Clinton Group asks to lead recapitalization of Griffon Corp.

By Lisa Kerner

Charlotte, N.C., May 31 -Griffon Corp. investors led by the Clinton Group, Inc. said they did not receive a "meaningful response" from the company in regards to their proposed $25 per share public recapitalization of Griffon.

The investors asked for the opportunity to outline the transaction to the board "with the hope that we will ultimately receive a favorable response to our proposal."

Clinton Group asked for a response within two weeks in order to "expeditiously finalize our due diligence with respect to arranging financing as well as appropriately addressing structural issues with the company," according to a letter included as part of a schedule 13D filing with the Securities and Exchange Commission.

Under the investors' proposal, up to 50% of the outstanding shares will 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 is expected to come from $395 million first lien bank financing, $130 million second lien bank financing and some $65 million incremental capital from Clinton Group, or its affiliates and co-investors.

The proposal is 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.

"We believe that undergoing a levered recapitalization by utilizing the strength of the company's balance sheet, coupled with executing a turnaround in Griffon's struggling business segments and rationalization of corporate overhead, will ultimately create tremendous value on a per share basis over the long-term," the investors' letter, signed by Conrad Bringsjord, stated.

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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