, 5151 San Felipe, Suite 500, Houston, Texas 77056, telephone:
(713) 861-2500 or on the companys website at http://www.goodmanglobal.com.