Millstream II Acquisition Corporation (fka msmaw)

[QRUNQ]

article from the philadelphia inquirer:

http://www.philly.com/mld/inquirer/business/16294815.htm

Posted on Fri, Dec. 22, 2006email thisprint thisreprint or license this'Blank-check' firm's investors nix the artificial-turf ideaMillstream, of Wayne, first raised money, then was to acquire a business for shareholders. But they voted: Not Sprinturf.
By Linda Loyd
Inquirer Staff Writer
Could it be a turf war? Artificial turf, that is.

Shareholders of a Wayne company formed two years ago to acquire a business - any business - in North America rejected proposals yesterday by management to acquire Sprinturf, a developer and installer of synthetic turf for athletic fields.

The acquiring company, Millstream II Acquisition Corp., 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 is what's known as a "blank-check" company, which raises money from investors first and acquires an operating company later. Millstream 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.

Millstream chairman and chief executive officer Arthur Spector did not return telephone calls yesterday.

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 was unavailable for comment yesterday, according to a FieldTurf spokesman. He 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 Dec. 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 Sept. 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.

Competitor FieldTurf, a privately held company based in Montreal with 2005 revenue of about $190 million, describes itself as "the world leader" in artificial-grass systems, according to a posting on its Web site. Reached yesterday, CEO John Gilman said FieldTurf had "no interest in acquiring Sprinturf."

Asked about Sprinturf's interest in a merger to expand its market share, Gilman said: "If a company has the wherewithal to grow, good luck to them. We play our part in the industry, and a competitor plays theirs."

Sprinturf CEO Henry Julicher could not be reached yesterday.

Synthetic-turf systems for athletic fields are big business, and competition is fierce. The Synthetic Turf Council, an industry trade group, estimates that annual installations of synthetic turf for athletic fields in the United States increased 100 percent between 2003 and 2005, from about 400 installations in 2003 to about 800 in 2005, according to Millstream.