Transpro and Modine Aftermarket to Combine

Transpro and Modine Manufacturing have signed definitive agreements providing for the merger of Modine's aftermarket business into Transpro as well as the acquisition of Transpro's heavy duty OEM business. This action follows the letter of intent the two companies signed in late October 2004. The transaction will create a publicly-traded company focused on supplying heating and cooling components and systems to the automotive and heavy-duty aftermarkets, primarily in North and Central America and Europe.

NEW HAVEN, CONNECTICUT and RACINE, WI — Transpro and Modine Manufacturing have signed definitive agreements providing for the merger of Modine’s aftermarket business into Transpro as well as the acquisition of Transpro’s heavy duty OEM business. This action follows the letter of intent the two companies signed in late October 2004.

The transaction will create a publicly-traded company focused on supplying heating and cooling components and systems to the automotive and heavy-duty aftermarkets, primarily in North and Central America and Europe. The business is expected to have annual revenues of more than $400 million.

As part of the agreements, Modine will spin off its aftermarket business on a debt-free basis to its shareholders, and the resulting company will immediately merge into Transpro. Each step of the transaction is expected to be tax free to the shareholders of both companies. Following the merger, Modine shareholders will own 52 percent of the new company’s shares and Transpro’s current shareholders will own 48 percent.

The proposed ownership split, which reflects the valuation of each company’s respective aftermarket businesses, is a slight adjustment to the original ownership composition described in the company’s letter of intent, which called for Modine shareholders to own 54 percent and current Transpro shareholders to own 46 percent.

Transpro will sell the stock of its heavy duty and off-road OEM businesses to Modine for $17 million in cash. As a result, the new company will be exclusively focused on the vehicle and industrial equipment aftermarket business.

Charles Johnson, currently CEO of Transpro, will become the new company’s CEO and will serve on its board of directors. Additionally, the new company’s board will consist of two independent directors from Modine’s board and two Modine senior executives, as well as five independent directors from Transpro’s board. One of Transpro’s current outside directors will serve as chairman of the board.

Commenting on the merger, Johnson said, “The combination is the result of intensive efforts over many months to create an efficient, focused, market-driven company out of the separate aftermarket businesses Transpro and Modine now operate.

“The new company will have an expanded product/brand presence, broader technology base and be positioned to compete on an extensive geographic basis in the vehicle aftermarket, with manufacturing and distribution facilities across North and Central America and Europe. It will also have a balance sheet capable of supporting future product development and providing the financial strength needed to weather the inevitable changes in the very demanding marketplace in which it will operate. These benefits will result in long-term growth opportunities for our shareholders and employees and enhanced service for our customers.”

With net sales in excess of $400 million, the new company will have a strong balance sheet with an expected debt-to-capitalization ratio of 20 percent compared to Transpro’s current ratio of 50 percent. Following one-time restructuring charges of $10 million to $14 million over the 12- to 18-month integration period, the company expects to generate at least $20 million of recurring full-year synergy benefits, given reasonable ongoing market conditions. The benefits are expected to come from facility rationalization, manufacturing efficiencies and improved material sourcing, with additional cost savings currently being targeted.

Transpro expects to be the acquirer for purchase accounting purposes, which may result in the realization of negative goodwill and a related extraordinary gain in the year the transaction closes. Additionally, the new company will benefit from a gain on the sale of the heavy duty OEM business in the year the transaction closes.

Wachovia Securities is acting as financial advisor, and Jones Day is providing legal counsel to Transpro. Robert W. Baird & Co. Incorporated is acting as financial advisor, and Quarles & Brady LLP is providing legal counsel to Modine.

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