Bonded Motors Cancels Planned Stock Offering
15 December 1998
Bonded Motors Cancels Planned Stock Offering; Charge to 4th Quarter Earnings; Purchase Agreement to Acquire Adjacent Property; Seeks Industrial Development Bond
LOS ANGELES--Dec. 14, 1998--Aaron Landon, Chairman of the Board and Chief Executive Officer of Bonded Motors, Inc. announced today the Company canceled a previously planned secondary stock offering. The Company said it will not use equity to fund expansion in the near future. The Company expects a charge to 4th quarter earnings to cover expenses accumulated during the process of the secondary offering of approximately $300,000.
Additionally, Bonded Motors announced the planned acquisition of property adjacent to their existing Los Angeles facility. The Company has agreed to terms with the seller, and escrow will be opened within one week. Mr. Landon stated, "The facility plus new construction will be used to increase our production capacity to an expected run rate of 100,000 engines per year. We have grown to the limit of our production capacity over the last several months. With the added floor space and warehousing capability, we can further streamline our production process, help lower costs and improve quality."
As an alternative to issuing equity for financing, the company has submitted an application for an Industrial Development Bond valued at $5.5 to $6 million. Mr. Landon said, "An Industrial Development Bond is an excellent financing source to fuel Bonded's continued expansion. With an expected interest rate under 5%, the bond appears cheaper than any other option and is not dilutive to shareholders."
The Company will host a conference call Tuesday, December 15, to discuss these issues. To participate in the discussion dial 800/388-8975 a few minutes before 1:00pm Eastern - 10:00am Pacific.
Bonded Motors is a remanufacturer of car and light truck engines with headquarters in Los Angeles, manufacturing facilities in California and Georgia, and Distribution Centers in California, Washington, Colorado, Ohio, New York, and Georgia. The Company's principal customers are automotive parts chain stores, such as Pep Boys - Manny, Moe and Jack, , CSK Automotive (Checker, Schucks, Kragen), Paccar Automotive (Grand's and Al's Auto Parts) , and Genuine Parts / NAPA .
Safe Harbor statement under the Private Securities Litigation Reform Act of 1995: The statements in this release regarding the business conditions of the automotive aftermarket for remanufactured engines, anticipated financing, and the expansion of the company's facilities are forward looking statements that include risks and uncertainties, included but not limited to product demand and development, technological advancements, impact of competitive products and pricing, growth in targeted markets, manufacturing capacity, risks of foreign operations, ability to integrate and leverage acquisitions, and other information detailed from time to time in the Company's Securities and Exchange Commission filings.