Precision Auto Care Announces Conversion of Debt to Equity
LEESBURG, Va., Oct. 31, 2002; Precision Auto Care, Inc. announced that the Company had reached an agreement with its two senior debt holders. Pursuant to the agreement, reached yesterday, the two creditors will exchange the outstanding debt held by them, which totals approximately $18 million, for 2,500,000 shares of common stock, 500,000 shares of preferred stock and warrants to purchase 11,500,000 shares of common stock at $.44 per share, exercisable over 10 years. Full exercise of the warrants is subject to shareholder approval of an amendment to the articles of incorporation increasing the number of authorized shares at the annual shareholder meeting on January 15, 2003. In the event that this shareholder approval is not obtained within two years, the Company has agreed to issue additional shares of preferred stock to each of the debt holders. The Company's CEO, Louis M. Brown, Jr., stated, "We are extremely pleased that we were able to consummate this transaction. With this deal done, our balance sheet is significantly stronger and our prospects going forward look much brighter." Robert Falconi, the Company's CFO stated, "With the completion of this debt to equity conversion, we will virtually eliminate our annual interest expense and it will be possible to start making money. We are very grateful to the Company's debt holders, Arthur Kellar and Mauricio Zambrano, and the vote of confidence that they have given to the company." Mr. Kellar is currently a member of the Board of Directors and Mr. Zambrano is a former director. Precision Auto Care, Inc.'s affiliate, Precision Franchising LLC, is one of the world's largest franchisor of auto care centers, with 444 operating centers as of June 30, 2002. The Company franchises and operates Precision Tune Auto Care centers around the world.