LA JOLLA — Henley Group severed a major tie to Allied-Signal Corp. on Wednesday by paying $465 million for 19.5 million shares of convertible preferred stock held by Allied-Signal, company officials said.
Henley also paid $65 million to Allied-Signal in return for $850 million in credit backing from Allied-Signal and for modifications to various "support agreements" between the companies.
Henley's Wheelabrator Industries subsidiary will use that credit backing to secure lower-cost financing needed to build refuse-to-energy plants valued at $850 million, Henley Chairman Michael Dingman said.
The modifications to support agreements signed last May when Allied-Signal spun Henley off made it possible for Henley to bring Wheelabrator public within the "next few months," according to Dingman.
Wheelabrator would be the second subsidiary to be taken public by 8-month-old Henley. Late last year Dingman announced that Henley was taking its Fisher Scientific group public. That public offering should be completed within the next month or two, Dingman said.
And, Henley, which boasts a bank credit line of more than $3 billion "is moving ahead on other fronts," according to Dingman.
Henley "is actively looking (for acquisitions), and there are some real bargains out there," according to Laurence Lytton, a New York-based industry analyst with Drexel Burnham Lambert Inc. "They'll move as soon as the opportunity presents itself."
Wednesday's stock deal means that Allied-Signal, which held 15.6% of Henley's 129 million common shares and common-share equivalents outstanding, no longer holds any Henley stock. And, Allied-Signal Chairman Edward Hennessy on Wednesday resigned from the Henley board. Dingman resigned from the Allied-Signal board last year.
However, the two companies still are bound by "22 documents and 1,500 pages of support agreements" that detail Allied-Signal's financial, legal and environmental obligations to the 35 former Allied Corp. and Signal Cos. subsidiaries now managed by Henley.