COLUMBIA, Md., March 22 /PRNewswire-FirstCall/ -- GSE Systems, Inc. (GSE)
(Amex: GVP), a leading global provider of real-time simulation and process
control solutions for the energy and process industries, announced that
Avantium International B.V. has recently completed a private placement round
of financing valued at euro 31 million (U.S. $27.6 million). The new capital
injection included the conversion of euro 11 million (U.S. $9.8 million) of
debt to equity, with the balance coming from new investors to Avantium:
Cazenove Private Equity, EDB Ventures, MVM, Sanders Morris Harris, and Eastman
Chemical Company.
As previously disclosed, GSE acquired its investment in Avantium through a
software licensing arrangement with Avantium in February 2000 and the sale of
the Company's VirtualPlant assets and technology to Avantium in March 2001.
GSE did not participate in this round of Avantium financing, and as such GSE's
interest in Avantium was diluted from 19.2% to approximately 6.1%. In
addition, this private placement transaction was consummated at a share price
significantly below the carrying value per share reflected in GSE's financial
statements for the Avantium investment. Accordingly, GSE will take a
$4.6 million, non-cash, pre-tax charge in the fourth quarter of 2001 to write-
down the Avantium investment to its current estimated fair value, based on the
pricing of the private placement.
According to Jerry Jen, GSE's President and Chief Operating Officer,
"Despite the write-down, GSE expects to have positive earnings for the year as
our process automation business rebounded nicely in 2001. It is also
important to note that the write-down is a non-cash event, and does not impact
our liquidity. While this transaction does not provide significant tax
benefits in 2001, we will be able to utilize available loss carry forwards in
the future. Audited results will be published next week."
Mr. Jen also said: "Avantium continues to perform to its business plan,
and the additional capital will further enable Avantium to grow and develop
its proprietary high throughput technology. We believe that our investment in
Avantium will be recovered in the future. We chose not to participate in this
round of financing, instead focusing our resources on growing GSE's core
businesses of power plant simulation and process automation, and exploring new
markets in power and process plant security."
GSE Systems, Inc. develops and delivers business and technology solutions
by applying process control, simulation software, systems and services to the
energy, process and manufacturing industries worldwide. The Company's
products are used in the following industries: specialty chemical, food and
beverage, petroleum refining, pharmaceutical, and fossil and nuclear power
generation. GSE Systems is headquartered in Columbia, Maryland with offices
in Alabama, Georgia, Louisiana, Maryland, North and South Carolina,
Pennsylvania, and Texas, and its global locations include offices in Japan and
Sweden. Information about GSE Systems is available via the Internet's World
Wide Web at http://www.gses.com .
This news release contains forward-looking statements that involve risks
and uncertainties. The actual future results of GSE Systems may differ
materially due to a number of factors, including but not limited to delays in
introduction of products or enhancements, size and timing of individual
orders, rapid technological changes, market acceptance of new products and
competition. These and other factors are more fully discussed in the
Company's annual report on Form 10-K for the year ended December 31, 2000 as
filed with the Securities and Exchange Commission.
SOURCE GSE Systems, Inc.
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Related links:
http://www.gses.com
CONTACT:
Gill R. Grady, Senior Vice President of GSE
Systems, +1-410-772-3500, or general info, Marilynn Meek,
+1-212-445-8451, or analyst info, Susan Garland, +1-212-445-8458,
both of FRB Weber Shandwick
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