Sergio, from the 10Q
On October 14, 1998, the Company entered into a Securities Purchase Agreement (the
Agreement) with Caterpillar Inc. (Caterpillar). Under the terms of the Agreement, Caterpillar will
acquire, for an aggregate purchase price of $18,000,000, one million newly issued shares of the
Company's common stock and a warrant to purchase an additional 10,267,127 newly-issued
shares of the Company's common stock at a price of $21.00 per share. The Agreement provides
that, upon closing, the Company's board of directors will be increased from eight to ten and the
Company's board of directors will appoint two members designated by Caterpillar. The
consummation of the transactions contemplated by the Agreement is contingent upon receiving
Company shareholder and regulatory approvals.
In connection with entering into the Agreement, the Company, Caterpillar and certain shareholders
of the Company have entered into several ancillary agreements. First, the Company and Caterpillar
have entered into an Option Agreement pursuant to which Caterpillar has the option to purchase
1,579,000 shares of the Company's common stock, through a private issuance from the Company,
at a price of $18.00 per share, exercisable in whole or in part at any time until October 14, 1999
or the closing of the transactions contemplated by the Agreement, whichever is sooner.
Second, certain of the shareholders (the Shareholders) of the Company and Caterpillar have
entered into a Voting Agreement pursuant to which the Shareholders have agreed (I) that the
Shareholders will not sell, transfer, pledge, grant a security interest in or lien on or otherwise
dispose of or encumber any of their shares in the Company prior to the closing of the transactions
contemplated by the Agreement and (ii) that the Shareholders will vote each of their shares at every
annual, special or adjourned meeting of the shareholders of the Company (a) in favor of approval
of the Agreement, (b) against any Competing Transaction (as defined in the Agreement) and (c) in
favor of any other matter relating to the closing of the transactions contemplated by the Agreement.
Finally, the Company and Caterpillar have entered into a Commercial Alliance Agreement pursuant
to which Caterpillar will provide the Company access to its dealer network and will make various
management, financial and engineering resources available to the Company following the closing.
Included in the Commercial Alliance Agreement is a Marketing Agreement which provides, among
other things, that the Company will pay Caterpillar a commission equal to 5% of the dealer net
price for complete machines and 3% for replacement parts and Company-branded attachments for
all sales made to Caterpillar dealers. Should the Company manufacture products that are eligible to
be sold under the Caterpillar brand name, the Company will pay Caterpillar a trademark license fee
equal to 3% of the net sales of these products to Caterpillar dealers.
Following the closing, Caterpillar will own approximately 8.8% of the Company's outstanding
common stock (assuming exercise or conversion of all outstanding options, warrants and
convertible debentures) and will have the right to own up to approximately 52% of the Company's
outstanding common stock (assuming exercise or conversion of all outstanding options, warrants
and convertible debentures) upon exercise of the warrant. The Company intends to use the
proceeds from the initial sale of its shares for increasing production levels, advertising and
marketing and general working capital purposes.
I still can't say I fully understand all this. How I see it is ASVI has the product and as you pointed out the deal with CAT brings cash and most important the global network for distribution.
Also from the 10Q
The Company's shipments during the month of October were decreased, the Company believes,
primarily due to three main factors. First, during the time the Company was negotiating the
Agreement with Caterpillar in the third quarter, the Company was not actively marketing new
Posi-Track dealerships to non-Caterpillar dealers as the Company believed these new dealers
would not choose to remain dealers when the Agreement was announced. Second, the Company
believes
there has been hesitancy on the part of existing Posi-Track dealers to place orders in light of the
Caterpillar Agreement discussed above. Finally, the Company's largest customer cancelled orders
for delivery of approximately $1.4 million of Posi-Track machines which were scheduled for
shipment during the fourth quarter. The Company believes future sales to this Posi-Track dealer
(also a Caterpillar dealer) may be reduced as this dealer is the authorized Posi-Track dealer for
territory that overlaps nine existing Caterpillar dealers' trade areas. The Company believes the
slow-down in orders is temporary and expects the order level to increase as additional Caterpillar
dealers begin carrying the Posi-Track models. Although the Company has been working closely
with Caterpillar to introduce the Posi-Track products to North American Caterpillar dealers as
quickly as possible, the Company may experience a decrease in its sales volume while the
Company proceeds through this transitional period with Caterpillar. The Company is currently
unable to determine the potential effect, if any, this transitional situation may present.
IMO most investors will understand this and it will not have an adverse affect on the stock price.
Targets
Short term 20 1/2
Intermediate 24
Joe |
