What does the story below mean? I know they would still be the exclusive contractor, but why would they be selling off controlling interest in Tech 2020 for a mere $900,000 profit? Obviously, someone doesn't like the story, because the stock is off from the day's high it reached after earnings were released.
NEW YORK--(BUSINESS WIRE)--Nov. 13, 1998--
-- Egan to Remain as Exclusive Contractor for All
Tech 2020 China Y2K Work --
Egan Systems Inc. (OTC BB:EGNS) announced Friday that it has signed a letter of intent to sell its 51% stake in Tech 2020 Ltd. to Prime Companies Inc. (OTC BB:PRMC) for $1.9 million.
The deal is subject to due diligence and approval by the board of directors of both companies.
Under terms of the agreement, Egan Systems will remain as the exclusive contractor for all the Y2K remediation work and software business generated by Tech 2020 Ltd. in China.
Tech 2020 Ltd. is a joint venture formed in August between Egan Systems (51%) and Intermost Ltd. (49%). Tech 2020 operations in China are directed by Intermost Ltd., a three-year old information technology firm, based in Shenzhen, China, which is seeking to become the gatekeeper for China's internet. The joint venture has been authorized to work on systems upgrading, integrating, remediation, technical support, supervision, marketing, training and software development. Tech 2020 factories have been established in Beijing and Shenzhen.
Ed Egan, president of Egan Systems, said, "This is an opportunity to take a $900,000 short term gain on our investment in China and still maintain our position to handle the Y2K business of Tech 2020."
David Lefkowitz, president of Prime Companies, said: "The purchase of Egan Systems' 51% controlling interest in Tech 2020 represents our entry into the wide open telecommunications and internet business in China. By partnering up with Intermost Ltd., we will have instant access to over two million potential business accounts in China."
Prime Companies Inc. is a fully reporting public company listed in the top 10% of American transportation companies. Prime Companies expects 1998 revenues to exceed $20 million. Through its global tracking systems for freight monitoring, Prime is seeking to build a communication and internet business services division.
Egan Systems Inc. produces ICOBOL and VX COBOL as well as tools to assist in making programs written in these languages Year 2000 compliant. Egan Systems Inc. is public, fully reporting, and is located in Holbrook, N.Y., with research and design facilities in Raleigh, N.C. More information on Egan Systems Inc., Prime Companies Inc., Intermost Ltd., and Tech 2020 Ltd. can be found on www.MarketManagement.com. Egan Systems -- Analysts call Ed Egan, president at 800/645-9898. Press call Thomas Tedrow at 800-777-8098.
"Safe Harbor" Statement Under The Private Securities Litigation Reform Act of 1995: The statements in the press release that relate to the company's expectations with regard to the future impact on the company's results from new products in development are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. The results anticipated by any or all of these forward-looking statements may not occur.
--30--cp/mi*
CONTACT: Press Only:
Tedrow Communications Corp., Winter Park, Fla.
Thomas Tedrow, 800/777-8098
KEYWORD: NEW YORK
INDUSTRY KEYWORD: COMED COMPUTERS/ELECTRONICS TELECOMMUNICATIONS INTERACTIVE/MULTIMEDIA/INTERNET TRANSPORTATION
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BW1258 NOV 13,1998
10:54 PACIFIC
13:54 EASTERN
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