Wednesday May 6, 7:04 am Eastern Time
Company Press Release
Chadmoore Wireless Group, Inc. Announces Closing of $7.5 Million Equity Financing
Initial Equity Funding Increased in Size by 50%
LAS VEGAS--(BUSINESS WIRE)--May 6, 1998--Chadmoore Wireless Group, Inc. (OTC BB:MOOR - news), a leading provider of specialized mobile radio (SMR) communications services under the ''PTT'' (Power to Talk) trade name, announced today the closing of a $7.5 million equity investment into the Company by Recovery Equity Investors II, L.P., a major institutional private equity fund.
This funding represents a 50% increase in size from Chadmoore's previously announced contemplated initial equity round with Recovery. In addition, Recovery has an option to invest an additional $5 million in the future at a significantly higher price, and Chadmoore has the ability to buy in such option if the Company meets certain performance criteria. Exercise of the option would result in a total equity infusion of $12.5 million.
In making this announcement, Robert W. Moore, founder and CEO of the Company, stated, ''I am excited that Recovery Equity Investors has demonstrated its confidence in Chadmoore-PTT by increasing the size of its equity investment to this extent and proceeding to an expeditious closing. This financing should enable us to proceed promptly with implementation of our business plan, which includes rolling out full-scale SMR distribution in another 144 markets beyond the 24 already being served.''
Moore emphasized in particular the non-monetary value of partnering with Recovery, noting that ''Recovery brings substantial expertise in building businesses and a network of related resources that have heretofore been unavailable to Chadmoore. We believe that Recovery's contributions to the Company will go well beyond their financial involvement.''
Added Jan S. Zwaik, Chadmoore-PTT's Chief Operating Officer, ''We are thrilled to have long-term capital in place and be able to refocus our attention on the execution of our business plan. This equity financing should enable us to roll out additional markets and add new customers more quickly, which in turn should result in a compounding effect from recurring revenues over time.''
Joseph J. Finn-Egan and Jeffrey A. Lipkin, managing general partners of Recovery, noted that their fund was attracted to Chadmoore by the Company's differentiated business model, advantageous spectrum position, and resourceful management team that has consistently out-performed its stated objectives. ''We look forward to a long, mutually rewarding relationship with Chadmoore,'' they said.
Private Equity Partners, based in Incline Village, Nev., served as exclusive financial advisor to Chadmoore in this transaction. Mark F. Sullivan, managing partner of PEP, stated ''We have believed in the underlying potential value of Chadmoore, and in management's ability to execute its business plan, from the beginning of our relationship with the Company last year. We are very excited to have been a part of this successful step in Chadmoore's evolution.''
This transaction brings the total amount of funding since PEP's involvement with the Company to approximately $11.2 million. Reflected Moore, ''The team at Private Equity Partners is awesome. They committed themselves to our success when few others believed that we could survive, and then never looked back. We literally could not have completed this financing without them.''
Upon consummation of the financing, Finn-Egan, Lipkin, and Sullivan have been appointed to the Company's board of directors, along with Janice H. Pellar, owner and CEO of EMCO Communications, a major SMR services provider and Chadmoore dealer based in Baton Rouge, La. Moore and Zwaik will continue to serve as directors as well, and William C. Bossung has resigned his position on the board effective with the closing of the financing.
In conjunction with Recovery's increased equity financing, the Company has elected to defer its previously announced effort to raise secured debt financing, but intends to return to the debt markets as needed in the future, presumably with a stronger balance sheet, longer operating history, and greater critical mass.
Consistent with that decision, Chadmoore has terminated discussions under its previously disclosed letter of intent with Foothill Capital Corp. Among the potential benefits to shareholders from this decision, the Company anticipates enhanced flexibility and (subject to general market conditions) lower borrowing costs in subsequent debt financings.
Chadmoore Wireless Group, Inc. is the second-largest holder of frequencies in the United States in the 800 MHz band for commercial specialized mobile radio (SMR) service, and controls the largest amount of available spectrum in the industry. The Company's footprint covers more than 53 million people in 168 markets, focusing on secondary and tertiary cities throughout the United States.
Also known as dispatch, one-to-many, or push-to-talk, Chadmoore - PTT's commercial SMR service enables reliable, cost-effective, real-time voice communications for smaller and medium-sized businesses that rely on mobile workforces. For a flat fee of approximately $15.00 per radio per month, customers enjoy unlimited air-time for communicating instantaneously with their teams.
Recovery Equity Partners is a leading institutional private equity fund that focuses on special situation investing, with $208 million under management from major public and corporate pension funds, bank holding companies, insurance companies, and similar financial institutions.
Private Equity Partners specializes in institutional private equity and debt financings for growth companies based in the western United States. The firm enjoys direct relationships with several hundred sources of institutional capital representing more than $50 billion of funds, and has established an effective process and reputation for closing transactions. PEP's relationship with Chadmoore remains ongoing, with near-term focus on the contemplated secured debt financing for the Company.
Financial Statements in this press release other than historical facts are ''forward-looking'' statements with the meaning of section 27A of the Securities Act of 1933, section 21E of the Securities Exchange Act of 1934, and as that term is defined in the Private Securities Litigation Reform Act of 1995.
The Company intends that such statements about the Company's future expectations, including future revenues and earnings, and all other forward-looking statements be subject to the safe harbors created thereby. Since these statements (future operational results and sales) involve risks and uncertainties and are subject to change at any time, the Company's actual results could differ materially from expected results.
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