By Market Wire
Last Update: 10/10/2006 10:00:32 AM Data provided by
DALLAS, TX, Oct 10, 2006 (MARKET WIRE via COMTEX) -- NewMarket Technology, Inc., (NMKT) and Action Products International, Inc., (APII) today announced executing a non-binding letter of intent (LOI) regarding the possible acquisition of all NewMarket outstanding common stock by Action Products in exchange for APII common stock. The letter of intent includes specific consideration for the respective shareholders of each Company.
Consideration for NewMarket Shareholders
NewMarket common stock would be valued in the transaction at not less than $0.50 per share for a total transaction value to NewMarket shareholders of approximately $100 million. The $0.50 per share purchase price is a minimum and not a constraint to the actual valuation. The actual NewMarket common stock purchase price could be higher.
Consideration for Action Products Shareholders
The shareholders of Action Products common stock will have an option in conjunction with the contemplated transaction to exchange their shares of common stock for shares of Class A Preferred Stock on a one share for one share basis. The Class A Preferred Stock will have a par value of $6 per share and include an annual yield of 5% payable quarterly in cash. In the event all 5.2 million shares currently issued and outstanding are converted, the 5% annual yield represents approximately $1.5 million in potential cash dividends to Class A Preferred shareholders per year or an estimated $0.30 per share. The current Action Products warrant holders will have the right to exercise their warrants and tender the common stock to receive the new convertible preferred shares, until a date to be set, which would be before the acquisition is completed. If the warrants are not exercised, by the conversion date, they will remain in effect under their current terms. The Action Products shareholders may maintain their warrant even if they choose to exchange common stock for the Class A Preferred Stock. The Class A Preferred stock will be callable by the Company after one year at par and will automatically convert to common in the event the market bid price for Action Products common stock remains at or above $6 per share for 10 consecutive days.
The current NewMarket management team would remain as the combined Company management team. The transaction would be subject to a shareholder vote of both companies.
"We are early on in our discussions, but the possible combination of the two companies has a number of promising benefits," said Philip Verges, CEO and Chairman of NewMarket Technology, Inc. "NewMarket would enjoy a listing upgrade to the NASDAQ exchange subject to review by NASDAQ. The existing Action Products operation is also a valuable asset. In the future, NewMarket intends to expand its business model for introducing new products and services to new markets beyond the technology sector. The possible transaction with Action Products creates consideration for accelerating that expansion."
Ron Kaplan, CEO and Chairman of Action Products International, Inc., said, "NewMarket Technology is a young company gaining momentum through an innovative and compelling business model that can sustain growth to create substantial profits and regular shareholder dividends. NewMarket brings significant value in terms of sales, profits and assets to Action Product shareholders today. NewMarket's potential is far greater and reason alone to consider this transaction. I believe this potential transaction with Action Products makes a compelling case for NewMarket to immediately expand its business model beyond technology to include consumer products. I expect that the Action Products operation will have increased value with the addition of NewMarket's unique approach to introducing new products and services to new markets."
About NewMarket Technology, Inc. (www.newmarkettechnology.com)
NewMarket Technology, Inc., is a Systems Innovation Company. NewMarket has combined a traditional systems integration and support services capacity with a specialized asset-based approach to assisting its clients with the delicate balance between maintaining legacy systems and gaining a competitive edge from the latest technology innovations. NewMarket provides certified integration and maintenance services to support the prevailing industry standard solutions to include Microsoft, Cisco Systems, Hyperion Solutions and SAP. Concurrently, NewMarket continuously seeks to acquire undiscovered emerging technology assets to incorporate into an overall product portfolio carefully packaged to complement the prevailing industry standard solutions. NewMarket's emerging technology portfolio includes products for the Telecommunications, Healthcare, Homeland Security and Financial Services industries. NewMarket delivers its portfolio of products and services through its global network of Solution Integration subsidiaries in North America, Latin America, China and Singapore. As a Systems Innovator, NewMarket has set itself apart from the systems integration market through the introduction of a technology business model that monetizes the value of emerging technologies to improve corporate profits and enhance shareholder value with the regular issue of dividends. NewMarket ranked Number 13 on the 2005 Deloitte Technology Fast 500, a ranking of the 500 fastest growing technology companies in North America. Rankings are based on the percentage of revenue growth over five years from 2000-2004. NewMarket's revenue increased 18,082 percent during this period. The financial results achieved have been three years of rapid, profitable growth from $2.3 million in revenue in 2003 to over $50 million in 2005.
About Action Products International, Inc.
Action Products International, Inc. (APII), based in Orlando, Florida, is a toy manufacturer, emphasizing educational and positive play brands, including JAY JAY THE JET PLANE Wooden Adventure System, the I DIG(R) series, Space Voyagers(R), "The most authentic Space Toys on the Earth," ToddWorld(TM) soft play toys, Climb*Tron(TM) window-climbing robots, Curiosity Kits(R) and IMADETHAT(TM). Its products are marketed and sold to toy stores, specialty retailers, Internet retailers, museums, zoos, theme parks, attractions, catalog companies and education markets in the United States and worldwide.
Visit the Company's web sites at www.apii.com and www.curiositykits.com
"SAFE HARBOR STATEMENT" UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains forward-looking statements that involve risks and uncertainties. The statements in this release are forward-looking statements that are made pursuant to safe harbor provision of the Private Securities Litigation Reform Act of 1995. Actual results, events and performance could vary materially from those contemplated by these forward-looking statements. These statements involve known and unknown risks and uncertainties, which may cause NewMarket's actual results in future periods to differ materially from results expressed or implied by forward-looking statements. These risks and uncertainties include, among other things, product demand and market competition. You should independently investigate and fully understand all risks before making investment decisions.
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