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Starcraft, Wheel to Wheel, Tecstar Agree to Combine in $122 Million Transaction Kelly L. Rose to Appoint Co-CEOs for the Combined Company, Remains Chairman of the Board; Starcraft Expects Revenues of $192 million, Net Income of $11.6 Million For Fisc
with Wheel to Wheel, Inc. of Troy, Mich. and its shareholders. The agreement
held Wheel to Wheel, an automotive engineering and design business.
Corporation common stock. Based on the trailing 30 day average closing price of
$122 million. The final value of the transaction is dependent upon the market
to be issued in the transaction is fixed. After the transaction, the current
shares outstanding.
of Wheel to Wheel. As a result of the merger, Starcraft will own directly or
indirectly 100% of the equity interest in Tecstar.
Starcraft and Wheel to Wheel jointly formed Tecstar in 1998. Tecstar provides
and installs appearance enhancement items on vehicles provided by and returned
to an original equipment manufacturer. Tecstar had sales of approximately $190
million for the fiscal year ended September 30, 2003. Wheel to Wheel had annual
revenues to customers other than Tecstar of approximately $8.7 million in fiscal
year 2003, which includes revenues from production, design, engineering,
validation and testing of automobiles and automotive components.
"Tecstar provides substantially all of the revenues and net income of Starcraft
Corporation," said Kelly L. Rose, Chairman of the Board. "This move enables us
to become a single-focus company with improved financial flexibility, allowing
Starcraft to more effectively take advantage of new opportunities that will
enhance shareholder value."
Under terms of the agreement, Rose, 51, currently Chairman and Chief Executive
Officer of Starcraft, will remain Chairman of the Board of the combined company.
Jeff Beitzel, 49, currently President of Wheel to Wheel and Tecstar and Mike
Schoeffler, 42, currently Starcraft President and Chief Operating Officer, will
become co-CEOs of Starcraft Corporation after the merger. The Company's
headquarters will remain in Goshen, Indiana.
"As Starcraft evolves, this co-CEO structure is ideal," Rose noted. "Mike
Schoeffler currently handles financial and corporate strategy, aftermarket parts
operations and investor relations, while Jeff Beitzel will have day-to-day
responsibility for all manufacturing and engineering operations. Their
complementary experience will unify our corporate structure while helping
clarify management's roles and accountability."
Richard Anderson, 50 and Doug Goad, 46, currently executive vice presidents of
Wheel to Wheel and Tecstar, will hold the same titles at Starcraft after the
merger. "I have enjoyed a long, solid working relationship with Doug and Rich,"
Beitzel added. "Their expertise has helped us successfully penetrate the
automotive industry since Wheel to Wheel was founded in 1995. They will be major
assets to the combined company."
After the merger, Goad, Anderson and Beitzel are to be appointed to Starcraft's
Board of Directors. "All three have spent the majority of their careers in the
automotive industry," Schoeffler noted. "Their presence on the board will
provide excellent insight for future corporate development and growth
opportunities." Starcraft also expects to appoint two more independent directors
to its Board to comply with anticipated NASDAQ listing requirements.
The directors of Starcraft and the directors and shareholders of Wheel to Wheel
have approved the agreement. Completion of the transaction is subject to
regulatory approvals and an affirmative vote of a majority of Starcraft's
shareholders. Members of Starcraft's management and Board of Directors,
representing approximately 36 percent of the Starcraft shares outstanding, have
expressed their intention to vote in favor of the transaction.
Starcraft shareholders will receive a proxy statement in December 2003,
containing additional information about the proposed transaction. The Company
expects to hold a shareholder meeting in January 2004 to vote on the agreement.
If approved, it is anticipated the merger would be effective immediately
following the meeting.
FISCAL 2003 EARNINGS ESTIMATE:
Separately, the Company announced it expects improved revenues and earnings for
the fourth quarter and fiscal year ended September 28, 2003. The Company expects
revenues of $192 million for fiscal year 2003 compared to $105 million in the
prior year. Net income is estimated to be $11.6 million, or $2.44 per basic
share and $2.21 per fully diluted share this year. Fiscal 2002 net income was
$3.0 million, or $0.65 per basic share and $0.55 per fully diluted share.
Revenues for the quarter are expected to be $43 million, compared to $31 million
for the fourth quarter of fiscal 2002. Net earnings for the quarter are expected
to be $2.6 million, or $0.55 per basic share and $0.49 per diluted share. In
fiscal 2002 the Company incurred a net loss of $946,000 in the fourth quarter,
or a loss of $0.20 per basic share. During the fourth quarter of fiscal 2002 the
Company incurred a one-time charge of $2.1 million related to the redemption of
certain warrants and options.
These results are preliminary and subject to final review. The Company plans to
report full fourth quarter and year-end results after the close of the market on
November 18, 2003.
INVESTOR CONFERENCE CALL:
An investor teleconference will be held on Friday, October 31, 2003, at 11:30
a.m. EST to discuss the merger agreement. Investors may participate in the
teleconference call by calling (800) 884-5695 within ten minutes prior to the
call and providing the conference pass code
#91329281. A tape replay of the call
will be available two hours after the conclusion of the conference through
November 7, 2003 by dialing (888) 286-8010 and providing the replay pass code
#91369623.
Starcraft Corporation, through its joint-venture ownership interest in Tecstar,
is a leading supplier to the OEM automotive supply market. It also supplies
after-market parts and accessories to wholesale and retail customers throughout
North America.
This news release contains forward-looking statements regarding Starcraft's
business operations and outlook, including projections of revenues and earnings,
prospects for consummation of the proposed business combination and certain
governance and operational changes that may follow such transaction if effected.
Investors are cautioned that actual results may differ materially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties including, but not limited to regulatory reviews, shareholder
approvals, and other important factors, in addition to risks and uncertainties
detailed in the Company's Form 10-K for fiscal 2002 filed with the Securities
and Exchange Commission.
SOURCE: Starcraft Corporation
CONTACT: Starcraft Corporation
Mike Schoeffler, 574-534-7827, ext. 300
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