Alpha Technologies Group Completes Facility Sale and Leaseback Transaction and Amendment to Its Credit Agreement
LOS ANGELES--Oct. 4, 2002--Alpha Technologies Group, Inc. today announced that it has completed the previously announced sale and leaseback of its Pelham, New Hampshire facility. Net proceeds from the transaction of approximately $4.5 million, plus $500,000 borrowed under the Company's revolving line of credit, were used to reduce bank indebtedness as required by Alpha's credit agreement.The transaction includes a 15-year lease for the building, which will be accounted for as an operating lease in accordance with SFAS No. 13, "Accounting for Leases". As a result of the transaction, Alpha's annual expenses associated with this facility will increase by approximately $325,000, which is the difference between its new rental expense and its former interest and depreciation expenses. In addition, the Company expects to incur a one-time, non-cash loss on the transaction of approximately $2.1 million, which will be reflected in its financial results for the fiscal year ending October 27, 2002.
The facility was sold to a group which includes a director of the Company and two other private investors. The director has a 50% ownership interest in this group. The transaction includes the issuance of 250,000 warrants of Company stock to the buyers at $1.42 per share.
Alpha also announced that it has completed the Fourth Amendment to its credit agreement. Under the terms of the Fourth Amendment, Alpha's principal amortization schedule for 2003 was reduced from quarterly payments of $1.2 million to quarterly payments of $750,000. Additionally, the Company's working capital line was extended until June 30, 2004; previously, it was scheduled to expire on June 30, 2003. Further, the loan covenants were reset to reflect the Company's most recent financial forecast.
Lawrence Butler, chairman and CEO, said, "With the completion of the sale and leaseback, Alpha was able to repay $5.0 million of principal, extend its working capital line, and reset certain loan covenants. This series of transactions greatly improves Alpha's financial flexibility, and will enable us to focus on profitably growing our business."
About Alpha Technologies Group
Alpha Technologies Group, Inc. is engaged in the manufacture, fabrication and sale of thermal management products and aluminum extrusions. The Company is one of the leading manufacturers of thermal management products in the United States. Thermal management products, principally heat sinks, dissipate unwanted heat generated by electronic components. The Company's thermal management products serve the automotive, telecommunication, industrial controls, transportation, power supply, factory automation, consumer electronics, aerospace, defense, microprocessor, and computer industries. The Company also sells aluminum extrusions to various industries including the construction, sporting goods and other leisure activity markets.
Forward-Looking Statements
This press release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: changes in demand for the Company's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, excess or shortage of production capacity, difficulties encountered in the integration of acquired businesses and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.