Tuesday April 13, 4:40 pm Eastern Time
Company Press Release
Simmonds Capital Limited and Vianet Technologies, Inc. Form Strategic Alliance for the Development and Manufacturing of Communication Products
TORONTO, ONTARIO and NEW YORK, NEW YORK--Simmonds Capital Limited and Vianet Technologies, Inc. announced today that they have reached agreement on a strategic alliance with respect to the development of products for the telecommunications market. Simmonds Capital is currently involved in the market through SCL Technologies, a contract manufacturer in Amherst, Nova Scotia. Earlier this year Vianet announced an agreement to acquire Develcon Electronics Ltd. of Toronto, Ontario, (TSE:DLC - news). This acquisition is subject to approval by Develcon shareholders at a meeting to be held in May 1999. Following the acquisition of Develcon by Vianet, Simmonds Capital Limited has agreed to invest up to CDN. $1.5 million in Vianet through the purchase of Vianet common treasury shares.
Develcon has granted SCL Technologies an exclusive three year manufacturing contract for the manufacture of printed circuit board products. The minimum volume of products to be manufactured by SCL Technologies over the three year period is estimated to be $18 million, based upon the current forecast. This volume could be substantially higher with accelerated growth of Develcon sales following the planned takeover by Vianet next month.
John Simmonds, the CEO of Simmonds Capital, stated ''We are very excited about the opportunities for both companies through this strategic alliance. With Vianet's leadership the future business potential of Develcon is impressive. Through the manufacturing support at SCL Technologies and our share investment, we are pleased to be working with the management at Vianet to help them achieve their goals of increased market penetration in the telecommunications market. This is but one of many areas where we can assist each other in further business development.''
Peter Leighton, the CEO of Vianet stated ''SCL Technologies is an established manufacturing supplier to the telecommunications market. They can provide high quality and cost effective manufacturing support for Develcon. We are looking forward to working more closely with SCL Technologies on further enhancements to the design of the current Orbitor and Athena products from Develcon. The manufacturing contract for SCL Technologies and the share investment by Simmonds Capital is just the beginning of a mutually rewarding relationship between our two companies.''
Develcon is a global provider of enterprise network solutions and LAN/WAN connectivity. Vianet Technologies specializes in the development and delivery of products which address enterprise needs for the convergence of voice, video and data technologies. Simmonds Capital Limited is a diversified management company involved in the contract manufacturing, electronics distribution and wireless communications markets.
Except for the historical information contained herein, the statements in this announcement are forward looking statements which involve risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the forward looking statements. Factors that might cause such a difference include, but are not limited to, those relating to: the acquisition by Vianet of Develcon Electronics; general economic conditions in the markets in which the companies operate; success in the development and market acceptance of new and existing products; dependence on suppliers, third party manufacturers and channels of distribution; customer and product concentration; fluctuations in customer demand; maintaining access to external sources of capital; ability to execute management's margin improvement and cost control plans; overall management of the companies' expansion; and other risk factors detailed from time to time in the companies' filings with regulatory bodies. |
