Griffon says Clinton Group's plan not right for its shareholders

By Lisa Kerner

Charlotte, N.C., June 4 - Griffon Corp. said Conrad Bringsjord and the Clinton Group, Inc. "mischaracterized" their prior dealings with the company. Chief executive officer Harvey R. Blau was responding to the Clinton Group's May 31 letter to Griffon claiming it did not receive a "meaningful response" from the company in regards to the group's proposed $25-per-share public recapitalization of Griffon.

Blau said the Clinton Group failed to provide Goldman Sachs with a proposal as requested and that Clinton's proposal was "indefinite and highly conditional" and "predicated on transferring control of the company and its board" to the Clinton Group.

Blau reiterated in his letter that "no decision has been made by the company to pursue a recapitalization or any other specific course of action at this time. However, based upon an initial review, your 'proposal' does not appear to be in the best interest of the company or our shareholders."

The Clinton Group had asked for the opportunity to outline its transaction to the board. Under the investors' proposal, up to 50% of shares outstanding would be purchased through a tender offer, with each existing shareholder entitled to have a minimum of 50% of their current holdings purchased if proration is required.

Funding for the recapitalization was expected to come from $395 million of first-lien bank financing, $130 million of second-lien bank financing and some $65 million of incremental capital from Clinton Group, or its affiliates and co-investors.

The proposal was contingent on several factors, including the Clinton Group initially appointing a majority of the directors to the board and the engagement of a restructuring firm to manage the company on an interim basis.

Griffon has been under fire by the investor over the past few weeks.

The Clinton Group beneficially owns 2,535,040 shares, or 8.5%, of the Jericho, N.Y., diversified manufacturing company's outstanding stock.

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