Company Press Release
Source: Marcum Natural Gas Services, Inc.
Marcum Natural Gas Services, Inc. Signs Letter of Intent
to Sell its Marcum Fuel Systems, Inc. Subsidiary to
Natural Fuels Corporation
DENVER, May 6 /PRNewswire/ -- Marcum Natural Gas Services, Inc. (Nasdaq:MGAS)
Tuesday announced that it has entered into a letter of intent with Natural Fuels Corporation, an
affiliate of Public Service Co. of Colorado and Colorado Interstate Gas, which will result in the
sale of substantially all of the assets of its wholly-owned subsidiary, Marcum Fuel Systems, Inc.
Marcum Fuel Systems has been in the alternative fuels industry since 1991.
According to A. Bradley Gabbard, president of Marcum Fuel Systems, Natural Fuels will be
purchasing the inventory and property of Marcum Fuel Systems and assuming responsibility for
completion of all projects in backlog. Gabbard said that ``the company's goal was to seek a
transaction that would fully consider and accommodate the needs of Marcum's customers and
result in a smooth transition of business responsibilities.'' Curt Dallinger, president of Natural Fuels,
says his company is looking forward to meeting the needs of Marcum's customers. ``Natural Fuels
is excited to have the opportunity to serve these new customers. We're confident they will be
pleased with the equipment and expertise Natural Fuels can offer them.'' The letter of intent
provides that Marcum Fuel Systems will collect its receivables and pay its payables in the normal
course of business.
W. Phillip Marcum, president of Marcum Natural Gas Services, said that ``the transaction with
Natural Fuels should be closed in early June 1997, subject to completion of due diligence and
execution of definitive agreements.'' The disposition of all assets is expected to result in net cash
proceeds of approximately $1.0 million, a portion of which will come from the sale to Natural
Fuels. Marcum also expects to receive additional cash proceeds during the next 12 months from a
shared interest in the gross margins related to pending projects awarded to Marcum Fuel Systems
or Natural Fuels that were based upon quotes issued by Marcum Fuel Systems. In addition,
Marcum Natural Gas Services will receive a royalty on future sales of its proprietary sonic nozzle
dispensing equipment that could enhance cash proceeds from the sale over the next five to ten
years. An approximate $1.3 million charge against the carrying value of Marcum Fuel Systems will
be recognized by the company in the first quarter of 1997. Marcum said that ``while we regret
terminating our participation in this business, this transaction is extremely positive for the company
in that it strengthens the company's financial condition and positions the company for profitable
operations in the future.''
Marcum stated that, due to the proposed sale, Marcum Natural Gas Services will reclassify its
1996 and 1995 results of operations to account for the Marcum Fuel Systems operations as
discontinued operations. As a result of the reclassification, 1996 revenues from continuing
operations will be presented as $19,014,673 versus total revenues of $23,614,051 as previously
reported, and the net income from continuing operations in 1996 will be presented as $7,988
versus a net loss of $1,541,417, or 13 cents per share, as previously reported. For 1995,
revenues from continuing operations will be presented as $19,158,015 versus total revenues of
$23,244,281 as previously reported, and the net loss from continuing operations in 1995 will be
presented as $858,437, or 7 cents per share, versus a net loss of $2,629,323, or 22 cents per
share, as previously reported. Cash flow from continuing operations, defined as net income from
continuing operations adding back depreciation and amortization, was $915,151 in 1996 and
$179,922 in 1995.
With this transaction, Marcum will concentrate it growth on its remaining three wholly-owned
subsidiaries: Southern Flow Companies, Inc., a large independent natural gas measurement
services company; Metretek, Incorporated, a manufacturer and supplier of electronic natural gas
meter monitoring and data collection systems; and Marcum Gas Transmission, Inc., which pursues
acquisitions of natural gas gathering, processing and transportation facilities and related assets.
Statements in this press release that look forward in time, which include everything other than
historical information, are forward-looking statements made pursuant to the safe harbor provision
of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are
subject to risks and uncertainties which could cause actual results to differ materially from those
projected or implied. These risks and uncertainties include, but are not limited to, changes in the
natural gas utilities industry, the energy industry in general and the natural gas industry in particular,
the impact of competition, product development and product acceptance risks, and other risks and
uncertainties described from time to time in the company's filings with the Securities and Exchange
Commission, including the most recent report on Form 10-KSB. The company assumes no
responsibility to update the information included in this press release. |
