SDC to Acquire Prized Czech Truck Manufacturer
22 July 1998
SDC to Acquire Prized Czech Truck Manufacturer
PALM BEACH, Fla.--July 22, 1998--In what would create the largest Czech Republic industrial operation to be majority-owned by an American company, SDC International, Inc., (SDCN) today announced the signing of two agreements providing for SDC's acquisition of the 100 year-old Czech truck manufacturer, Tatra, a.s. SDC International, Inc. is a publicly owned US-based company established to market, sell, and finance high quality Eastern and Central European industrial products such as diesel generators, cogeneration equipment, on-road and off-road trucks, tractors, and other transport equipment.
SDC has executed an agreement for acquisition of 43.5% of the outstanding shares of Tatra from the Czech engineering giant SKODA, a.s.. A second agreement with the largest commercial bank in the Czech Republic, KOMERCNI BANKA, provides for SDC's discounted acquisition of the Bank's senior secured 2.8 billion Czech koruna ($90 million US) loan to Tatra. SDC will pay US$30 million for the senior secured loan. Closing of SDC's acquisition of Tatra stock and senior debt is scheduled for September 30th, pending appropriate due diligence reviews and financing matters.
Upon closing the acquisition, SDC will become one of the few NASD Bulletin Board stocks to attain the growth which should enable it to immediately qualify for larger US exchanges. According to Tatra's consolidated audit report certified by Ernst & Young, Tatra's revenues for 1997 were about US$290 million, with about US$230 million in assets. Tatra employs over 7500 employees. If SDC fully converts the bank debts of Tatra into equity, Tatra would have a book value of about US $100 million, of which SDC could have up to 84% of the outstanding shares, giving SDC's stock a US$ 15-18 book value per share. Tatra would currently contribute at least $1.00 earnings to each SDC share.
SDC Chairman, Ronald A. Adams, said "the most exciting aspect of the acquisition is working with Tatra to help them take advantage of the company's vast earnings potential by managing and marketing improvements and by the injection of capital." He added, "despite the 'handcuffs' caused by former state ownership and capital restrictions, Tatra, after serious losses in prior years, seems to have turned the corner. 1997 profits were US$2 million and were also US$2 million for the first quarter of 1998. The disintegration of the company's markets caused by the fall of communism choked Tatra's earnings for many years. We want to lift the yoke."
SDC plans to increase earnings per share by infusing capital for raw material and component inventories, thereby increasing efficiency and output. New marketing and sales programs along with Tatra's first-ever leasing program will be introduced to modernize and revitalize this sleeping giant. Additionally, the Tatra labor union's recent approval to reduce the workforce by 20% will, also, provide a substantial increase in earnings.
SDC International is traded on the NASD Bulletin Board under the symbol "SDCN". The Company completed an 8-K filing with the Securities and Exchange Commission today regarding the acquisition agreements.
Note: Any and all estimates of cost savings, synergies, projected earnings and share valuations, and pro forma financial information included herein are "forward-looking" and inherently subject to significant uncertainties and contingencies, many of which are beyond SDC's and Tatra's control, including: (a) future economic conditions in the markets in which SDC and Tatra operate; (b) financial market conditions; (c) inflation and currency exchange rates; (d) changing competition and effects of new and increased competition in the areas served by SDC and Tatra; (e) changes in the economic regulatory climate in the countries in which SDC and Tatra sell their products; (f) labor uncertainties and SDC's and Tatra's ability to implement anticipated labor savings; (g) unanticipated environmental and other situations relating to Tatra's assets; (h) adverse changes in laws, regulations or rules governing environmental, tax or accounting matters. There can be no assurance that the estimated savings, synergies, projected earnings and share valuations or pro forma financial information will not vary materially from those estimates. The inclusion of such estimates herein should not be regarded as an indication or affirmation that SDC or Tatra or any other party considers such estimates an accurate prediction of future events.
Complete background information sheets are immediately available upon request.