Exhibit 99.2
July 14,
2009
Mr. Robert
Placek
Chairman of the
Board, President and Chief Executive Officer
Wegener
Corporation
11350
Technology Circle
Duluth, Georgia
30097
Re: Letter of Intent to
Acquire Wegener Corporation
Dear Mr.
Placek
We are pleased
to indicate the interest of Riverside Capital Appreciation Fund V
(“ Riverside ”), an affiliate of The Riverside
Company, and its portfolio company Sencore Inc. (“
Sencore ” or the “ Buyer ”) to
acquire all of the stock of Wegener Corporation (“
Wegener ” or the “ Company ”) as
outlined below.
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1.
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Acquisition
of Shares/Consideration. Subject to satisfaction of the
conditions described in this letter, at the closing of the
acquisition (the “Closing”), the Buyer would acquire
all of the stock of Wegener. Our current contemplation
is that this transaction would be structured as a merger (the
“ Merger ”) of an acquisition subsidiary of
Sencore with and into Wegener, in which the outstanding shares of
the Company’s Common Stock would be converted into the right
to receive, in cash, consideration equal to an aggregate of $6.0
million on a cash-free, debt-free basis, which consideration would
be reduced by the amount of accrued payables to the extent that
they have aged beyond 45 days and which would be expressed as a per
share value for purposes of any definitive agreement.
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Our valuation
of $6.0 million assumes that the Company is free of all debt,
capital leases, taxes payable, accrued transaction expenses and any
amounts due to related parties. Accordingly, the per
share consideration would be appropriately reduced to reflect any
anticipated amounts of these items as of the
Closing. Our valuation also assumes that the Company
will have an appropriate amount of working capital at the
Closing. In general, we calculate working capital on a
GAAP basis, consistently applied. Assuming that the
Closing were to take place on or about August 31, 2009, our
expectation would be that working capital would be equal to
approximately $2.3 million (this calculation would be adjusted to
exclude the aged payables, which instead are deducted from the
purchase price directly as described above). As part of
the due diligence process, if Buyer identifies a category of asset
or liability that is appropriate to reflect in the purchase price
calculation, then the consideration payable to the stockholders of
the Company (the “ Stockholders ”) will be
adjusted accordingly. The definitive agreement providing
for the Merger (the “ Merger Agreement ”) will
also include certain protective provisions regarding working
capital and other aspects of the capital structure, including (i)
interim operating covenants prohibiting non-ordinary course working
capital practices, the declaration of dividends and the incurrence
of indebtedness and (ii) closing conditions relating to a certain
minimum adjusted working capital amount (which would also take into
account cash, debt, transaction expenses and other
items). For the avoidance of doubt, the definitions
driving the calculations provided in the Merger Agreement will be
structured such that there would not be double-counting (for
example, if a liability is already included in the definition of
“debt” or “aged payables” it would not also
be included in the definition of “working
capital”).
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Structure . Although it is our expectation that
the transaction would be structured as a merger, we are willing to
discuss alternative structures with you to achieve the Closing more
promptly, including a tender offer structure. In any
case, we will expect certain significant shareholders, including
the Company’s executive officers and directors, to sign
appropriate support agreements (providing that they will vote in
favor of the Merger and/or tender their shares of Wegener Common
Stock in any tender offer) contemporaneously with the execution of
the Merger Agreement.
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Due
Diligence. Following the
signing of this letter, Wegener’s board of directors (the
“ Board ”) will authorize Wegener management to
provide additional information on the Company, as well
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