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Gales Industries Incorporated (OTCBB:GLDS) today announced that it
has completed the acquisition of Sigma Metals, Inc., a strategic
metals distributor based in Deer Park, Long Island, NY. Now a
wholly-owned subsidiary, Sigma will operate as a new platform company
for Gales. Sigma had trailing 12-month revenues of approximately $18
million. Sigma will continue to operate from its existing location and
has retained all key management and personnel in accordance with the
purchase agreement.
"We are very pleased to have completed our second acquisition.
With the addition of Sigma Metals, Gales Industries now has combined
trailing revenues in excess of $50 million," stated Peter D.
Rettaliata, Gales' President and Chief Executive Officer. "More
important, Sigma Metals brings numerous benefits to Gales as it
relates to our pursuit of growth, margin enhancement, and expanded
services to our customers. Simply, we are both more profitable and
more relevant to our customers. In conjunction with Air Industries
Machining Corp., our primary platform business engaged in the
manufacturing of flight safety and other critical aviation components,
Sigma Metals establishes a second platform for dealing with the supply
of a major cost component, specialty metals."
The purchase price to acquire Sigma Metals was $5.0 million plus
an amount, yet to be finalized, equal to Sigma's earnings for the
period from January 1, 2006 until the date of closing, April 16, 2007.
Approximately $4.3 million of the purchase price was paid in cash and
the balance was paid through a combination of restricted stock and
debt. The debt to the sellers will be adjusted to include, upon
finalization, the amount owed related to Sigma's earnings for the
aforementioned period. At the time of closing, Sigma had approximately
$900,000 in institutional debt and $250,000 due for advances from its
shareholders. Gales is in the process of finalizing an expansion of
its credit arrangements with PNC Bank which will become the primary
lender to Sigma, replacing its current institutional lender.
To facilitate the acquisition, Gales raised approximately $4.9
million in gross proceeds through a private placement of its Series B
Convertible Preferred Stock. This private placement is ongoing and
Gales anticipates raising up to an additional $2.1 million through
this private placement. The Series B Convertible Preferred Stock has
not been and will not be registered under the Securities Act of 1933,
and may not be offered or sold in the United States without
registration and applicable exemption from registration requirements.
In connection with the acquisition, Gales Industries entered into
employment agreements with the principals of Sigma Metals. George
Elkins will continue to serve Sigma Metals as its Chief Executive
Officer, Carole Tate as its President, and Joseph Coonan as its Vice
President.
Sigma Metals is a specialty distributor of strategic metals,
primarily aluminum, stainless steels of various grades, titanium and
other exotic end user specified materials. Sigma's products are sold
to both aerospace/defense contractors as well as commercial accounts
throughout the U.S. and numerous international markets. Customers
include the world's largest aircraft manufacturers, subcontractors,
original equipment manufacturers and various government agencies.
Legal representation for Gales Industries in this transaction was
provided by Eaton & Van Winkle LLP of New York, NY. Legal
representation for Sigma Metals in this transaction was provided by
Berkman, Henoch, Peterson & Peddy, P.C. of Garden City, NY.
ABOUT GALES INDUSTRIES INCORPORATED
Gales Industries Incorporated (OTCBB:GLDS) is a holding company
established to engage in the consolidation of manufacturers,
engineering integrators and related service providers to the
aerospace/defense and commercial aviation industries. The Company is
focused on flight safety and other critical componentry. The Company's
first acquisition was of Air Industries Machining Corp., a leading
aerospace/defense manufacturer and engineering integrator based in Bay
Shore, Long Island, NY. Consolidation opportunities include companies
operating within highly synergistic disciplines of manufacturing,
technical services and strategic products distribution. The Company's
strategy and attendant tactical plan is to execute its consolidation
principally amongst Tier III, IV and V aerospace/defense
subcontractors. Gales offers a tailored exit strategy or management
continuity strategy in exchange for qualified acquisitions, and
targets technically superior middle market organizations with revenues
of up to $100 million annually. Information on the Company and its
products may be found online at www.airindmc.com.
Certain matters discussed in this press release are
'forward-looking statements' intended to qualify for the safe harbors
from liability established by the Private Securities Litigation Reform
Act of 1995. In particular, the Company's statements regarding trends
in the marketplace, firm backlog, projected backlog, potential future
results and acquisitions, are examples of such forward-looking
statements. The forward-looking statements include risks and
uncertainties, including, but not limited to, the timing of projects
due to the variability in size, scope and duration of projects,
estimates, projections and forecasts made by management with respect
to the Company's critical accounting policies, firm backlog, projected
backlog, regulatory delays, government funding and budgets, matters
pertaining to potential and pending acquisitions subject to and after
closings, and other factors, including results of financial audits and
general economic conditions, not within the Company's control. Certain
of the Company's forward looking statements, with the projected
backlog in particular, are formulated based on management's extensive
industry experience and understanding and assessment of industry
trends, customer requirements, and related government spending.
Projected backlog may be subject to variability and may increase or
decrease at any time based on a variety of factors, including but not
limited to modifications of previously released orders, acceleration
of orders under general purchase agreements, etc. The factors
discussed herein and expressed from time to time in the Company's
filings with the Securities and Exchange Commission could cause actual
results and developments to be materially different from those
expressed in or implied by such statements. The forward-looking
statements are made only as of the date of this press release and the
Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or
circumstances.
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