Wayne, PA, December 22, 2006--Millstream II Acquisition Corp. shareholders rejected proposals by management to acquire Sprinturf, a developer and installer of synthetic turf for athletic fields.
Millstream raised $27.6 million in its initial public offering stock sale in December 2004--and was trying to find a business with significant growth potential in which to invest that money, according to a filing with the Securities and Exchange Commission.
Millstream, a blank-check company, a company that raises money from investors first and acquires an operating company later, struck an agreement with Sprinturf in August in a transaction that would have left the artificial-turf installer a publicly held company. But a majority of Millstream shareholders voted against that plan.
On Wednesday, Millstream announced that the Delaware Chancery Court denied a motion by one of its shareholders to block Millstream from holding the special stockholders meeting at 10 a.m. yesterday.
The plaintiff who had been seeking to prevent the shareholder meeting was David Moskowski, who owns 100 Millstream shares and is senior vice president of FieldTurf Tarkett, a Sprinturf rival.
Moskowski alleged in the complaint that Millstream II failed to give proper notice of the shareholders' meeting, according to SEC filings.
Moskowski had asked the court to order Millstream II to "proceed with a plan of liquidation and dissolution."
That's because, if the merger with Sprinturf failed by December 23, Millstream's officers have to dissolve and liquidate Millstream within 60 days, according to a proxy statement sent to shareholders.
Shares of Millstream closed yesterday at $5.37, up 17 cents.
As of Sept. 30, Millstream had about $25.5 million in a trust account, maintained by an independent trustee, which was to be released if the acquisition of Sprinturf succeeded.
Millstream noted in a proxy statement that the market for synthetic-turf systems for athletic fields is "growing rapidly."
Sprinturf's customers include the Philadelphia Eagles, Major League Soccer team D.C. United, a half-dozen universities, including the University of Pennsylvania, and 150 high schools. Sprinturf reported $28.2 million in revenue during the nine months ended September 30, up from $23.4 million in the same period a year earlier, Millstream said.
Sprinturf was not profitable during that period. Its net loss from operations decreased to $246,000 from the $2.1 million loss for the same nine months in 2005.
