Onetravel (AMEX:OTV)
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From Jun 2019 to Jun 2024
OneTravel Holdings, Inc. (AMEX: OTV):
Benefits That Would Result From the Sale Include
-- Minimizing OTV's exposure to risk associated with SunTrips
Subsidiary
-- Retaining distribution deal to be non-exclusive reseller
of SunTrips tour packages
-- Strengthens OTV's balance sheet - elimination of money
losing subsidiary
-- Re-emphasized focus on online/offline full service travel
model
OneTravel Holdings, Inc. (AMEX: OTV), a leading online and offline
provider of travel and leisure services announced that it has reached
an agreement in principle to sell FS SunTours, Inc., which operates
SunTrips, to an affiliate of Crystal Finance LLC. Specific terms of
the transaction will include the establishment of an operating line of
credit facility for SunTrips followed by an equity infusion at the
time the purchasers finalize the structure of the acquisition. As part
of the sale transaction, OTV has committed to provide an undetermined
amount of financing. The terms and amount of the OTV provided
financing will be dependent upon the amount of liabilities the
purchaser assumes, although OTV's maximum commitment has not been
established, it is expected to be in the range of $2.5 million - $3.0
million, assuming all liabilities are assumed by the purchaser. The
parties expect the sale to close within 45 days, but closing is
subject to execution of a mutually acceptable definitive agreement. In
anticipation of the sale, Matthew C. Holliday, Senior Vice President
of Planning was named President of SunTrips.
Commenting on the agreement, OTV President Marc Bercoon stated:
"We have been working diligently with the principals of Crystal for a
few weeks now and we hammered out the major terms of the deal late
last night. SunTrips has been around for 28 years and has tremendous
brand recognition in its markets, however, we have determined that
tours packages are a product we want to sell and not own. We have
proven in the online/offline travel business that we can sell travel
products. Upon execution of the agreement, Crystal will bring in a
group that has great experience in the tour business and will allow us
to maintain a distribution deal to sell the SunTrips products. The
distribution deal will allow us to profit from the continued operation
of the SunTrips franchise and remove the risk associated with the
business that has greatly contributed to OTV's operating loss during
the recently completed fiscal year. Also, the fact that the purchasers
have committed to arrange for an operating line of credit in the
interim gives us great confidence that the transaction will close."
"We see tremendous opportunity in the SunTrips business. We feel
that because of various factors, the business has been underperforming
for the past several years and it is clear that with OTV's stated
focus on the full service online/offline travel business, the SunTrips
operation is not a good fit for OTV's core competency. OTV made it
clear to us that if we wanted to complete a transaction, we had to
move quickly and we have committed to do so. There are a lot of
quality people at SunTrips and we plan to work with them to bring
SunTrips back to profitability and build a more national presence for
the business." stated Fabrizzio P. Busso-Campana, a principal with
Crystal Finance LLC.
OTV also commented that the sale of SunTrips will greatly improve
its balance sheet.
Commenting on the impact on the OTV balance sheet, Marc Bercoon
added: "We recently disclosed that as of June 30, 2005 our working
capital position was a negative $33 million. Approximately $16 million
of the current liabilities related to either past due or future
obligations of FS SunTours, Inc., which is the SunTrips business. We
will not have to pay most all of these liabilities based upon the
terms agreed to in principle. Additionally, $12.5 million of the
liabilities relate to the seller note issued in connection with OTV's
April 2005 acquisition of OneTravel, Inc., which comes due March 15,
2006, after exercising all available extensions. Lastly, approximately
$6 million of the liabilities were related to the promissory note that
OTV issued in connection with the acquisition of Farequest Holdings,
Inc. in February 2005. This Farequest note was converted to common
stock at $20 per share on October 13, 2005."
"As we have repeatedly said, we are focused on building an
online/offline full service travel business. That part of our business
has been progressing very well as indicated by the increased gross
bookings in our updated guidance. The sale of SunTrips will greatly
strengthen the financial position of our company and provide us with
the opportunity to profit from selling the SunTrips products, which I
am confident we can do. We are executing on our plan and although we
still must address the $12.5 million seller note from the OneTravel
acquisition, we are in a much better position to address that in the
months ahead after this sale closes." stated OTV Chairman and CEO
William Goldstein
About OneTravel Holdings, Inc. (AMEX:OTV)
OneTravel Holdings, Inc. (www.onetravelholdings.com) derives all
of its revenues from its travel business subsidiaries, Farequest
Holdings, Inc., operating under the name 1-800-CHEAPSEATS
(www.cheapseats.com) and OneTravel, Inc. (www.onetravel.com), both of
which are leading online and offline providers of a full range of
travel services, and FS SunTours, Inc., which sells leisure and
vacation travel packages under the SunTrips(R) brand
(www.suntrips.com). The Company derives additional revenue from
operating other travel related web sites including
www.discounthotels.com and www.11thhour.com.
Statements in this news release about anticipated or expected
future revenue or shareholder value growth or expressions of future
goals or objectives, including statements regarding market conditions
or whether current plans to grow and strengthen the Company's business
will be implemented or accomplished, are forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. When used in this release and documents, the words
"anticipate", "believe", "estimate", "expect" and similar expressions,
as they relate to the Company or its management, are intended to
identify such forward-looking statements, but are not the exclusive
means of identifying these statements. All forward-looking statements
in this release are based upon information available to the Company on
the date of this release. Any forward-looking statements involve risks
and uncertainties, including the risk that the Company will be unable
to grow or strengthen its business due to a lack of capital or a
change in market demand for its products and services or to fully or
effectively integrate all business units or the inability to realize
anticipated cost savings or revenue and stockholder value growth
opportunities associated with the acquisitions of Farequest Holdings,
Inc. and OneTravel, Inc. The Company has previously mentioned in
conference calls that gross bookings are not equal to gross revenues
under generally accepted accounting principles, so no inference can be
made about profitability based on gross bookings unless expressly
stated by the Company. There is also no certainty that the Company
will be successful in its quest to secure strategic alliances in its
efforts to close the sale of the SunTrips business. The Company is
also subject to those risks and uncertainties described in the
Company's filings with the U.S. Securities and Exchange Commission
("SEC"), including the Company's historical losses and negative cash
flow, its need for additional capital, including to finance the
$12,500,000 promissory notes payable to the former stockholders of
OneTravel, Inc., and that future financing, if available, will dilute
the Company's current common stockholders. Additionally,
forward-looking statements concerning the performance of the travel
and leisure industry are based on current market conditions and risks,
which may change as the result of certain regulatory, political, or
economic events, a shift in consumer travel preferences, as well as
those risks and uncertainties described in the Company's SEC filings,
which could cause actual events or results to differ materially from
the events or results described in the forward-looking statements,
whether as a result of new information, future events or otherwise.
Readers are cautioned not to place undue reliance on these
forward-looking statements. For a complete description of the items
approved at the annual stockholder's meeting, the Company's proxy
statement is available for viewing in the Company's SEC filings.