The purchase price consists of $18.5 million in cash and $1.0 million to be paid to Mace in the form of a three-year promissory note bearing 7.5% interest. The note has a $250,000 principal payment due on each of the first and second anniversary dates of the promissory note's issuance, with the balance of $500,000 due and payable on the third anniversary. CW Acquisition, LLC has deposited $200,000 in escrow pending the closing.
The proceeds from this transaction will be used to pay down debt and fund further expansion of Mace's security segment. Mace will pay down approximately $10.3 million of debt associated with the Arizona car washes, and approximately $2.9 million of additional debt. Mace will also pay a pre-payment penalty estimated at between $1.5 million and $2.5 million to be incurred as a result of the early retirement of the above-mentioned $10.3 million of debt. The Company's total outstanding debt is approximately $26.7 million, and at the completion of this transaction Mace's total debt will be reduced to approximately $12.9 million. Mace estimates that the net cash proceeds from the transaction after costs and debt payments will be approximately $2.2 million, excluding future receipts on the $1.0 million promissory note. At December 31, 2005, the Company's cash and short-term investments totaled approximately $11.4 million.
This is a major step in Mace's goal to sell all of its car washes and invest in its security segment. Mace believes that this transaction is in the best interest of the Company and its shareholders. At the completion of this transaction, Mace will have 36 remaining car washes located in Florida, Texas, New Jersey, Pennsylvania and Delaware.
Mace Security International, Inc. is a manufacturer of electronic surveillance and personal defense products, and an owner and operator of car and truck wash facilities. Information about Mace and becoming a Mace Authorized Dealer is available at www.mace.com. The Company's consumer e-commerce web site is www.macecatalog.com.