Wells-Gardner Would Become the Leading Global Supplier of LCDs and Monitors to
the Worldwide Gaming Market
CHICAGO, March 30 /PRNewswire-FirstCall/ -- Wells-Gardner Electronics
Corporation (Amex: WGA) announced that it has signed a nonbinding letter of
intent to purchase all of the outstanding stock of Pentranic Group Ltd. of
Livingston, Scotland, a manufacturer of CRT monitors and LCDs for sale to the
gaming and amusement markets in Europe. The terms of the transaction have not
been disclosed. The transaction is subject to due diligence, negotiation of a
definitive agreement and the approval of the Wells-Gardner Board of Directors,
as well as to Pentranic Group's disposition or spin-off of its power supply
business and real estate assets, which will not be included in the purchase.
Assuming satisfaction of these conditions, Wells-Gardner expects the
transaction to close within approximately 90 days.
"This acquisition is a continuation of our long-term strategy through
geographic expansion and would make Wells-Gardner the leading global supplier
of LCDs and color video monitors to the worldwide gaming market," said Anthony
Spier, Wells-Gardner's Chairman and Chief Executive Officer. "The 2004
revenue of Pentranic Group's LCD and monitor business was approximately
$10 million, which would increase Wells-Gardner's revenue to in excess of
$60 million on a pro forma basis. It would also give us a major presence in
Europe and geographically position us closer to the rapidly expanding Russian
and Eastern European gaming markets, allowing us to pursue those markets more
aggressively. Many analysts predict Russia will be the fastest growing slot
machine market in the world in the coming years."
"This acquisition would combine the largest U.S.-based and the largest
European-based suppliers of LCDs and monitors to the global gaming and
amusement markets. Our 2 companies have very little customer overlap.
Consequently this combination would represent almost 100 percent incremental
sales," noted Asif Habib, Chairman of Pentranic Group Ltd. "The joint company
would have production in Taiwan, Malaysia, the United States and the United
Kingdom, sales offices in Chicago, Las Vegas, Atlantic City, Miami, London,
Edinburgh and Sydney and service centers in over 30 locations throughout the
world. It would make Wells-Gardner the leading supplier of LCDs and monitors
to the gaming industry worldwide and would allow us to service our customers
better than any of our competitors."
Merriman Curhan Ford & Co., of San Francisco, California, is acting as
financial advisor to Wells-Gardner in the transaction.
Quarterly update:
The Company also announced today that the 1st quarter 2005 results will be
impacted by certain non-recurring items along with the previously disclosed
lower margin start up of LCD sales, resulting in a modest loss for the
quarter. The Company will have charges of approximately $300,000 for the
separation and consulting agreement of a former officer along with a write off
of an outstanding receivable of a long-time non-gaming customer who ceased
operations in March 2005. In addition, approximately $1 million in sales to a
major gaming customer were delayed into the 2nd quarter 2005 due to the
customer changing one of its manufacturing locations. As previously discussed
and referenced in the Company's recently filed 10K, the initial sales of LCDs
are resulting in low margins. The Company expects margin expansion to ramp up
in the 2nd half of the year as efficiencies improve and sales increase.
The Company expects a rebound in the 2nd quarter with sales rising about
20% from the 1st quarter and more than 10% from the strong 4th quarter of
2004. Management anticipates sales to their major gaming customers will
increase considerably for both the traditional CRT monitors and the new LCDs.
The Company will further update investors on the prospects for the 2nd quarter
2005 and full year in the quarterly earnings release.
Founded in 1925, Wells-Gardner Electronics Corporation is a distributor
and manufacturer of color video monitors and other related distribution
products for a variety of markets including, but not limited to, gaming
machine manufacturers, casinos, coin-operated video game manufacturers and
other display integrators. During 2000, the Company formed a 50/50 joint
venture named Wells-Eastern Asia Displays ("WEA") to manufacture video
monitors in Malaysia. In addition, the Company acquired American Gaming &
Electronics, Inc. ("AGE"), a leading parts distributor to the gaming markets,
which sells parts and services to over 700 casinos in North America with
offices in Las Vegas, Nevada, Egg Harbor Township, New Jersey and McCook,
Illinois. AGE also sells refurbished gaming machines on a global basis as
well as installs and services some brands of new gaming machines in casinos in
North America.
This press release contains forward-looking statements within the meaning
of the federal securities laws. Those statements include statements regarding
the intent, belief or expectations of the Company and its management. Readers
are cautioned that the forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties, and that actual
results could differ materially from those expressed in any forward-looking
statement. Important factors that could cause actual results to differ
materially from those indicated by such forward-looking statements include,
but are not limited to, development of competing technologies, availability of
adequate credit, interruption or loss of supply from key suppliers, our
ability to increase production at our Malaysian joint venture, increased
competition, the regulatory process and regulatory and legislative changes
affecting the gaming industry. Wells-Gardner assumes no obligation to update
the information contained in this release to reflect events or circumstances
after the date of this release or to reflect the occurrence of unanticipated
events. A copy of Wells-Gardner's Annual Report and Quarterly Report can be
obtained without charge by request to James Winikates, Wells-Gardner
Electronics Corporation, 9500 West 55th Street, Suite A, McCook, Illinois
60525-3605. For additional investor information, please contact Alan Woinski
- Gaming Venture Corp., USA at (201) 599-8484.
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SOURCE Wells-Gardner Electronics Corporation
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Related links:
http://www.wgec.com
CONTACT:
Alan Woinski of Gaming Venture Corp., USA,
+1-201-599-8484
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