West 49 expands retail network by two strategic businesses acquisition
30 Sep '05
4 min read
Under the terms of the agreement to acquire Board Zone Inc., the Company has agreed to pay $1 million in cash and 250,000 common shares of West 49 upon closing. In addition, the Company will issue up to a maximum of 750,000 shares to the principals of Board Zone Inc. upon the successful achievement of certain operational targets over the next several years. Based on the initial outlay of cash and shares, the acquisition is valued at approximately $1.425 million. The management of West 49 estimates Board Zone's annualized revenue to be $2.5 million generating operating income(xx) of $0.2 million.
Mr. Baio included that in both scenarios, they have ensured that the entrepreneurs who have successfully built these businesses will continue to have a vested interest in the overall success of West 49 and they will remain personally involved in future operations. Their management team and Board look forward to working with all of their talented entrepreneurs to create truly national brands that will continue to capitalize on the growth of the action sports industry.
Currently, West 49 has $7.0 million in total debt including capital leases and the current portion of long-term debt, with additional borrowing capacity of $7.8 million across the Company's credit facilities. The Company expects to start recognizing operating profit from these acquisitions beginning in its fourth fiscal quarter. Historically, the third and fourth fiscal periods are the Company's strongest as they include the Back-to-School and Christmas seasons.
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