Global Technovations Signs Letter Of Intent To Acquire Auto Technology Company
10 April 2000
Global Technovations Signs Letter Of Intent To Acquire Major Automotive Technology Company With 1999 Sales Of $84 Million
PALM BEACH GARDENS, Fla.--April 10, 2000--Global Technovations, Inc. (AMEX:GTN) (the "Company") announced today that it has executed a letter of intent to purchase an automotive technology-based manufacturing and distribution company. In calendar 1999, the target company recorded revenues of approximately $84 million and had earnings before interest, taxes, depreciation and amortization of approximately $7.3 million ("EBITDA"). The acquisition, which will not require a stockholder vote, is contingent upon completion of due diligence, the Company obtaining financing and the execution of a definitive agreement. Specific terms of the acquisition including the identity of the target will not be disclosed until the execution of a definitive agreement, which is expected to occur on or before June 30, 2000.Will Willis, President and Chief Executive Officer of Global Technovations, Inc., stated, "We have initiated preliminary discussions with four other potential target companies we would like to acquire. The undisclosed company featured in today's press release is the largest of the target companies and would provide us with a solid platform to make further acquisitions. Additionally, we envision potential manufacturing, marketing, sales and distribution synergies between our existing and prospective businesses."
David Natan, Global Technovations' Vice President and CFO, commented, "The potential acquisition as currently structured will immediately be accretive to earnings and should result in minimal shareholder dilution. While execution of the letter of intent is a critical first step, we have a number of important hurdles to overcome including obtaining acceptable financing. We are optimistic that we can get the deal closed by June 30, 2000. We hope to improve upon the target's historic financial performance through post acquisition sales growth, cost reductions and by expanding upon its core businesses through further acquisitions."
Mr. Willis concluded, "A transaction of this magnitude will have an immediate and favorable impact on our size and profitability. Our acquisition strategy was developed to complement and accelerate our efforts to expand the MotorCheck(tm) ("OSA-II") on-site oil analysis business. Recent business-building efforts have given us the confidence that the OSA-II business is well on its way and we can now start to broaden our business base via acquisitions."
Global Technovations, Inc. develops, assembles, and markets the sophisticated, patented MotorCheck(tm) and TruckCheck(tm) On-Site Analyzer, "an oil analysis mini-lab in a box", and distributes MightyClean 2000(tm), a proprietary hydrocarbon eating microbe cleaning product.
Forward-Looking Statements
The forward-looking statements discussed in this press release relate to the Company's expectations that (1) it will complete the acquisition of the target company described above, (2) the acquisition of the target company will have a favorable impact upon the Company's profitability and provide synergy with its on-site oil analysis business, (3) the Company's management will be able to improve upon the target company's financial performance as described above, (4) the Company will be successful in making additional acquisitions, and (5) the "OSA business is well on its way", are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
The results anticipated by these forward-looking statements may not occur. These statements are subject to risks and uncertainties that could cause results to differ materially from those contemplated in the above forward-looking statements. Such risks and uncertainties include the following: (1) completion of due diligence by the Company, (2) the ability of the Company to obtain acceptable financing of the target company, (3) the ability of the Company to reach a definitive agreement with the stockholders of the target company, (4) the ability of the Company to reduce the target's costs, provide the leadership necessary to expand its business, and improve its profitability, (5) the ability of the Company to reach contractual terms with one or more other prospective acquisition targets, (6) the completion of due diligence work for other potential acquisition targets, (7) the Company's ability to obtain required financing to complete the other potential acquisition targets, (8) the volume of samples received from the third party oil analysis program previously announced is sufficient to generate $500,000 to $750,000 in annualized revenue, (9) Speedco may decide not to expand to new locations during calendar 2000, or not to use the OSA-II units at new locations if they do open, (10) retailers and potential customers may be reluctant to purchase the Company's new Retail MotorCheck(tm) Display Units, (11) the decision by a municipality and/or potential other new or existing customers to place orders for the lease or purchase of multiple OSA-II units despite successful trial evaluation periods, (12) the continued reliability of the OSA technology over an extended period of time, (13) the Company's ability to market OSA-IIs, (14) the acceptance of the OSA-II technology by the marketplace, (15) the general tendency of large corporations to slowly change from known technology to emerging new technology, (16) potential future competition from third parties that may develop proprietary technology, which either does not violate the Company's proprietary rights or is claimed not to violate the Company's proprietary rights, (17) the Company's ability to attract strategic partners for the OSA-II, and (18) the Company's ability to resolve contractual issues with potential strategic partners. Investors should also consider information contained in documents filed by the Company with the Securities and Exchange Commission.