CellStar Completes Divestiture of Brazil Joint
Venture Operations
PR Newswire - September 06, 2000 20:08
Jump to first matched term
CARROLLTON, Texas, Sept. 6 /PRNewswire/ -- CellStar Corporation
(Nasdaq: CLST), a global, value-added wireless logistics services leader,
today announced it has completed the divestiture of its 51% ownership interest
in CellStar do Brasil Ltda., to its joint venture partner, Fontana Business Corp.
Earlier this year, CellStar announced it would divest its majority interest in the
Brazilian joint venture. CellStar concluded that the joint venture structure,
together with foreign exchange risk, the high cost of capital in Brazil,
accumulated losses and the prospect of ongoing losses, were not optimal for
success in that market. The Company expects the pre-tax income in the third
quarter resulting from the gain on disposition and the Brazil third quarter
operating losses to be approximately $2.0 million. The joint venture operations
in Brazil incurred a $1.3 million loss in the first quarter and a $2.2 million loss in
the second quarter before special charges of $5.8 million. In the disposition,
CellStar obtained promissory notes related to the restructuring of certain debt
obligations. These notes are fully reserved and will remain reserved pending
receipt of payments by the Company.
"The sale of the Brazilian operations will have a positive impact on our results
because we will no longer be required to fund operations in Brazil or recognize
losses those operations may incur going forward," said Dale H. Allardyce,
CellStar's president and chief operating officer. "The divestiture is one of
several recent actions the Company has taken to focus its resources on its more
profitable, lower-risk, growth businesses. Opportunities for growth in the
wireless industry are excellent, and CellStar intends to pursue those
opportunities that add value to our customers in the areas of wireless product
distribution and value-added services worldwide."
CellStar Corporation is a leading global provider of distribution and
value-added logistics services to the wireless communications industry, with
operations in Asia-Pacific, Latin America, Europe and North America. CellStar
facilitates the effective and efficient distribution of handsets, related accessories
and other wireless products from leading manufacturers to network operators,
agents, resellers, dealers and retailers. In many of its markets, CellStar provides
activation services that generate new subscribers for its wireless carrier
customers. For the year ended November 30, 1999, the Company generated
revenues of $2.3 billion. Additional information about CellStar may be found on
its web site at www.cellstar.com.
This news release contains forward-looking statements, as defined in the
Private Securities Litigation Reform Act of 1995. A variety of risk factors,
including changes in foreign laws, regulations and tariffs, new technologies,
system implementation difficulties, competition, handset shortages and other
risk factors, are discussed in the Company's Annual Report on Form 10-K and
most recent Quarterly Report on Form 10-Q, which are on file with the SEC.
Any combination of these risk factors could cause CellStar's actual results to
vary materially from anticipated results or other expectations expressed in the
Company's forward-looking statements.
SOURCE CellStar Corporation
/CONTACT: Austin P. Young of CellStar Corporation, 972-466-5031; or
general, Bob Schwaller, 972-830-2295, or analysts, Kristine Walczak,
312-640-6723, or media, Maxine Levy, 972-830-2123, all of the Financial
Relations Board, for CellStar Corporation/
/Web site: cellstar.com /
(CLST) |
