Server: Netscape-FastTrack/2.01 Date: Wed, 17 Dec 1997 05:54:00 GMT Accept-ranges: bytes Last-modified: Wed, 19 Mar 1997 19:03:02 GMT Content-length: 10500 Content-type: text/html News Release

NEWS RELEASE

ATRION Corporation

 

Atrion Corporation
3230 Second Street
P. O. Box 3869
Muscle Shoals, AL 35662

FOR IMMEDIATE RELEASE

Contact: Jerry A. Howard
Chairman and Chief Executive Officer
(205) 383-3631

ATRION ANNOUNCES $39.4 MILLION AGREEMENT
TO SELL NATURAL GAS OPERATIONS
------------
PLANS TO USE PROCEEDS FOR STRATEGIC EXPANSION
OF MEDICAL PRODUCTS BUSINESS

Muscle Shoals, Alabama (March 19, 1997) -- Atrion Corporation (Nasdaq/NM:ATRI) announced today that it has entered into a definitive agreement to sell its natural gas pipeline and marketing operations to Midcoast Energy Resources, Inc. (AMEX:MRS) for approximately $39.4 million in cash, subject to certain post-closing adjustments. The closing of the transaction is subject to satisfaction of certain conditions as well as the notification and waiting period provisions of the Hart-Scott Rodino Antitrust Improvements Act and to approval by Atrion's stockholders at the annual meeting of stockholders anticipated to be held in May or June. The transaction is not contingent on financing.

Since the early 1990s, as the market for the Company's natural gas services has grown more competitive, Atrion has allocated substantial resources to the development and growth of businesses outside its traditional natural gas operations. Over the past three years, the Company has invested more than $26 million in companies engaged in the development, manufacturing and marketing of medical and related products. Through these acquisitions the Company has added executives with considerable expertise, and has gained significant experience, in the medical products industry. While implementing this diversification program, the Company has maintained its natural gas operations in the face of efforts by competitors and customers to bypass the Company's pipeline systems and competitive pressures that have resulted in contract renegotiations and discounting. After a thorough review of alternatives relating to continued operation, possible expansion or disposition of its natural gas operations, the Board of Directors of the Company, on the recommendation of management, has concluded that a sale of the Company's natural gas pipeline and marketing operations offers the greatest potential for maximizing stockholder value by providing the Company with financial liquidity for future acquisitions outside the natural gas industry. The Board of Directors believes that both the timing of the transaction and the price to be paid by Midcoast are attractive and that for those and other reasons the transaction is in the best interest of the Company and its stockholders. In connection with its decision to approve the transaction, at its March 18, 1997 meeting the Board of Directors received an opinion from Raymond James & Associates, Inc. that, subject to the matters set forth in such opinion, the consideration to be received by the Company in the transaction is fair, from a financial point of view, to the Company.

Jerry A. Howard, Chairman of the Board, President and Chief Executive Officer of Atrion, remarked, "The agreement with Midcoast represents a significant opportunity to accelerate the strategic shift of Atrion's business toward medical products. Our actions to diversify the Company's business beyond the natural gas industry and build a more growth-oriented corporate structure began more than three years ago. The acquisition in 1994 of a medical products company demonstrated Atrion's identification of the medical industry as an attractive target market for our resources. During 1995 we acquired exclusive worldwide rights to a specialized medical catheter system, and we expanded our medical-related operations further in 1996 through the acquisition of a manufacturer of valves and other medical components. The operating income from our medical products business has doubled over the past three years from $1.2 million in 1994 to $2.4 million in 1996. As we have expanded our medical products operations, we have continued to maintain our pipeline and energy marketing operations which we have now agreed to sell to Midcoast." Howard noted that the subsidiaries being sold represented approximately 36% of Atrion’s net book value of $34.4 million at December 31, 1996 and generated approximately 72% of Atrion’s operating income of $9.4 million for the year ended December 31, 1996.

Mr. Howard stated, "This transaction clearly represents a major redeployment of the Company’s capital. We plan to use the proceeds of the sale principally for acquisitions of medical product lines and companies involved in the development, manufacturing and marketing of medical products. Our intent is to focus on operations that offer significant synergies with our existing medical products operations. We anticipate moving prudently but as expeditiously as possible to accomplish the objective of adding assets that will enable us to build long-term value for our stockholders." After the closing of the transaction, Atrion will continue to own Atrion Medical Products, Inc. (formerly Ryder International Corporation) and Halkey-Roberts Corporation, which comprise the Company’s medical products segment, and AlaTenn Pipeline Company, Inc., which owns the Company’s gaseous oxygen pipeline. While the Company has identified certain market segments and businesses within such segments with which it might be interested in discussing a stock or asset acquisition, business combination or other similar type of transaction, no agreements exist with respect to any such proposed transaction. Raymond James & Associates is also assisting the Company in the identification of possible acquisition candidates and in the analysis of possible acquisitions in the medical products industry.

While the agreement with Midcoast provides that the transaction is to be closed on or before July 3, 1997, the Company anticipates that if the transaction is approved by the stockholders, the closing will take place as soon as practicable after the annual meeting. At the closing, the Company is to receive cash of approximately $39.4 million and is to transfer to Midcoast all of the capital stock of Alabama-Tennessee Natural Gas Company, Tennessee River Intrastate Gas Company, Inc. and AlaTenn Energy Marketing Company, Inc. The purchase price is subject to certain adjustments subsequent to closing which will be based on the final determination of the consolidated net book value of the subsidiaries being sold. In addition, the Company may receive deferred payments of as much as $250,000 per year for an eight-year period, beginning in 1999.

Howard added, "We understand that Midcoast's plans are to retain the personnel of the natural gas pipeline and marketing operations. This is an attractive aspect of the transaction and will help ensure that the individuals who have contributed to the efficiency of these operations will continue to have viable career paths."

In a separate action, the Board of Directors of Atrion has declared a dividend of $0.20 per share, payable June 1, 1997 to stockholders of record on May 20, 1997. The Board of Directors also determined that, commencing with the dividend payable on September 1, 1997, the quarterly dividend will be paid at the rate of $0.10 per share rather than at the current rate of $0.20 per share. The quarterly dividend will be reduced regardless of whether the proposed sale is consummated. Mr. Howard commented, "The Board of Directors concluded that if we were to retain our natural gas operations we should reduce the dividend to help us meet the funding requirements of both of our business segments. If the proposed sale of our natural gas operations is consummated, the reduction will bring our dividend more into line with other companies in the medical products industry and provide more resources for the Company to invest in its ongoing business." The Board of Directors will continue to review the dividend policy on a regular basis in the future.

Atrion Corporation, formerly AlaTenn Resources, Inc., supplies its customers with innovative medical products and pipeline and energy services.

Midcoast is a Houston-based pipeline company with offices in Corpus Christi, Texas; Topeka, Kansas; Tuscaloosa, Alabama; and Pachuta, Mississippi. Midcoast gathers, transports, processes and markets natural gas and other petroleum products, and with this transaction will have more than 45 company-owned pipelines.

Statements contained in this press release concerning the anticipated use of proceeds from the transaction and the possibility of future growth in the medical products industry are forward-looking statements that are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. Such factors include the ability of the parties to complete the transaction and risks associated with the Company's ability to identify and consummate acquisitions in the medical products industry.