Stewart & Stevenson Announces Agreement for the Sale of Its Power Products Division
October 24 2005 - 9:51PM
PR Newswire (US)
HOUSTON, Oct. 24 /PRNewswire-FirstCall/ -- Stewart & Stevenson
Services, Inc. (NYSE:SVC) today announced that the company has
entered into a definitive agreement to sell substantially all of
the operating assets and business of its Power Products Division
headquartered in Houston, Texas, to Mr. Hushang Ansary, a prominent
Houston oil industry entrepreneur and philanthropist. Total cash
consideration for the acquired assets will be approximately $180
million, subject to adjustment based on the actual assets delivered
at closing. Max L. Lukens, Stewart & Stevenson's President and
Chief Executive Officer, stated, "We are pleased to have entered
into this agreement with Mr. Ansary. Stewart & Stevenson is
proud of the efforts of the highly-experienced Power Products
employees led by Don Kyle and his team, and we are confident that
these hard-working and dedicated employees will be a valuable
addition to the buyer." The Power Products segment distributes,
manufactures and services specialty power equipment and provides
replacement parts and materials, serving customers in the
transportation, marine, construction, oilfield, power generation
and material handling industries in multiple locations in the
United States, Venezuela and Colombia. The sale is subject to
receipt of required regulatory and third party consents and other
customary conditions and is expected to close by the end of the
company's fiscal year. The Power Products Division will be
reflected as a discontinued operation in the company's third
quarter 2005 financial results. Merrill Lynch & Co. served as
exclusive financial advisor to the company for this transaction.
Mr. Lukens added, "Upon completion of today's announced sale of our
Power Products segment and the pending sale of our Engineered
Products business announced previously, Stewart & Stevenson
becomes a single-focused manufacturer of tactical military vehicles
and related products. Management and the Board are confident that
our industry-leading expertise in the manufacture of tactical
vehicles, our broad product portfolio, our technical capabilities,
and our strong balance sheet uniquely position us to take advantage
of opportunities that may arise aimed at maximizing shareholder
value." Stewart & Stevenson has produced over 29,000 Family of
Medium Tactical Vehicles (FMTV) for the U.S. Army and others from
its state-of-the-art facility in Sealy, Texas. The FMTV, which
includes 2.5-Ton, 5-Ton and 10-Ton trucks in more than 15 active
variants, has become the platform of choice for the U.S. Army. In
April 2005, Stewart & Stevenson widened its military product
range to include the 4x4 and 6x6 Pinzgauer all-terrain vehicle,
through its acquisition of Automotive Technik Holdings Limited.
Stewart & Stevenson also produces Low Signature Armored Cabs
(LSAC) for the FMTV, which protect the soldier in the field of
battle. In September 2003, the company began a strategic review of
all of its primary businesses in an effort to identify and
implement necessary actions to enhance value for its shareholders.
Since that time, the company has exited the turnkey engineering,
procurement and construction activities of the Distributed Energy
Solutions segment; implemented numerous actions in the Power
Products segment aimed at improving profitability, sold the Airline
Products business, and currently have the sale of Engineered
Products and Power Products under contract. In addition to widening
the product offering of the Tactical Vehicle Systems segment by
acquiring the Pinzgauer light tactical vehicle line, the company is
expanding the capacity of that segment at its Sealy location in
order to deliver increased orders to the U.S. Army. The company
will continue its process of identifying and implementing actions
to enhance value for the shareholders and will report on progress
in this regard as results are known. The company will comment
further on the details of today's announcement in its upcoming
third quarter conference call which is anticipated to take place in
the first week of December. This press release contains
forward-looking statements that are based on management's current
expectations, estimates, and projections. These statements are not
guarantees of future performance and involve a number of risks,
uncertainties and assumptions and are made pursuant to the Safe
Harbor Provisions of the Private Securities Litigation Reform Act
of 1995. Many factors, including those discussed more fully
elsewhere in this release and in the company's filings with the
Securities and Exchange Commission, particularly its latest annual
report on Form 10-K, as well as others, could cause results to
differ materially from those stated. These factors include, but are
not limited to, risks of dependence on government and failure to
obtain new government contracts, inherent risks of government
contracts, risks of supply interruptions to Tactical Vehicle
Systems segment, risks associated with Distributed Energy Solutions
segment, risks of fixed-price contracts, risks as to rising steel
prices, risks as to cost controls, risks of general economic
conditions, risks of oil and gas industry economic conditions,
risks as to distributorships, risks as to licenses, risk of
competition, risks relating to technology, risks as to terrorist
attacks on the U.S. and their impact on the U.S. economy, risks
relating to personnel, risks of claims and litigation, risks of
product defects, risks as to foreign sales and global trade
matters, risks as to acquisitions and restructuring activities,
risks as to currency fluctuations, risks as to environmental and
safety matters, and credit risks all as more specifically outlined
in the company's latest annual report on Form 10-K. In addition,
such forward-looking statements could be affected by general
industry and market conditions and growth rates, general domestic
and international conditions including interest rates, inflation
and currency exchange rates and other future factors. Actual
outcomes and results may differ materially from what is expressed
or forecasted in such forward- looking statements. DATASOURCE:
Stewart & Stevenson Services, Inc. CONTACT: John Simmons,
Sr.V.P., CFO, Treasurer of Stewart & Stevenson Services, Inc.,
+1-713-868-7700 Web site: http://www.ssss.com/
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