Granahan Mccourt Acquisition Corp. (AMEX:GHN.U)
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Granahan McCourt Acquisition Corp. (AMEX: GHN, GHN.U, GHN.WS) (“Granahan
McCourt”) announced today that it has entered
into a definitive merger agreement with privately-held Pro Brand
International, Inc. (“PBI”),
a leading designer and developer of advanced antenna and RF systems for
the satellite industry, primarily serving Direct Broadcast Satellite (“DBS”)
operators.
PBI’s current management team will remain in
place to run the business following consummation of the acquisition. Mr.
David McCourt will remain Chairman of the Board of Granahan McCourt. It
is anticipated that, upon consummation of the acquisition, Granahan
McCourt will change its name to “Pro Brand
International, Inc.”
David McCourt, President, CEO and Chairman of the Board of Granahan
McCourt, stated, “PBI has built a strong
business in the high-growth DBS satellite sector and is well positioned
to continue to gain market share going forward. A terrific engineering
design and development team with, in my view, some of the most
sophisticated satellite equipment and RF design experience in the
industry, combined with a proven track record in the space, creates a
solid foundation to pursue meaningful growth opportunities. In addition
to providing capital and a public currency, we have partnered with PBI's
existing team to create a multi-pronged growth strategy for this new
platform. We will be focused on executing international expansion,
leveraging PBI’s design capabilities into
adjacent verticals, rolling out additional products, and pursuing
attractive acquisition opportunities in a fragmented industry.”
Mr. Philip Shou, Chief Executive Officer of Pro Brand, added, “We
are very excited to be partnering with Granahan McCourt, as we believe
their extensive operating experience, combined with the strategy we have
developed over the past six months with the Granahan McCourt team, will
take our company to the next level.”
Overview of the Business
Founded in 1983 and headquartered in Marietta, Georgia, PBI is a leading
designer and developer of advanced antenna and RF systems for the
satellite sector, primarily serving DBS providers. PBI serves operators
such as DIRECTV and EchoStar’s Dish Network
in the U.S., Star Choice in Canada and others in the DBS space, and its
engineering team has extensive expertise in related verticals such as
Very Small Aperture Terminals (“VSATs”).
PBI leverages its advanced R&D labs and in-house engineering team to
design complete end-to-end solutions for satellite antenna systems. PBI
and Granahan McCourt have developed a multi-pronged strategy which they
believe will enhance PBI's already-strong growth. PBI expects to be able
to continue to bring to market leading-edge solutions to its existing
and new customers and PBI's engineering excellence, advanced facilities
and existing products and expertise provide many of the capabilities
needed to address adjacent and growing markets such as VSAT. In
addition, PBI has focused principally on the US and anticipates that the
combination with Granahan McCourt will help identify and execute key
geographic expansion opportunities. This, together with opportunities
for consolidation of the satellite equipment sector, which is a
fragmented market, provides meaningful opportunities for further growth
in revenue and net income.
Summary of the Transaction
Under the terms of the merger agreement, Granahan McCourt will acquire
PBI for an aggregate purchase price of $75.0 million, of which $20.0
million will be paid in Granahan McCourt common stock, together with
contingent earnout payments in 2009, 2010, and 2011 if PBI meets certain
performance targets. Most of the common shares issued to PBI in
connection with the transaction will be restricted from sale, hedge or
pledge for up to six months following the closing pursuant to a standard
lockup. Granahan McCourt will fund the acquisition with cash that is
currently held in trust together with new shares to be issued.
The transaction is currently expected to close in the third or fourth
quarter of 2008. The closing of the transaction is subject to customary
closing conditions, including approval of the acquisition agreement by
the stockholders of Granahan McCourt. In addition, the closing is
conditioned on holders of less than 20% of the shares of Granahan
McCourt common stock voting against the acquisition and electing to
convert their Granahan McCourt common stock into cash, as permitted by
the Granahan McCourt certificate of incorporation.
PBI Historical Financial Highlights and 2008 Outlook
In fiscal 2007, total revenues were $132.0 million, a 47% increase from
$89.6 million in fiscal 2006. EBITDA in fiscal 2007 was $14.6 million,
or 11% of revenues, a 79% increase from $8.1 million, or 9% of revenues,
in fiscal 2006. Net income in 2007 was $8.7 million, an 86% increase
from $4.7 million in 2006. PBI has no long term debt and no preferred
stock.
Based on current business trends, total revenues in 2008 are expected to
be approximately $160.0 million, EBITDA approximately $18.0 million and
net income approximately $11.0 million. 2008 revenue, EBITDA and net
income guidance does not include any potential acquisitions.
Conference Call Information
Granahan McCourt will host a conference call to discuss the transaction
at 10:00 a.m. Eastern Time tomorrow, May 1, 2008. Investors may listen
to the call via telephone by dialing (800) 762-9439 (pass code 3875558),
or for international callers, (480) 629-9041. A telephone replay will be
available shortly after the call and can be accessed by dialing (800)
406-7325 (pass code 3875558), or for international callers, (303)
590-3030. The replay will be available until May 15, 2008, at 11:59 p.m.
Eastern Time. The audio presentation and presentation slides will be
webcast live and may be accessed by visiting the GMAC section of the
Granahan McCourt website at www.granahanmccourt.com.
About Granahan McCourt Acquisition Corporation
Granahan McCourt Acquisition Corporation is a blank check company
organized on July 10, 2006 for the purpose of acquiring one or more
assets or operating businesses in the telecommunications and media
industries through a merger, capital stock exchange, asset or stock
acquisition or other similar business combination. Granahan McCourt
Acquisition Corporation does not have significant operations.
Use of Non-GAAP Financial Information
This press release includes a presentation of EBITDA, which is a
non-GAAP financial measure within the meaning of Regulation G
promulgated by the SEC. Granahan McCourt and PBI believe that the
presentation of EBITDA, or earnings before interest, taxes, depreciation
and amortization, serves to enhance the understanding of PBI's financial
performance and helps indicate the ability of PBI's assets to generate
cash sufficient to meet capital expenditure and working capital
requirements and otherwise meet its obligations as they become due. We
have included a reconciliation of EBITDA to PBI's net income calculated
in accordance with GAAP in the accompanying tables. However, EBITDA
should be considered in addition to and not as substitutes for, or
superior to financial measures of financial performance prepared in
accordance with GAAP. PBI's calculation of EBITDA may not be comparable
to similarly titled measures reported by other companies.
Forward-Looking Statements
This press release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. We have
based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are
subject to known and unknown risks, uncertainties and assumptions about
us that may cause our actual results, levels of activity, performance or
achievements to be materially different from any future results, levels
of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as “may,”
“should,” “could,”
“would,” “expect,”
“plan,” “anticipate,”
“believe,” “estimate,”
“continue,” or the
negative of such terms or other similar expressions. Factors that might
cause or contribute to such a discrepancy include, but are not limited
to, those described in our other Securities and Exchange Commission
filings, including the Form 10?K for the
period ended December 31, 2007. These risks and uncertainties also
include risks and uncertainties regarding PBI, including, among other
things, changes in demand for PBI’s products,
PBI’s dependence on significant customers,
the lack of long-term contracts governing PBI’s
customer and supplier relationships, PBI’s
ability to retain its management and key personnel, PBI’s
ability to adequately protect its intellectual property and its
technologies, competition in PBI’s markets,
competitive pricing and continued pricing pressures in the DBS market,
supplier constraints, the introduction of new products and services by
competitors, the ability of PBI to manage costs and maintain production
volumes, conditions in PBI’s industry and
economic conditions generally, PBI's ability to develop and market new
technologies in a competitively advantageous manner, and PBI’s
success at integrating acquired businesses.
Additional Information and Where to Find It
In connection with the proposed merger and required stockholder
approval, Granahan McCourt will file with the SEC a proxy statement
which will be mailed to the stockholders of Granahan McCourt. Granahan
McCourt’s stockholders are urged to read the
proxy statement and other relevant materials when they become available
as they will contain important information about the merger with PBI.
Granahan McCourt’s stockholders will be able
to obtain a free copy of such filings at the Securities and Exchange
Commission’s internet site (http://www.sec.gov).
Copies of such filings can also be obtained, without charge, by
directing a request to Granahan McCourt, 179 Stony Brook Road, Hopewell,
NJ 08525.
Granahan McCourt and its officers and directors may be deemed to have
participated in the solicitation of proxies from Granahan McCourt’s
stockholders in favor of the approval of the merger. Information
concerning Granahan McCourt’s directors and
executive officers is set forth in the publicly filed documents of
Granahan McCourt. Stockholders may obtain more detailed information
regarding the direct and indirect interests of Granahan McCourt and its
directors and executive officers in the merger by reading the
preliminary and definitive proxy statements regarding the merger, which
will be filed with the SEC.
Pro Brand International, Inc. and Subsidiary
Consolidated Statements of Income
YEARS ENDED DECEMBER 31,
2007
2006
REVENUES
$
131,991,807
$
89,626,360
COST OF GOODS SOLD
111,223,276
74,060,923
GROSS PROFIT
20,768,531
15,565,437
OPERATING EXPENSES:
Selling
969,089
521,883
General and administrative
6,849,232
6,233,948
7,818,321
6,755,831
INCOME FROM OPERATIONS
12,950,210
8,809,606
OTHER INCOME (EXPENSE):
Interest expense
(240,642
)
(207,750
)
Loss from settlement with customer
-
(2,170,000
)
Gain on settlement with supplier
800,000
-
Gain (loss) on sale of investments
(183,034
)
-
Loss from sale of fixed assets
(20,857
)
-
Interest income
29,852
77,990
Other income
277,649
706,464
662,968
(1,593,296
)
INCOME BEFORE PROVISION FOR INCOME TAXES
13,613,178
7,216,310
PROVISION FOR INCOME TAXES
4,871,106
2,519,330
NET INCOME
$
8,742,072
$
4,696,980
Pro Brand International, Inc. and Subsidiary
Historical EBITDA Reconciliation
YEARS ENDED DECEMBER 31,
2007
2006
EBITDA Calculation:
Net Income
$
8,742,072
$
4,696,980
Plus: Depreciation & Amortization
766,221
798,161
Plus: Net Interest Expense
210,790
129,760
Plus: Taxes
4,871,106
2,519,330
EBITDA
$
14,590,189
$
8,144,231