Signature Brands finalizes agreement to acquire CD Plus.com
Signature Brands Ltd SBX
Shares issued 22,608,541 May 14 close $0.45
Mon 17 May 99 News Release
Mr. Jim Fisher reports
Signature Brands has signed a definitive agreement to acquire CD Plus.com
Inc. The deal is subject to the completion of due diligence by both sides
as well as the approval of the Toronto Stock Exchange and shareholders of
Signature Brands Limited. We expect to convene an annual and special
meeting of shareholders by the end of June. Signature will acquire CD
Plus.com by issuing approximately 250-million shares to the current
shareholders of CD Plus.com.
Subject to adjustments, the final agreement will result in current
Signature shareholders holding about 8.5 per cent of the equity of the
company. The final agreement on the appropriate number of shares to be
issued was influenced by the final adjustments in the sale of Signature's
food business to Weston Foods which reduced the cash value of Signature
Brands Limited.
CD Plus.com operates a Canada-wide network of prerecorded music retail
stores in secondary markets across the country. Currently, the company
operates 102 stores nationwide under several trade names, including CD
Plus, AVE Entertainment, Music Baron and Music City. The company also
operates Canada's leading music retailing Internet site, www.cdplus.com,
which it acquired in December, 1998, as part of the acquisition of the
10-store CD Plus retail chain. The distribution and warehousing facilities
are in Winnipeg, North Bay and Toronto.
CD Plus.com's Internet site has been in operation for over three years and
offers customers national reach and support through the company's cross
Canada retail chain. CD Plus.com management is committed to the growth and
expansion of the Internet sales channel and has entered into marketing
arrangements with AOL Canada, Canada.com, BID.COM, Sprint Canada, and
Altavista.ca (as a part of the Double Click network) and is currently
negotiating additional agreements with several other marketing and content
partners.
CD Plus.com is one of the five largest music retailing chains in Canada.
The company was established in 1992, when the principal shareholder
acquired Rock Entertainment Accessories Inc., then a regional chain of
music stores in Northern Ontario. From 1992 to 1999, the company grew
through acquisitions, from a small regional chain of 12 stores to its
current size of 102 locations across Canada. The company has focused and
continues to focus on those communities where ideally it does not compete
with other national music retailing chains.
The company intends to continue its expansion and growth as a leading
multichannel Canadian music retailer through internal growth, acquisitions
and penetration into new channels of distribution. As part of this
strategy, the company has signed a letter of intent to purchase Urban Sound
Exchange which, with 10 corporate stores, seven franchised locations, and
the Internet Web site www.urbansound.com, all specializing in the sale of
"used" music, will serve as the basis for the company's growth across this
growing market sector.
The company has engaged First Marathon, to undertake on a best efforts
agency basis, an equity financing of up to $10-million.
Shown below is a summary of CD Plus.com's financial results up to Dec. 31,
1998. These results do not include the results of the 10 CD Plus stores
acquired Dec. 24, 1998, which generated sales of over $10-million during
the 1998 calendar year.
INCOME STATEMENT
Nine months ended Dec. 31
(thousands of dollars)
1998 1997
Sales $39,183 $36,936
Gross margin 12,716 11,948
EBITDA 2,618 2,479
EBIT 2,206 2,152
EBT 1,874 1,905
Net income 1,046 1,534
Balance Sheet
Working capital 5,571 1,186
Total assets 32,940 24,591
Shareholders' equity 6,297 5,713
INCOME STATEMENT
Year ended Dec. 31
(thousands of dollars)
1998 1997
Sales $46,050 $29,327
Gross margin 15,239 9,999
EBITDA 2,444 942
EBIT 1,902 634
EBT 1,473 409
Net income 1,073 409
Balance Sheet
Working capital 5,621 7,002
Total assets 17,303 14,404
Shareholders' equity 5,251 4,178
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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