The combination of Milestone and Da-Lite will aim to create an industry leader in mounting solutions, AV furniture, and projection screens across both commercial and consumer AV markets. With nearly 1,000 employees worldwide and eight major operating locations around the globe, the combined business will be optimally positioned to continue delivering the customer service and product innovation that have been hallmarks of both Milestone and Da-Lite.

“We are pleased to announce the combination of these two great companies,” says Milestone AV Technologies chief executive Scott Gill.

“Through the strength of this combination, we will be able to offer a more comprehensive product line to our joint customers, open up new sales channels for our brands and provide growth opportunities for our employees. We look forward to expanding our reputation for innovative products and market-leading customer service.”

Milestone, headquartered in Savage, Minnesota, was formed from the successful merger of Chief Manufacturing and Sanus Systems in 2004. Da-Lite will continue to be based in Warsaw, Indiana as an operating subsidiary of Milestone, under the leadership of current Da-Lite president Richard Lundin.

“Da-Lite has a 100-year heritage of product innovation in the AV market,” added Richard.

“Combining Da-Lite and Milestone allows us to bring the benefits and enhanced opportunities of increased global scale to our customers and employees.”

A definitive merger agreement has been signed, and the transaction is expected to close within the next 30 days.

Financial structure of transaction

The merger will be funded under a new credit facility at Milestone. The transaction will trigger a Change of Control (“CoC”) under Da-Lite’s $94.2MM principal amount outstanding 12-1/2% Senior Notes due 2015 (the “12-1/2% Notes”). According to the terms of the indenture governing the 12-1/2% Notes, holders will be offered a right to sell their notes back to Da-lite subsequent to closing at the 101% CoC price. In addition, Da-lite intends to exercise the “equity claw” provision under the 12-1/2% notes and repurchase up to the maximum original principal amount of such notes permitted under the “equity claw” provision (i.e., at least 65% of the original $105 million principal amount of such notes is required to remain outstanding after such repurchase) at the 112 ½% equity claw price. Otherwise, the 12-1/2% Notes are expected to remain outstanding.

Free cash flow repurchase

Da-Lite is required, on or before 1 April 2011, to make a free cash flow offer to purchase a portion of the 12-1/2% Notes on the terms and subject to the conditions set forth in the indenture (the “Free Cash Flow Offer”) at the 103% Free Cash Flow Offer Price. The Company intends to make the Free Cash Flow Offer pursuant to an offer to purchase and related documents.