Global Diversified Industries Inc (GDIV)

[mike306oh]

***The Article mentioned in today's PR:

http://www.pe.com/business/local/stories/PE_Biz_modular02.a10c3.html

Global buys Aurora assets
07:58 PM PST on Tuesday, March 1, 2005

By JONATHAN SHIKES / The Press-Enterprise

Changes within California's portable-classroom industry continued Tuesday as a Chowchilla firm closed a deal to buy many of the assets of Moreno Valley-based Aurora Modular Industries, which folded last August and filed for bankruptcy.

Global Diversified Industries, one of several medium-size modular-building manufacturers in the state, also bought the rights to Aurora's well-known name and blueprints, said Global Diversified's/ chief executive Phil Hamilton in a recent interview.

"They were the Cadillac of the industry," Hamilton said by phone. "We plan to switch to their brand. Our current product is good, but this gives us a higher line."

Global Diversified, which operates a 100,000-square-foot factory in Chowchilla, a city on Highway 99 northwest of Fresno, will triple its production with the acquisition and could also double or even triple its yearly revenues, which were about $12 million in 2004, Hamilton added.

Aurora had been one of the state's largest manufacturers of prefabricated classrooms until it unexpectedly closed its doors and laid off all of its workers, leaving behind millions of dollars in unpaid debts and numerous unfinished products.

In October, a U.S. Bankruptcy Court trustee raised $1.6 million by auctioning Aurora's assets, said attorney Frank Adams. Global Diversified was the largest buyer, taking home raw materials, equipment, tools and unfinished buildings.

In late January, a second portable-classroom maker, Temecula-based Turnkey Inc., locked its doors and filed paperwork in U.S. District Court to dissolve itself.

The company's creditors may eventually force Turnkey into bankruptcy as well.

Both Aurora and Turnkey built classrooms, cafeterias, gyms, restrooms and other buildings for school districts throughout California.

Their collapse has left behind angry subcontractors and cautious school districts, but it has also created business opportunities for other manufacturers, said Steve Cary, assistant superintendent for business services at Upland Unified School District.

The state's largest portable-classroom builder, Perris-based Modtech Holdings, "has been able to grow quite a bit in picking up Aurora business," Cary said by phone.

Both Modtech and Global Diversified bid on Aurora's incomplete work at Upland Unified, with Modtech getting the job.

The major industry issues have been the costs of raw materials like concrete and lumber, which jumped dramatically in 2004, as well as increasing labor costs.

"What I'm hearing from my peers is that this industry may be dying because of all these costs," Cary said.

"It will be interesting to see what happens."

Reach Jonathan Shikes at [phone] or [e-mail]