In a new 13D filing with the US SEC, Jeffrey Gates‘ Gates Capital Management reported holding 3.26 million common shares of Nortek Inc (NASDAQ:NTK), which amass 20.4% of the total outstanding stock. This represents an increase in the stake, as the fund previously held 3.11 million shares, according to its last 13F filing for the reporting period ended March 31. The new filing also revealed that the fund and the company have signed a Tender and Support Agreement, upon which Gates Capital Management agreed to tender all of its shares to a subsidiary of Melrose Industries PLC, which has recently signed a merger agreement to acquire Nortek (NASDAQ:NTK) for $86.00 per share (estimated total of $2.8 billion).
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Nortek is a diversified industrial company that operates in six segments – Air Quality & Home Solutions, Custom & Commercial Air Solutions, Residential & Commercial HVAC, Ergonomic & Productivity Solutions, Audio, Video & Control Solutions, and Security & Control Solutions. Since the beginning of the year, the company’s stock has almost doubled. For the first quarter of 2016, Nortek (NASDAQ:NTK) reported earnings per share of $0.16 and revenue of $613.9 million, which compares to a loss per share of $0.87 and revenue of $572.7 million posted for the same period a year earlier.
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At the end of the first quarter, 10 investors from our database were long Nortek (NASDAQ:NTK), compared to 14 funds in the previous quarter. Among them, the biggest position was disclosed by Gates Capital Management, and the second biggest was held by Kevin Michael Ulrich and Anthony Davis’ Anchorage Advisors, worth $73.6 million. Remaining investors with a similar bullishness include Edward A. Mule’s Silver Point Capital, Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors, and Jim Simons’s Renaissance Technologies.
Among investors who were no longer optimistic about investing in Nortek (NASDAQ:NTK) and who decided to sell its positions are Andre F. Perold’s HighVista Strategies, which said goodbye to the largest investment, valued at about $0.9 million in stock, and Alec Litowitz and Ross Laser’s Magnetar Capital, which dumped about $0.4 million worth of shares.
You can access the original SEC filing by clicking here.
Ownership Summary Table
| Name | Sole Voting Power | Shared Voting Power | Sole Dispositive Power | Shared Dispositive Power | Aggregate Amount Owned Power | Percent of Class |
|---|---|---|---|---|---|---|
| GATES CAPITAL MANAGEMENT | 0 | 3,260,633 | 0 | 3,260,633 | 3,260,633 | 20.4% |
| GATES CAPITAL MANAGEMENT GP | 0 | 3,260,633 | 0 | 3,260,633 | 3,260,633 | 20.4% |
| GATES CAPITAL MANAGEMENT, INC | 0 | 3,260,633 | 0 | 3,260,633 | 3,260,633 | 20.4% |
| JEFFREY L. GATES | 0 | 3,260,633 | 0 | 3,260,633 | 3,260,633 | 20.4% |
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Page 1 of 11 – SEC Filing
| SECURITIES AND EXCHANGE COMMISSION | |
| Washington, D.C. 20549 | |
| SCHEDULE 13D | |
| Under the Securities Exchange Act of 1934 | |
| Nortek, Inc. | |
| (Name of Issuer) | |
| Common Stock, | |
| (Title of Class of Securities) | |
| 656559309 | |
| (CUSIP Number) | |
| Gates Capital Management, Inc. 1177 Avenue of the Americas, 46th Floor New York, New York 10036 with a copy to: Eleazer Klein, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 (212) 756-2000 | |
| (Name, Address and Telephone Number of Person | |
| Authorized to Receive Notices and Communications) | |
| July 6, 2016 | |
| (Date of Event Which Requires Filing of This Statement) | |
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), Rule
13d-1(f) or Rule 13d-1(g), check the following box. [x]
(Page 1 of 11 Pages)
______________________________
* The remainder of this cover page shall be filled out for a reporting
person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing
information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”)
or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
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Page 2 of 11 – SEC Filing
| 1 | NAME OF REPORTING PERSON GATES CAPITAL MANAGEMENT, L.P. | |||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP | (a) ¨ (b) ¨ | ||
| 3 | SEC USE ONLY | |||
| 4 | SOURCE OF FUNDS AF | |||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) | ¨ | ||
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION Delaware | |||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: | 7 | SOLE VOTING POWER -0- | ||
| 8 | SHARED VOTING POWER 3,260,633 shares of Common Stock | |||
| 9 | SOLE DISPOSITIVE POWER -0- | |||
| 10 | SHARED DISPOSITIVE POWER 3,260,633 shares of Common Stock | |||
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 3,260,633 shares of Common Stock | |||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ¨ | ||
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 20.4% | |||
| 14 | TYPE OF REPORTING PERSON IA, PN | |||
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| 1 | NAME OF REPORTING PERSON GATES CAPITAL MANAGEMENT GP, LLC | |||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP | (a) ¨ (b) ¨ | ||
| 3 | SEC USE ONLY | |||
| 4 | SOURCE OF FUNDS AF | |||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) | ¨ | ||
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION Delaware | |||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: | 7 | SOLE VOTING POWER -0- | ||
| 8 | SHARED VOTING POWER 3,260,633 shares of Common Stock | |||
| 9 | SOLE DISPOSITIVE POWER -0- | |||
| 10 | SHARED DISPOSITIVE POWER 3,260,633 shares of Common Stock | |||
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 3,260,633 shares of Common Stock | |||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ¨ | ||
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 20.4% | |||
| 14 | TYPE OF REPORTING PERSON OO | |||
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Page 4 of 11 – SEC Filing
| 1 | NAME OF REPORTING PERSON GATES CAPITAL MANAGEMENT, INC. | |||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP | (a) ¨ (b) ¨ | ||
| 3 | SEC USE ONLY | |||
| 4 | SOURCE OF FUNDS AF | |||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) | ¨ | ||
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION Delaware | |||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: | 7 | SOLE VOTING POWER -0- | ||
| 8 | SHARED VOTING POWER 3,260,633 shares of Common Stock | |||
| 9 | SOLE DISPOSITIVE POWER -0- | |||
| 10 | SHARED DISPOSITIVE POWER 3,260,633 shares of Common Stock | |||
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 3,260,633 shares of Common Stock | |||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ¨ | ||
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 20.4% | |||
| 14 | TYPE OF REPORTING PERSON CO, HC | |||
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Page 5 of 11 – SEC Filing
| 1 | NAME OF REPORTING PERSON JEFFREY L. GATES | |||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP | (a) ¨ (b) ¨ | ||
| 3 | SEC USE ONLY | |||
| 4 | SOURCE OF FUNDS AF | |||
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) | ¨ | ||
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION United States of America | |||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: | 7 | SOLE VOTING POWER -0- | ||
| 8 | SHARED VOTING POWER 3,260,633 shares of Common Stock | |||
| 9 | SOLE DISPOSITIVE POWER -0- | |||
| 10 | SHARED DISPOSITIVE POWER 3,260,633 shares of Common Stock | |||
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 3,260,633 shares of Common Stock | |||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES | ¨ | ||
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 20.4% | |||
| 14 | TYPE OF REPORTING PERSON IN | |||
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Page 6 of 11 – SEC Filing
| Item 1. | SECURITY AND ISSUER |
| This statement relates to the shares of common stock, par value $0.01 per share (the “Common Stock”), of Nortek, Inc., a Delaware corporation (the “Issuer”). The Issuer’s principal executive offices are located at 500 Exchange Street, Providence, Rhode Island 02903-2699. | |
| Item 2. | IDENTITY AND BACKGROUND | |
| (a) This Schedule 13D is filed by each of the entities and persons listed below, all of whom together are referred to herein as the “Reporting Persons”: | ||
| (i) Gates Capital Management, L.P., a Delaware limited partnership (“Gates Capital”), with respect to the shares of Common Stock held by ECF Value Fund, L.P., a Delaware limited partnership (“ECF I”), ECF Value Fund II, L.P., a Delaware limited partnership (“ECF II”), and ECF Value Fund International Ltd, a limited partnership formed under the laws of the British Virgin Islands (“ECF INTL”), as to which Gates Capital serves as investment manager (collectively, the “Gates Capital Funds”); | ||
| (ii) Gates Capital Management GP, LLC, a Delaware limited liability company (“the General Partner”), which is the general partner of Gates Capital, with respect to the shares of Common Stock directly held by the Gates Capital Funds; | ||
| (iii) Gates Capital Management, Inc., a Delaware corporation (“the Corporation”), is the managing member of the General Partner, with respect to the shares of Common Stock directly held by the Gates Capital Funds; and | ||
| (iv) Jeffrey L. Gates, a United States citizen, who serves as the President of the Corporation, with respect to the shares of Common Stock directly held by the Gates Capital Funds. | ||
| Set forth in the attached Annex A and incorporated herein by reference is a listing of the directors, general partners, managing members and controlling persons of the Reporting Persons (collectively, the “Covered Persons”), and sets forth the principal occupation, citizenship and principal place of business of each Covered Person. | ||
| (b) The business address of each of Gates Capital, the General Partner, the Corporation, Mr. Gates, ECF I and ECF II is c/o Gates Capital Management, Inc., 1177 Avenue of the Americas, 46th Floor, New York, New York 10036. The business address of ECF INTL is ECF Value Fund International, Ltd., c/o Harneys Westwood & Riegels, Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, British Virgin Islands. | ||
| (c) The principal business of Gates Capital is to serve as investment manager to the Gates Capital Funds. The principal business of the General Partner is to serve as the general partner to Gates Capital. The principal business of the Corporation is the performance of investment management and advisory services. The principal business of Mr. Gates is to serve as the President of Gates Capital. | ||
| (d) During the last five years, none of the Reporting Persons, or, to the best of their knowledge, the Covered Persons, have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). | ||
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Page 7 of 11 – SEC Filing
| (e) None of the Reporting Persons, during the last five years, have been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. |
| (f) Gates Capital is a Delaware limited partnership, the General Partner is a Delaware limited liability company, and the Corporation is a Delaware corporation. ECF I and ECF II are organized under the laws of Delaware. ECF INTL is organized under the laws of the British Virgin Islands. Mr. Gates is a United States citizen. The citizenship of each Covered Person is set forth on Annex A and incorporated herein by reference. |
| Item 3. | SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION |
| The Reporting Persons used approximately $129,309,882 (including brokerage commissions) of the working capital of the Gates Capital Funds in the aggregate to purchase the shares of Common Stock reported in this Schedule 13D. Such shares of Common Stock are or may be held from time to time by the Fund in margin accounts established with its brokers or banks and a portion of the purchase price for the Common Stock may be obtained through margin borrowing. Securities positions which may be held in the margin accounts, including the Common Stock, may be pledged as collateral security for the repayment of debit balances in the margin accounts. | |
| Item 4. | PURPOSE OF TRANSACTION |
| The Reporting Persons acquired the shares of Common Stock reported herein for investment purposes in the ordinary course of business. The Reporting Persons acquired such shares of Common Stock because they believed that the shares of Common Stock reported herein, when purchased, represented an attractive investment opportunity. | |
| On July 6, 2016, the Reporting Person entered into the Tender and Support Agreement attached hereto as Exhibit 2 (the “Tender and Support Agreement”), which Tender and Support Agreement sets forth certain terms with respect to the proposed acquisition of the Issuer and pursuant to which the Reporting Persons will tender all of its Common Stock to a subsidiary of Melrose Industries PLC, a public limited company incorporated under the laws of the United Kingdom, which transactions, if consummated, would have one or more of the results specified in subparagraphs (a) through (j) of Item 4 of Schedule 13D. The transactions contemplated in the Tender and Support Agreement are subject to a number of material conditions and there can be no assurance that the execution of the Tender and Support Agreement will result in the consummation of one or more transactions on the terms set forth in the Tender and Support Agreement or at all. The full text of the Tender and Support Agreement is included as Exhibit 2 to this Schedule 13D. The description of the Tender and Support Agreement contained in this response to Item 4 is qualified in its entirety by reference to the terms of such Tender and Support Agreement, which are incorporated herein by reference. | |
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Page 8 of 11 – SEC Filing
| The Reporting Persons intend to review their investment in the Issuer on a continuing basis. Depending on various factors, including, without limitation, the outcome of the transactions referenced above, the Issuer’s financial position and strategic direction, actions taken by the Board, price levels of the Common Stock, other investment opportunities available to the Reporting Persons, and conditions in the securities market and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate, subject to the Tender and Support Agreement, including, without limitation, having discussions with the directors, management and other interested parties of the relevant entities in connection with the transactions contemplated by the Tender and Support Agreement, purchasing additional shares of Common Stock and/or other equity, debt, notes, instruments or other securities of the Issuer (collectively, “Securities”), disposing of any or all of their Securities, in the open market or otherwise, at any time and from time to time, and engaging in any hedging or similar transactions with respect to the Securities. The Reporting Persons reserve the right to change their intention with respect to any and all matters referred to in subparagraphs (a) – (j) of Item 4 of Schedule 13D. |
| Item 5. | INTEREST IN SECURITIES OF THE ISSUER |
| (a) The aggregate number of shares of Common Stock to which this Schedule 13D relates is 3,260,633 shares of Common Stock, constituting approximately 20.4% of the outstanding Common Stock. All percentages set forth herein are based upon a total of 16,008,461 shares of Common Stock outstanding as of July 5, 2016, as reported directly to the Reporting Persons by the Issuer. | |
| (b) Each of the Reporting Persons has the shared power to vote or to direct the vote or to dispose or to direct the disposition of 3,260,633 shares of Common Stock. | |
| (c) Information concerning transactions in the Common Stock effected by the Reporting Persons during the past sixty days is set forth in Annex B hereto and is incorporated by reference herein. | |
| (d) Not applicable. | |
| (e) Not applicable. | |
| Item 6. | CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER |
| The Reporting Persons are parties to an agreement with respect to the joint filing of this Schedule 13D and any amendments thereto. A copy of such agreement is attached as Exhibit 1 to this Schedule 13D and is incorporated by reference herein. In addition, the Reporting Persons are parties to the Tender and Support Agreement, a description of which is set forth in Item 4 of this Schedule 13D and incorporated by reference into this Item 6. | |
| Except as set forth herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons or between the Reporting Persons and any other person with respect to the Common Stock. | |
| Item 7. | EXHIBITS |
| Exhibit | Description |
| 1 | Joint Filing Agreement, dated July 6, 2016. |
| 2 | Tender and Support Agreement, dated July 6, 2016. |
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Page 9 of 11 – SEC Filing
SIGNATURES
After reasonable inquiry and to the best
of his or its knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true,
complete and correct.
Date: July 7, 2016
| Gates Capital Management, L.P. | ||
| By: Gates Capital Management GP, LLC, its general partner | ||
| By: Gates Capital Management, Inc., its managing member | ||
| By: | /s/ Jeffrey L. Gates | |
| Jeffrey L. Gates | ||
| President | ||
| Gates Capital Management GP, LLC | ||
| By: Gates Capital Management, Inc., its managing member | ||
| By: | /s/ Jeffrey L. Gates | |
| Jeffrey L. Gates | ||
| President | ||
| Gates Capital Management, Inc. | ||
|
| ||
| By: | /s/ Jeffrey L. Gates | |
| Jeffrey L. Gates | ||
| President | ||
| By: | /s/ Jeffrey L. Gates | ||
| Jeffrey L. Gates |
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Page 10 of 11 – SEC Filing
Annex A
MANAGERS AND GENERAL
PARTNERS OF THE REPORTING PERSONS
The following sets forth the name, principal occupation, citizenship
or jurisdiction of organization and principal place of business of the directors, general partners, managing members or controlling
persons (the “Covered Persons”) of the Reporting Persons:
Gates Capital Management, L.P.
| Name | Title or Relationship with Reporting Person | Principal Occupation or Employment | Citizenship or Jurisdiction of Organization | Principal Place Business |
| Gates Capital Management GP, LLC | General Partner | Investment Management | Delaware | (1) |
Gates Capital Management GP, LLC
| Name | Title or Relationship with Reporting Person | Principal Occupation or Employment | Citizenship or Jurisdiction of Organization | Principal Place Business |
| Gates Capital Management, Inc. | Managing Member | Investment Management | Delaware | (1) |
Gates Capital Management, Inc.
| Name | Title or Relationship with Fund | Principal Occupation or Employment | Citizenship or Jurisdiction of Organization | Principal Place Business |
| Jeffrey L. Gates | President | Investment Management | United States | (1) |
(1) The address of the principal place of business of
each of the Covered Persons is c/o Gates Capital Management, Inc., 1177 Avenue of the Americas, 46th Floor, New York, New York
10036.
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Page 11 of 11 – SEC Filing
Annex B
TRANSACTIONS IN COMMON STOCK BY
THE REPORTING PERSONS
The following tables set forth all transactions
in the Common Stock effected by the Reporting Persons in the past sixty days. Unless otherwise noted, all such transactions were
effected in the open market through a broker and all prices per share include commissions.
Gates Capital Funds
| Trade Date | Shares Purchased (Sold) | Price Per Share ($) |
| 05/09/2016 | 35,000 | 46.00 |
| 05/19/2016 | 69,600 | 47.53 |
| 05/25/2016 | 41,334 | 47.95 |
| 06/08/2016 | (2,000) | 51.91 |
| 06/09/2016 | (3,425) | 51.68 |
| 06/10/2016 | (640) | 51.53 |
