Fidelity Holdings to Focus Solely On Major Automotive
13 November 2000
Fidelity Holdings to Focus Solely On Major Automotive; Company To Divest Non-Automotive Operations
KEW GARDENS, N.Y.--Nov. 13, 2000--Fidelity Holdings, Inc. (Nasdaq NM: FDHG) today announced that after a lengthy and intensive review of its operations, the Board of Directors has decided to focus its activities exclusively on Major Automotive, its retail automobile division, and divest itself of all its non-automotive operations, including IG2, the Company's telecommunications subsidiary. Fidelity is actively seeking a buyer, or buyers, for its non-automotive operations. The Company has significantly reduced expenses, including payroll, at IG2 and its other non-automotive businesses. As a result, Fidelity will take a one-time charge to earnings for the third quarter.Mr. Bruce Bendell, Chairman and Chief Executive Officer of Fidelity stated, "Major Automotive has grown rapidly even as a portion of our cash resources and management time have been utilized for our technology division. We believe that in order to increase shareholder value, we should focus all of our resources on our automobile sales and service business. At the current time, Major Automotive owns 12 franchises at 8 locations and currently has several franchise acquisitions pending. Management has proven that it has the talent and expertise necessary to successfully run a diverse multi-line automotive business. We look forward to directing our focus as a leading company in the retail automotive sector. We believe that this decision will also serve to reduce confusion in the public market place regarding the proper valuation of our stock, which we feel is greatly undervalued at this time."
Mr. Bendell continued: "The severe erosion of valuations in the overall technology sector and the need for further extensive funds to support IG2, as well as our other technology operations, have led the board to conclude that the best course of action at this time is to divest ourselves of such businesses and pursue a sale of their operations and/or related assets. Until now, Fidelity has expended considerable sums to support IG2's development. However, taking full advantage of the potential opportunities available to IG2 would require undertaking additional financing measures that we believe are not available or are not in the best interests of Fidelity or its shareholders at this time. While IG2 has made great strides and currently has 32 CLEC licenses in 63 markets, the needs of taking advantage of that endeavor are best met by a purchaser whose business is similarly aligned and who has the resources to support its growth." - More -
"Our outside Director Dennis Roth, former Chairman and Chief Executive Officer of IG2, a knowledgeable, respected leader in the telecommunications industry, will participate in our effort to obtain a maximum return for the technology operations for the benefit of Fidelity's shareholders," concluded Mr. Bendell.