Fortress America Acquisition Corporation Enters Into Agreement to Acquire Total Site Solutions and Vortech
Tuesday June 6, 7:30 am ET
Fortress America Fulfills Objective to Acquire Business With Focus on Growing Homeland Security Industry
ARLINGTON, Va., June 6 /PRNewswire-FirstCall/ -- Fortress America Acquisition Corporation (OTC Bulletin Board: FAAC - News), a special purpose acquisition company announced it has entered into a definitive acquisition agreement pursuant to which Fortress America will purchase all outstanding membership interests of privately owned VTC L.L.C., doing business as Total Site Solutions ("TSS") and Vortech, L.L.C. ("Vortech") for $38.5 million. The purchase price represents a multiple of approximately 5.7 times adjusted 2005 EBITDA.
TSS and Vortech, both based in Beltsville, Maryland, provide comprehensive services for the planning, design, and development of mission critical facilities and information infrastructure. The transaction is subject to customary closing conditions, including the approval of Fortress America stockholders. The combined companies intend to operate under the name Fortress International Group and will seek NASDAQ listing after closing.
THE TRANSACTION
<b.Under the terms of the acquisition agreement, the owners and key employees of TSS and Vortech will receive $19 million in cash, an $8 million five year convertible note and 2 million common shares of Fortress America at closing, representing an 18% ownership interest in the combined company. In addition, TSS and Vortech owners are entitled to receive additional Fortress America shares worth up to $10 million over a two year period contingent upon the value of Fortress America shares reaching certain minimum price per share levels.
TSS and Vortech recorded combined 2005 revenues of $58.6 million and adjusted EBITDA of $6.8 million. In 2005, revenues grew 180% over combined 2004 revenues of $21 million.
Upon consummation of the transaction, the current principals of TSS and Vortech, Thomas Rosato and Gerard Gallagher, will sign employment agreements to remain with the combined company and will become Chief Executive Officer and President and Chief Operating Officer, respectively. Fortress America CEO and President, Harvey Weiss will become Chairman of the combined company and C. Thomas McMillen will become Vice Chairman.
Mr. Weiss commented, "TSS and Vortech provide comprehensive mission- critical solutions to government and private industry. Homeland Security threats and regulations for data integrity and availability are driving this vibrant market. We believe these companies provide an excellent platform to consolidate the global mission-critical marketplace."
Mr. McMillen said, "We told the market place that we would look to acquire a company that was profitable, attractively priced and was centered around 'critical infrastructure protection.' We also looked for a fragmented market that was prime for consolidation and where existing management would stay on and have a significant financial stake in making the combined company successful. We believe we have achieved all those objectives with this acquisition."
Tom Rosato added, "The acquisition adds financial strength to our comprehensive set of services offerings and will allow us to proceed with our strategic plan to expand our company through both organic growth and a focused acquisition strategy, and, as a result, deliver increased shareholder value."
Conference Call Information
Fortress America will host a conference call on June 7, 2006 at 10:30 am ET to discuss the transaction. Interested parties should call 866-271-6130, with passcode 80435811 to access the call. Investors may also access this call via the Internet at:
phx.corporate-ir.net For those who are unavailable to listen to the live broadcast, a replay will be available through June 14, 2006 and can be accessed by dialing 888-286-8010. The pass code is 66021542.
*EBITDA, a measure sometimes used to measure performance, is defined as net income (loss) from continuing operations, plus interest expense net of interest income, income taxes and depreciation and amortization. EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operational activities as a measure of liquidity. As used in this presentation, adjusted EBITDA reflects the removal from the calculation of EBITDA of certain items that are, in our judgment, either non-recurring or, for other reasons, not expected to be reflected in the performance of Total Site Solutions and Vortech after closing of the acquisition. Adjusted EBITDA is not a completely representative measure of either the historical performance or, necessarily, the future potential of Total Site Solutions and Vortech.
About Total Site Solutions
Total Site Solutions (TSS) offers unsurpassed expertise in the planning, design, building and maintenance of specialized, mission-critical facilities such as data centers, call centers, network operation centers, communication facilities and secure facilities. TSS's comprehensive suite of services and multi-disciplinary expertise provide customers a single source for critical services that bridge the gap between IT and facilities. Headquartered in the Baltimore-Washington Corridor, with offices in San Francisco and Atlanta, TSS clients include the world's most demanding organizations, including Fortune 500 firms and U.S. Government agencies. For more information, call 866-363-4TSS (4877) or visit totalsiteteam.com.
About Vortech, LLC
Vortech provides power and information carrying systems to government, commercial, and mission-critical facilities. A leader in structured cabling solutions, electrical power system installations, and emergency power solutions for data center and high technology environments, Vortech also provides value-added Systems and Network Integration Services as well as ongoing system maintenance services, keeping its customers on the cutting edge of technology, and building reliable business solutions. For more information, visit govortech.com.
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