Bonded Motors Announces 66 Percent Workforce Reduction
4 April 2000
Bonded Motors Announces 66 Percent Workforce Reduction; Resignation of Chief Financial Officer and Board Member; Appointment of Interim Chief Operating Officer
LOS ANGELES--April 3, 2000--On March 29, 2000, Bonded Motors Inc. filed with the Securities and Exchange Commission a notification of late filing of its annual report on Form 10-K for the year ended Dec. 31, 1999.The company is required to file its Form 10-K not later than April 14, 2000. As previously reported, the company has been advised by its independent auditors, KPMG LLP, that it expects to issue a "going concern" opinion on the company's Dec. 31, 1999, financial statements based on the company's current financial position.
As previously reported, the company is in violation of certain Bank covenants under its working capital line of credit with Comerica Bank ("Bank") and has been working with the Bank to negotiate extensions of additional short-term financing.
In addition, the company has been working with its major trade suppliers through the Motor Equipment Manufacturers' Association ("MEMA") to obtain an extension of credit terms on new orders. The company has satisfied its most recent financing requirements through a series of short-term overdrafts to its existing credit line provided by the Bank and an interim credit agreement with MEMA.
Management has taken steps to reduce costs by effecting previously announced workforce reductions and closings of its distribution centers in Albany, N.Y., and Salida, Calif., and its manufacturing operation in Macon, Ga.
On Friday, March 31, 2000, the company effected a further 66 percent workforce reduction in its Los Angeles manufacturing facility. In addition, management has been exploring various alternatives to obtain necessary short-term financing.
As of Friday, March 31, 2000, the company had not secured any alternative financing and was not able to reach a further agreement with MEMA for an extension of credit terms with the company's major trade suppliers. Comerica Bank has notified the company that it would cease extending additional credit to the company in the event the company was not able to reach such an agreement with MEMA by March 31, 2000.
If an agreement is not reached with the company's trade suppliers or if the company does not have access to the additional short-term financing from the Bank, the company will not be able to continue funding operations.
On March 27, 2000, the company appointed Michael Dulion as interim chief operating officer. On April 1, 2000, the company received resignation letters from its chief financial officer, Paul Sullivan, and one of its directors, David Braunstein.
The Nasdaq-Amex Market Group has notified the company that it will delist the company's common stock from the Nasdaq National Market, as the company has not complied with the minimum $5 million market value of public float requirement of the National Market.
The company has appealed the Nasdaq delisting decision and requested that in the event its appeal is denied, Nasdaq list its common stock on the Nasdaq Small Cap Market.
Even if the company is able to secure additional short-term financing from the Bank and reach a further agreement with its major trade suppliers, the company will require additional cash from outside sources to continue funding its operations.
Management is continuing to explore various alternatives to obtain such financing. There can be no assurance, however, that such financings would be available when needed, if at all, or on favorable terms and conditions. Additional equity financings would cause dilution of the outstanding common stock.
This release contains forward-looking statements within the meaning of federal securities laws that are intended to be covered by the safe harbors created thereby. Those statements include, but may not be limited to, the discussions of the company's liquidity. Investors are cautioned that all forward-looking statements involve risks and uncertainties, in particular, regarding the company's plans for short-term liquidity. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the company or any other person that the objectives and plans of the company will be achieved. The release should be read in conjunction with the company's most recent reports filed with the Securities and Exchange Commission.