UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------------------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): January 21, 2006
KADANT INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-11406 52-1762325
(State or Other (Commission File Number) (IRS Employer
Jurisdiction Identification No.)
of Incorporation)
One Acton Place
Acton, Massachusetts 01720
(Address of Principal Executive Offices) (Zip Code)
(978) 776-2000
Registrant's telephone number, including area code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
KADANT INC.
Item 1.01 Entry into a Material Definitive Agreement.
On January 21, 2006, Kadant Inc., a Delaware corporation ("Kadant"), on behalf
of its wholly foreign owned enterprise formed in China (the "Kadant WFOE"),
entered into an Asset Purchase Agreement (the "Purchase Agreement") with Jining
Huayi Light Industry Machinery Co., Ltd. ("Huayi") to acquire substantially all
the assets of Huayi for approximately $20 million, subject to adjustment.
Pursuant to the Purchase Agreement, at the closing 20% of the purchase price, or
approximately $4 million, will be issued in escrow in the form of a standby
letter of credit to secure certain post-closing and indemnification obligations
of the sellers. The letter of credit may be drawn upon by the sellers over the
next 18 months as certain obligations are satisfied.
The closing of the acquisition contemplated by the Purchase Agreement is subject
to customary closing conditions, including regulatory approvals and the approval
of Huayi's board of directors and shareholders, as well as Kadant's board of
directors. The closing is expected to occur in the first quarter of 2006. Kadant
expects to finance the acquisition through a combination of cash and borrowings,
in China or under its existing $25 million revolver, which is part of Kadant's
credit facility entered into with a consortium of banks with JPMorganChase Bank
as administrative agent in May 2005.
The foregoing description of the transaction contemplated by the Purchase
Agreement does not purport to be a complete statement of the parties' rights
under the Purchase Agreement and is qualified in its entirety by reference to
the full text of the Purchase Agreement, which will be filed as an exhibit to
Kadant's Annual Report on Form 10-K. A copy of the press release announcing the
execution of the Purchase Agreement is filed with this report as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
No. Description
___ ___________
99.1 Press Release issued by the Company on January 26, 2006.
2
KADANT INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KADANT INC.
Date: January 26, 2006 By: /s/ Thomas M. O'Brien
-----------------------------
Thomas M. O'Brien
Executive Vice President and
Chief Financial Officer
3
Exhibit 99.1
[LOGO]
NEWS
KADANT
AN ACCENT ON INNOVATION
One Acton Place, Suite 202
Acton, MA 01720
Investor contact: Thomas M. O'Brien, 978-776-2000
Media contact: GreatPoint Communications, 978-392-6866
Kadant to Acquire Chinese Producer of Stock-Preparation Systems
ACTON, Mass., January 26, 2006 - Kadant Inc. (NYSE:KAI) announced today that it
has signed a definitive agreement to acquire substantially all the assets of the
Jining Huayi Light Industry Machinery Co., Ltd. for approximately $20 million in
cash, subject to adjustment. Huayi is a supplier of stock-preparation systems in
China, with unaudited revenues of approximately $15 million in 2005.
Kadant expects to finance the acquisition through a combination of cash
and borrowings, in China or under its existing $25 million revolver. The
completion of the acquisition is subject to customary closing conditions,
including regulatory approvals, as well as the approval of Kadant's board of
directors. The closing is expected to occur in the first quarter of 2006.
"Huayi is a well-respected supplier in China's paper recycling
industry, and would significantly enhance Kadant's presence in growing Asian
markets," said William A. Rainville, chairman and chief executive officer of
Kadant. "While our stock-preparation systems typically address the demands of
China's major global producers, Huayi offers equipment that serves the large
number of local independent mills, expanding our customer base. The acquisition
of Huayi would give us a low-cost manufacturing base in Asia for our
stock-preparation products, and could also support the production of our
accessories and water-management products there in the future."
Kadant Inc. is a leading supplier to the global pulp and paper
industry, with a range of products and services for improving efficiency and
quality in pulp and paper production, including paper machine accessories, and
systems for stock preparation, fluid handling, and water management. Our
fluid-handling products are also used to optimize production in the steel,
rubber, plastics, food, and textile industries. In addition, we produce granules
from papermaking byproducts for agricultural and lawn and garden applications.
Kadant is based in Acton, Massachusetts, and, with the addition of Kadant
Johnson in May 2005, has annual revenues of approximately $270 million and
approximately 1,500 employees worldwide. For more information, visit
www.kadant.com.
The following constitutes a "Safe Harbor" statement under the Private
Securities Litigation Reform Act of 1995: This press release contains
forward-looking statements that involve a number of risks and uncertainties,
including forward-looking statements about the estimated purchase price for the
acquisition, the potential financing to fund a portion of the purchase price,
the anticipated timing for closing the transaction, the benefits and synergies
of the transaction, and the expected future business of the combined company
following the completion of the transaction. Important factors could cause
actual results to differ materially from those indicated by such statements
including the ability to complete the transaction, the ability of Kadant to
successfully integrate the Chinese operation, the ability to realize anticipated
synergies, the receipt of regulatory and board approval in connection with the
transaction, and other factors set forth under the heading "Risk Factors" in
Kadant's quarterly report on Form 10-Q for the period ended October 1, 2005.
These include risks and uncertainties relating to our dependence on the pulp and
paper industry; international sales and operations; competition; increases in
our debt; restrictions in our credit agreement; our ability to successfully
integrate Kadant Johnson; our acquisition strategy; our ability to complete the
restructuring of our French subsidiary; retention of liabilities and warranty
claims associated with composite building products manufactured prior to the
sale of the business; availability of raw materials and exposure to commodity
price fluctuations related to the manufacture of fiber-based products;
protection of patents and proprietary rights; fluctuations in quarterly
operating results; and anti-takeover provisions. We undertake no obligation to
publicly update any forward-looking statement, whether as a result of new
information, future events, or otherwise.
###