ESOL - looks like they are doomed!
Late Developments Derail Employee Solutions Restructuring; Board Elects to
Discontinue Operations, Sell
Assets
Business Editors
PHOENIX--(BUSINESS WIRE)--Dec. 14, 2000--Employee Solutions Inc.
(OTCBB:ESOL) today announced that despite successfully negotiating a
financial restructuring plan in principle with an ad hoc committee of
bondholders, the significant delay in doing so has made it impossible
to complete the transaction given the company's current cash position
and recent adverse developments.
Completion of the restructuring plan was complicated by the need
to renew the company's workers' compensation insurance policy for 2001
and establish a new working capital credit facility. The company was
recently notified by its insurance carrier that a higher-than-normal
deposit would be required prior to the completion of the
restructuring, which the company could not afford.
Without workers' compensation insurance coverage, the company
cannot continue to operate as a PEO. Potential credit facility lenders
also recently notified the company that they would not extend a new
credit facility, citing restructuring outcome uncertainty and related
factors.
Additionally, because the restructuring transaction was not
completed before the end of 2000, an abnormal number of the company's
existing customers have issued termination notices that are effective
on Dec. 30, 2000.
"As previously disclosed, lengthy delays were encountered during
the course of the restructuring negotiations, notwithstanding that the
company had made it abundantly clear early in the process that a
restructuring transaction needed to be completed before the end of
2000," said Quentin P. Smith Jr., Employee Solutions president and
chief executive officer.
"We did not anticipate receiving an untenable renewal proposal for
workers' compensation insurance nor being turned down by the potential
credit facility lenders. We are extremely disappointed in this
outcome."
Smith continued, "Under these circumstances, the company is left
with no alternative other than to attempt to sell certain business
units and discontinue its core PEO operations by year-end."
Employee Solutions offers business-to-business enterprise
solutions for employers, franchisors, technology-related businesses
and membership associations throughout the United States by providing
comprehensive payroll and payroll tax processing, human resource
management services, benefits design and administration, and risk
management services. For additional information, access the company's
Web site at www.employeesolutions.com.
Note: The discussions in this news release that are not historical
facts are "forward-looking statements" intended to qualify for the
safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are
subject to risks and uncertainties that could cause actual results to
differ materially from those anticipated. Such risks and uncertainties
include those risks set forth in the company's Report on Form 10-K for
the year ended Dec. 31, 1999, and its Report on Form 10-Q for the
quarter ended Sept. 30, 2000.
--30--JAP/la*
CONTACT: Employee Solutions Inc., Phoenix
Quentin P. Smith Jr., 602/522-5324
or
Silverman Heller Associates
Dan Matsui/Eugene Heller, 310/208-2550
KEYWORD: ARIZONA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS E-COMMERCE
HUMAN RESOURCES
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Dec-14-2000 23:30 GMT
Symbols:
US;ESOL
Source BW Business Wire
Categories:
MST/R/US/AZ MST/I/NET MST/S/JOB |
