Autodaq Corporation and AutoTradeCenter.com Inc.
announced July 1 the signing of a definitive merger agreement.
According to the companies, the combined entity offers the automotive remarketing industry a comprehensive set of remarketing services for manufacturers,
leasing, rental and fleet companies as well as wholesalers and
automobile retailers.
The new AutoTradeCenter, Inc. will continue trading on the OTCBB
under the current symbol AUTC. Three members of AutoTradeCenter.com's
current Board of Directors will join the new entity's Board of
Directors following the closing of the merger. The senior management
of both entities will remain with the combined entity. Adam Boyden,
president and chief executive officer of Autodaq, will be the chief
executive officer of the new entity, and Roger L. Butterwick,
president of AutoTradeCenter.com, will be the chief financial officer.
The merged entity will retain its administrative offices and
technology group in Menlo Park, the Internet dealer services operation
center in Mesa and Coconut Creek, Florida, and the remarketing
management, lease maturity management and sales and
leadership-training center in Minneapolis.
"This is an important step that will accelerate our strategy and
position us as leaders in remarketing technology, operational
expertise and proven vehicle sales," said Boyden. "In addition to the
clear strategic benefits of combining two highly complementary
organizations, we create substantial value through significant cost
structure improvements and access to new growth opportunities. This
combination puts us into a leadership role in our industry segment."
Butterwick said, "We are creating a new kind of industry leader --
one founded on superior customer service, world-class technology and
infrastructure, and the industry's best performing products and
services. With our combined resources, we can deepen our commitment to
excellence in automotive remarketing services."
According to the companies, the new combined entity will be positioned to leverage
its experience operating remarketing programs
for such companies including Audi, Honda, Hyundai, Isuzu, Suzuki,
Volvo, Enterprise Rent-a-Car, and several other banks and financial
institutions.
Under the terms of the agreement, AutoTradeCenter.com shareholders
will receive shares of Common Stock and Preferred Stock in a
newly-formed Delaware company, AutoTradeCenter, Inc. Autodaq
shareholders will receive shares of Common Stock and various classes
of Preferred Stock in AutoTradeCenter, Inc.
As a result of the foregoing transactions, following the merger
the current shareholders of AutoTradeCenter.com will own approximately
26.5 percent of the new company's fully-diluted capital stock (including, for
purposes of this calculation, shares of Common Stock reserved for
issuance pursuant to the company's stock option plan), and the current
shareholders of Autodaq will own approximately 64 percent of the new
company's capital stock. Senior management of AutoTradeCenter.com will
receive options to purchase up to an aggregate of 4.5 percent of the new
entity's Common Stock. Shares of Common Stock reserved for issuance
pursuant to the company's stock plan will constitute the remaining 5 percent
of the company's capital stock. The transaction will be accounted for
as a purchase and is intended to qualify as tax-free to the
shareholders of AutoTradeCenter.com and Autodaq. The transaction is
expected to close in the second half of 2002. The merger is subject to
approval of the shareholders of AutoTradeCenter.com and Autodaq, as
well as other customary closing conditions. Autodaq shareholders
holding shares sufficient to approve the merger delivered voting
agreements and proxies in which they agreed to vote their shares in
favor of the merger. The agreement requires AutoTradeCenter.com to
deliver voting agreements and proxies from shareholders holding shares
sufficient to approve the merger on or before July 19, 2002. In the
event AutoTradeCenter.com fails to deliver such voting agreements as
previously described, an affiliate of Autodaq may exercise a warrant
convertible into a majority of AutoTradeCenter.com's capital stock for
nominal consideration.
Additionally, as part of the agreement, Autodaq says it loaned
AutoTradeCenter.com approximately $1 million, which
AutoTradeCenter.com used to retire its indebtedness under a credit
facility due on June 30, 2002 and to terminate a services agreement
related to such credit facility. AutoTradeCenter.com is not required
to make payments to Autodaq under the loan prior to the closing of the
merger. As partial consideration for such loan, AutoTradeCenter.com
provided an affiliate of Autodaq with a warrant to purchase shares
equal to approximately 5 percent of AutoTradeCenter.com's Common Stock on a
fully-diluted basis at an exercise price equal to the fair market
value of AutoTradeCenter.com's Common Stock.
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