SYNTREX ANNOUNCES AGREEMENT WITH NORTHCOTE PARTNERS
SYNTREX ANNOUNCES AGREEMENT WITH NORTHCOTE PARTNERS EATONTOWN, N.J., Dec. 17 /PRNewswire/ -- Syntrex Incorporated
(NASDAQ: STRX) announced today that it has entered into an agreement with Northcote Partners, a New York based investment partnership, pursuant to which Northcote has agreed to acquire from the company either a controlling interest in Syntrex capital stock or, alternatively, all of the assets and business of Syntrex, through a plan of reorganization which will be subject to approval by the U.S. Bankruptcy Court. Syntrex filed for protection under Chapter 11 of the U.S. Bankruptcy Code on June 28, 1991 and has been operating as a debtor-in-possession since that date. The agreement obliges Northcote to provide, among other things, $8.0 million in cash or credit facilities that would be applied to reorganize Syntrex. A specific plan of reorganization has not yet been formulated; however, the management of Syntrex and Northcote have agreed to work together to develop a plan that will satisfy creditors and administrative expenses, as well as provide additional working capital for the reorganized company.
The agreement with Northcote is subject to several conditions, including approval by the U.S. Bankruptcy Court, Northcote obtaining financing that it requires to consummate the transaction, satisfactory completion of Northcote's due diligence, an acceptable plan of reorganization and engagement agreements with two executive officers of Syntrex. Dan Sinnott, chairman and CEO of Syntrex, said, "although there are several conditions which will have to be satisfied before Syntrex can emerge from Chapter 11, the agreement with Northcote provides a starting point for resolving claims of creditors and having a plan of reorganization approved." Sinnott added, "representatives of Northcote and members of the Syntrex management team will negotiate with the company's creditors with a view toward developing a plan of reorganization. Although a substantial amount of work must be done, we are cautiously optimistic that an acceptable plan can be developed and submitted for approval early in 1992. Syntrex is entitled to terminate the agreement, if Northcote has not obtained binding commitments for its required financing prior to the expiration of the period specified in the agreement for submission of a plan of reorganization. Northcote can terminate the agreement at any time prior to final approval of the agreement with Northcote by the Bankruptcy Court." Under its agreement with Northcote, Syntrex may not actively pursue the sale of its business for a specified period of time; however, offers may be submitted by other parties to acquire Syntrex which may be more favorable than the Northcote transaction. If an alternate more favorable offer is accepted, Northcote would be entitled to a breakup fee under certain circumstances. Syntrex can continue to provide information on the company to these other parties. There can be no assurance that the conditions to close will be satisfied or that the court will approve a plan of reorganization authorizing the Northcote transaction to close or that the plan would provide Syntrex's existing shareholders with any continuing interest in the company or other benefit. Sinnott stated, "while operating in Chapter 11, the company has taken significant measures to stabilize the company's performance and has endeavored to maintain customer confidence by continuing to deliver high quality network system products and professional services." The company has taken action in two areas that have resulted in substantial savings. Reductions in occupied office space in both Eatontown and field offices have resulted in significant rent and utility savings. Other expense savings were made mostly through reductions in manpower, as the company took actions to match resources to lower revenue levels. Results for the months of September, October and November 1991 show improvement in operations. Sinnott summarized Syntrex's position as follows: "We have operated on a business as usual basis for the past 5-1/2 months. We believe that going forward the company is better positioned to continue its improvement in operating results as a result of the reduction in expense levels. The company's creditors have consented to the use of cash collateral through a series of court orders, the most current of which extends through Jan. 17, 1992. The company believes it has sufficient liquidity to fund operations through the current cash collateral order." As a result of the bankruptcy filing, the audit of the company's operating results for the fiscal year ended April 30, 1991 has not been completed and final operating results and other financial information for that fiscal year and subsequent interim periods is not available. However, the company has complied with all requirements of the Bankruptcy Code and has submitted monthly financial information to the court. The Bankruptcy Court has recently approved the completion of the audit and operating results and other financial information will be released upon completion of the audit. Syntrex is a national Network Systems Integrator. The company designs, implements and supports PC-based networks using Novell, NetWare, Banyan VINES, and Microsoft LAN Manager operating systems. With system engineering, service and sales professionals in 31 cities, the company ranked as the sixth largest Network Systems Integrator in 1990, according to LAN magazine. -0- 12/17/91 /CONTACT: Lou Miceli of Syntrex, 908-542-1500 (STRX) CO: Syntrex Incorporated ST: New Jersey IN: CPR SU: FC-OS -- NY072 -- 3113 12/17/91 16:28 EST
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|Date:||Dec 17, 1991|
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