CERXnet Signs Agreement to Acquire Berliner Reifenwerk GmbH
16 September 1999
DENVER--Sept. 16, 1999--CERXnet Incorporated announced that it has signed a binding agreement to acquire ownership of 92.3% of Berliner Reifenwerk GmbH ("BRW"), a large and profitable German company headquartered in the Berlin suburb of Schmockwitz, with 6 offices and over 200 employees. CERXnet has issued 10,000,000 shares of its common stock to acquire this interest in BRW, which represents approximately 30% of CERXnet's outstanding stock.
Organized in 1942, BRW sells new tires, retreads and exports used automobile and truck tires, and recycles used tires at its Berlin plant. BRW annually retreads approx. 350,000 used tires and recycles approx. 30,000 tons of used tires. BRW has been since 1965 the largest tire-retreading plant in the former German Democratic Republic.
BRW is modernising its 89,000 sq. meter plant to greatly increase revenues from retreading, recycling and disposal of used tires. The expanded plant will incorporate a heat-generating power plant that will burn used tires to produce electricity and steam for BRW's use, and BRW will sell the excess electricity to local utilities. The German government has paid over DM 45 mil. in subsidies to BRW, which are not repayable. An additional DM 41 mil. in non-repayable government subsidies also has been authorized, which will be paid to BRW as work progresses on the plant construction and renovation.
Upon completion of the plant renovation, BRW will be the only tire retreading company in Germany with a permit to burn used tires. A sophisticated system for filtering dust and sulphur emissions already has been installed. The fully modernised plant will have a capacity of 6 tons/hour and will generate 10 MW of electricity per hour. Revenues in 2002 are expected to be more than double 1997 revenues, and profits are expected to increase as a percentage of revenues.
Condensed audited financial information:
(in Deutsche Marks)
31-12-97 31-12-98
-------- --------
Total Assets 122,828,000 126,407,000
Total Liabilities 58,561,000 51,860,000
Owners' Equity 64,267,000 74,547,000
Total Revenues 50,031,000 56,926,000
Net Profit 5,437,000 8,697,000
The foregoing financial information has been audited, but is not presented in accordance with U.S. generally accepted accounting principles. The amounts presented also do not include land and buildings, expenditures yet to be made for plant modernisation, nor any of the additional government subsidies already authorized. CERXnet will promptly take the steps to reconcile BRW's financial statements to U.S. accounting standards.