Sells 6.9 Million Shares of Common Stock
Stores Continue to Be Open for Business as Usual
Mark J. Wattles Named New Chairman of the Board
DENVER, Jan. 11 /PRNewswire-FirstCall/ -- Ultimate Electronics, Inc.
(Nasdaq: ULTEE) today announced that in order to provide it with the necessary
time to complete an operational and financial restructuring, it has
voluntarily filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
Concurrently, the Company announced that it has entered into a Stock Purchase
Agreement with Mark Wattles Enterprises, LLC ("Wattles") to purchase
6.85 million shares of Company common stock for $4.4 million and a two-year
Option Agreement with Wattles to purchase 1.85 million shares of Company
common stock for $1.2 million. The Company announced that it has received a
commitment for up to $113 million in debtor-in-possession from Wells Fargo
Retail Finance and $5.6 million in debtor-in-possession financing from
Wattles.
The Company said today's filing in U.S. Bankruptcy Court for the District
of Delaware will allow it to continue business operations while the Company
works with Mr. Wattles to formulate the restructuring plan. The post-petition
financing, which is subject to Bankruptcy Court approval, is expected to
provide the Company with funding to support its post-petition trade and
employee obligations, as well as the Company's ongoing operating needs during
the restructuring process.
In addition, in support of the transaction, the Company's founder and
Chairman of the Board, William J. Pearse, has entered into a two-year Option
Agreement to sell 1.8 million shares of Company common stock to Wattles with
an exercise price of the lower of $.65 or the average closing stock price for
the five-day period preceding the date of exercise and a Voting Agreement to
allow Wattles to vote the shares that are subject to the option. Various
Pearse family trusts have also entered into a Voting Agreement with respect to
their shares of Company common stock to allow Wattles to vote their shares.
Pursuant to the terms of the Stock Purchase Agreement, all of the Company's
directors, including Mr. Pearse, have resigned from the Company's Board of
Directors effective as of the closing of the transaction, which occurred
earlier today, and Mark J. Wattles has been named the Chairman of the Board.
"After weighing all available alternatives, we believe this is the best
solution for Ultimate to remain a viable business going forward," said Dave
Workman, Ultimate Electronics' President and Chief Executive Officer. "We
welcome the significant retail experience and resources that Mr. Wattles
brings to our current situation. We look forward to working with him as we
position the company for future profitability."
"As a retailer, I've always admired the Ultimate Electronics and
Soundtrack chains," said Mark J. Wattles, the Company's new Chairman of the
Board. "I'm excited to be part of this company's future and am committed to
seeing it return to the growth company it was."
In conjunction with today's filing, the Company filed a variety of "first
day motions" to support its employees, vendors, customers and other
stakeholders; to obtain interim financing authority and maintain existing cash
management programs; to retain legal, financial and other professionals; to
support the company's reorganization case; and for other relief. The Company
expects that during the restructuring process, vendors, suppliers and other
business partners will be paid under normal terms for goods and services
provided during the reorganization.
During this process, the Company expects to continue to provide the same
high-quality goods and services as it has in the past. All stores are
currently open and serving customers. In its first day motions, the Company
has requested authority from the Bankruptcy Court to continue to honor its
customer service policies, such as returns, exchanges, credits and layaway
programs at each store location. Further, the Company has requested authority
from the Bankruptcy Court to continue to pay employee wages and salaries, to
offer the same medical, dental, life insurance, disability and other benefits
and to accrue vacation time without interruption.
Additional information on today's announcement is available on the
Company's website at http://www.ultimatelectronics.com. Details regarding the filing
can be found at http://www.deb.uscourts.gov or http://www.kccllc.net/ultimate.
Safe Harbor Statement
Certain statements made in this news release are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are made based upon management's current
expectations and beliefs concerning future developments and their potential
effects upon the Company. These forward-looking statements include statements
regarding the Company's expectations concerning the bankruptcy process and the
continuation of its day to day operations and payments to vendors and
employees in the ordinary course. Actual results may differ materially from
those included in the forward-looking statements due to a number of factors,
including, but not limited to, the following: the ability of the Company to
continue as a going concern; the ability of the Company to obtain approval of
the DIP facility; court approval of the Company's first day papers and other
motions prosecuted by it from time to time; the ability of the Company to
develop, prosecute, confirm and consummate one or more plans of reorganization
with respect to the Chapter 11 cases; risks associated with third parties
seeking and obtaining court approval to terminate or shorten the exclusivity
period for the Company to propose and confirm one or more plans of
reorganization, for the appointment of a Chapter 11 trustee or to convert the
cases to chapter 7 cases; the ability of the Company to obtain trade credit,
and shipments and terms with vendors and service providers for current orders;
the Company's ability to maintain contracts that are critical to its
operations; potential adverse developments with respect to the Company's
liquidity or results of operations; the ability to fund and execute its
business plan; the ability to attract, retain and compensate key executives
and associates; the ability of the Company to attract and retain customers;
and other risk factors identified in the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 2004, the Company's Quarterly Report on
Form 10-Q for the quarter ended October 31, 2004 and other filings with the
Securities and Exchange Commission. There can be no assurance that future
developments affecting the Company will be those anticipated by management.
The Company disclaims any obligation to update or revise any of the
forward-looking statements that are in this news release.
About Ultimate Electronics, Inc. (Nasdaq: ULTEE)
Ultimate Electronics is a leading specialty retailer of home entertainment
and consumer electronics products in 14 states. The Company operates
65 stores, including 54 stores in Arizona, Idaho, Illinois, Iowa, Kansas,
Minnesota, Missouri, Nevada, New Mexico, Oklahoma, South Dakota, Texas and
Utah under the trade name Ultimate Electronics(R) and 11 stores in Colorado
under the trade name SoundTrack(R). In addition, the Company operates Fast
Trak Inc., an independent electronics repair company and a wholly owned
subsidiary of Ultimate Electronics.
For further information, please contact: Investor Relations Department,
Ultimate Electronics, Inc. at 303-412-2500 (ext. 2640) or 1-800-260-2660
(ext. 2640) or e-mail shareholder@ulte.com.
SOURCE Ultimate Electronics, Inc.
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Related links:
http://www.ultimateelectronics.com
Company News On-Call:
http://www.prnewswire.com/comp/877054.html
CONTACT:
Investor Relations Department of Ultimate
Electronics, Inc., +1-303-412-2500, ext. 2640, or
+1-800-260-2660, ext. 2640, shareholder@ulte.com
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