CPYJ - CDC Systems Inc. Updates Press Releases
Business Editors
DALLAS--(BUSINESS WIRE)--Oct. 25, 2004--CDC Systems Inc. (Pink
Sheets:CPYJ), a Delaware corporation (the "Company"), announced on
Oct. 22, 2004 that it intended to review its prior press releases to
determine their accuracy and completeness. In an ongoing effort to
provide more complete information, the Company is issuing this updated
press release.
In a press release dated Sept. 28, 2004, the Company announced
that in November 2004, it would begin receiving $1,114,000 in annual
revenues from 55 compressors which have been designed to the CDC
specifications and which according to its press release dated Sept.
29, 2004, represents $4,100,000 in assets deployed in the field. To
clarify, CDC entered into an Option Agreement on Sept. 28, 2004, to
acquire a gas compression equipment company with primary business
operations in New Mexico from a third party (the "Third Party"). Mr.
David Ball, an incoming vice president and father of Shelby Ball, our
president, has a long-term ongoing relationship with the owner of the
Third Party and has worked extensively with the owner to develop the
design specifications to which approximately 50 of the 55 compressor
systems adhere. The terms of the Option Agreement with the Third Party
provide for a purchase price of $3,134,160 and the continued
employment of its president/owner pursuant to a minimum two-year
employment contract. The revenues and assets referenced in the Sept.
28, 2004 and Sept. 29, 2004, press releases are revenues and assets
that would be generated from the 55 compressors. These revenues and
assets would become revenues and assets of CDC upon the completion of
the acquisition. Management is in the process of seeking debt
financing to complete this acquisition. In the event the Company is
unsuccessful in obtaining the required financing, then it intends to
attempt to renegotiate the terms of the Option Agreement.
Additionally, on Sept. 29, 2004, the Company announced that it had
been approved for a $15,000,000 loan. To expand upon that press
release, the terms of the loan require an advance escrow payment of
$400,000. The loan provides for the funding to occur in three phases,
with an initial funding of $7,000,000 and two subsequent potential
draws of $4,000,000 each, with an interest rate of 6.5%, and up to a
10-year repayment schedule. The loan would be secured by the assets of
CDC. The term sheet for the loan also reflects that the initial
funding should occur during the week of Oct. 25, 2004. Management is
currently evaluating this loan commitment and the proposed documents
underlying the loan with outside counsel. Management is meeting this
week with representatives of the lender regarding this transaction.
The Company has not determined whether it will seek an extension on
this loan commitment as it will not be completed this week, or whether
it will pursue the funding of the loan or seek alternative financing.
On Oct. 4, 2004, the Company announced that Seago Operating had
decided to select CDC Systems to be their preferred natural gas
compressor supplier, adding annual revenue potential of $350,000 for
the Company. This press release also contained expected annual
revenues rising to over $2,500,000. On Oct. 5, 2004, the Company
announced an agreement with Strawn Oil under which Strawn Oil selected
CDC as their preferred natural gas compressor supplier which would
increase its expected annual revenues to $2,764,000. To clarify these
press releases, the expected annual revenues are based partially upon
the purchase of the Third Party and the completion of other CDC
projects and agreements, which includes Seago Operating and Strawn
Oil. Absent the completion of the acquisition or the completion of
other CDC projects and agreements, the Company may not receive these
total revenues.
On Oct. 11, 2004, the Company announced that CDC Systems provides
compressor systems that make low producing natural gas wells gain
production increases from 40 to 90%, and, that in some cases, a 200%
increase or larger had been achieved. To clarify, these increases are
based partially upon the results from wells which have utilized
compressors designed to meet CDC specifications which enable marginal
(barely profitable) and non-profitable natural gas wells to produce
more volume cost effectively and efficiently. Most of the compressor
systems referenced in the Oct. 11, 2004 press release are
owned/operated by the Third Party while some are owned by other
independent gas compressor leasing companies. While the Company
believes these gains in production can be achieved on other wells, no
assurance can be given that other wells will achieve similar results.
In a separate press release dated Oct. 11, 2004, the Company
announced that it had been asked to start building 10 CDC L1-XL
compressors which would ultimately add $426,000 in annual revenues. To
clarify the press release, the Third Party engaged in discussions with
representatives of several natural gas companies who expressed their
need for 10 large compressors which meet CDC specifications and
indicated a willingness to lease them if constructed. Any anticipated
revenues for CDC would be received only upon the acquisition of the
Third Party.
On Oct. 14, 2004, the Company announced that David Ball would
become V.P. of Operations as of Nov. 8, 2004. To expand upon this
announcement, David Ball is the father of Shelby Ball, the Company's
president.
The Company is continuing to review its prior disclosures and may
issue additional clarifying press releases if necessary to ensure the
accuracy of the information available to the investing public.
Safe Harbor statement: This release contains "forward-looking
statements." Statements describing objectives or goals or the
Company's future plans are also forward-looking statements and are
subject to certain risks and uncertainties, including the financial
performance of the Company, ability to obtain financing, the outcome
of the current SEC inquiry and market valuations of its stock, which
could cause actual results to differ materially from those
anticipated.
For more information about CDC Systems Inc. go to
www.cdc-systems.com
--30--AA/ho*
CONTACT: Patrick Arnett, Consultant
Patrick Arnett, 281-999-7721
KEYWORD: DELAWARE TEXAS
INDUSTRY KEYWORD: OIL/GAS ENERGY BANKING MERGERS/ACQ
SOURCE: CDC Systems Inc.
Copyright Business Wire 2004
Oct-25-2004 19:10 GMT
Symbols:
US;CPYJ
Source BW Business Wire
Categories:
MST/I/BNK MST/I/OIL MST/I/OIS MST/L/EN MST/R/US/DE MST/R/US/TX
MST/S/MRG TGT/BWN
