ALJ Regional Holdings Inc. (fka ALJJ)

[Enterprising Investor]

ALJ Regional Holdings Announces Entry Into Definitive Agreement To Acquire Las Vegas Based Carpets N' More (4/08/14)

LAS VEGAS, April 8, 2014 /PRNewswire/ -- ALJ Regional Holdings, Inc. (OTC Markets: ALJJ) ("ALJ") announced that it has entered into a Purchase and Sale Agreement to acquire all of the outstanding equity securities of Floors-N-More, LLC, dba, Carpets N' More ("Carpets"). Carpets is the largest floor cover retailer in Las Vegas and a provider of countertops, cabinets, window coverings and garage and closet organizers, with five retail locations. The acquisition is conditioned upon the re-issuance by the Nevada State Contractors Board of certain licenses to Carpets, which are expected to occur in the near future.

The aggregate consideration for the acquisition of all of Carpets was $5.47 million, including expenses of the transaction, payable by ALJ in cash to the seller. Concurrently with the closing, Carpets will be recapitalized in a transaction resulting in ALJ owning 87.94% (basic) or 82.63% (fully diluted) and Mr. Chesin, the Chief Executive Officer of Carpets, owning 12.06% (basic) or 17.37% (fully diluted) of Carpets.

ALJ is funding the acquisition through existing cash, the sale of 1.4 million shares of its common stock in two separate private placements at a price of $1.60 per share, and the incurrence of $2.0 million in debt from Libra Securities Holdings, LLC, a related party. The Promissory Note, which was approved by the disinterested directors on the Board of Directors of ALJ, carries a 5-year maturity with a balloon payment due April 2019 and a 10% annual interest rate. The note may be pre-paid at any time without penalty. Interest is payable quarterly but may be capitalized by ALJ at its election.

Carpets will continue under the leadership of Mr. Chesin and the remainder of its management team. "We are really excited to add Carpets N' More to our portfolio of companies at ALJ. They fit the mold of our target acquisitions, with an experienced management team and growing EBITDA. We are also excited to retain Steve as Carpets' CEO, and partner with him through his direct investment in Carpets," said Jess Ravich, ALJ's Executive Chairman. Steve Chesin added, "This is a great fit for Carpets. We are experiencing a rebound in the housing market in Las Vegas and are looking forward to working with ALJ in the future."

ALJ was advised by Shearman & Sterling LLP in these transactions.

http://www.prnewswire.com/news-releases/alj-regional-holdings-announces-entry-into-definitive-agreement-to-acquire-las-vegas-based-carpets-n-more-254381081.html