KBL Healthcare Acquisition Corp. III (stock symbol: [t]KHA[/t]), which raised $133.9 million when it went public in July 2007, has announced that it is going to acquire PRWT Services, "a national, diversified enterprise operating in pharmaceutical manufacturing and distribution, facilities management and maintenance services, and business processing services."
KBL Healthcare Acquisition Corp. III and PRWT Services, Inc. to Engage in Business Combination
PRWT is One of the Nation's Leading and Fastest Growing Minority-Owned Enterprises
Monday March 16, 2009, 7:30 am EDT
NEW YORK and PHILADELPHIA, March 16, 2009 (GLOBE NEWSWIRE) -- KBL Healthcare Acquisition Corp. III (``KBL') (NYSE Alternext US:KHA, KHA-U, KHA-WT), a specified purpose acquisition company (SPAC), today announced that it has entered into a definitive agreement for a business combination with privately-held PRWT Services, Inc. (``PRWT'), a national, diversified enterprise operating in pharmaceutical manufacturing and distribution, facilities management and maintenance services, and business processing services. Founded in 1988, PRWT is a certified minority business enterprise with 18 state and local entities and is certified by the National Minority Supplier Development Council (NMSDC) including 17 regional councils. PRWT will retain its minority-owned status following the consummation of the business combination.
PRWT has grown, both organically and through acquisitions, from a single office and 16 employees to approximately 1,312 employees in 10 states and the District of Columbia. PRWT estimates that revenues increased to more than $165.0 million for the full year ended December 31, 2008 from $75.4 million in 2007.
Effective January 1, 2008, and after a two-year due diligence process, PRWT, through its newly-created Life Sciences subsidiary Cherokee Pharmaceuticals (``Cherokee'), acquired a manufacturing facility located in Riverside, Pennsylvania from Merck & Co., Inc. With the creation of Cherokee and the acquisition, PRWT became the first minority-owned manufacturer of Active Pharmaceutical Ingredients (``APIs') in the United States. Concurrent with the closing of the acquisition, PRWT executed a five-year supply agreement with Merck for APIs used in the formulation of human and animal health products and a four-year supply agreement to produce crop protection APIs with a non-Merck customer. PRWT believes that Cherokee's cGMP-certification, state-of-the-art facilities, excess operating capacity, and average employee tenure of 15 years provide a significant, flexible and scalable platform for growth with the potential to expand into other pharmaceutical businesses.
For the last 20 years, PRWT has been a leading provider of high volume/high performance back office services to a full range of commercial and government clients throughout the United States, and a provider of professional facilities management services focusing on complex and highly secure maintenance and management projects for federal, state and local governments. PRWT provides services to the Delaware River Port Authority, San Francisco Municipal Transportation Agency, as well as the U.S. Social Security Administration, City of Philadelphia, Virginia Department of Transportation Movable Bridges, the U.S. Army Corps of Engineers, and the Thurgood Marshall Federal Judiciary Building.
Dr. Marlene Krauss, Chief Executive Officer of KBL, commented, ``We believe that, after a diligent search, we have identified a company that possesses all of our investment criteria. PRWT is, above all, a strong business with three competitively positioned business units, each of which stands to benefit during the current economic environment. We believe that Cherokee, in particular, has the potential for significant growth and expansion. PRWT possesses a world-class, results-driven management team led by its Chairman, Willie Johnson. The company has earned a reputation as a value-added partner that consistently exceeds customer expectations. As a minority-owned business, PRWT is expected to continue to benefit from increasing diversity spending. In 2007 corporate members purchased over $100 billion in goods and services from National Minority Supplier Development Council (NMSDC) certified companies like PRWT.'
Dr. Krauss and her team successfully closed two prior SPAC transactions and possess decades of healthcare investing and merger and acquisition experience.
Willie F. Johnson, Founder and Chairman of PRWT Services, stated, ``PRWT has built a strong and enduring business brand and a reputation among its clients for delivering innovative thinking, efficiencies and cost savings. As a public company, we will sustain these priorities as well as focus on driving long-term value for our shareholders and continue to invest in the communities where we work and live. We are confident in our prospects and look forward to working in collaboration with KBL to continue to grow the business. This business combination will provide us with access to capital to fund internal growth initiatives and acquisitions, elevate our profile within our industries, and help us to attract and retain high quality professionals.'
Further information on PRWT Services, Inc. and its business units can be found on PRWT's website at prwt.com.
The Transaction
Under the terms of the transaction, and in order to preserve PRWT's minority certifications, the business combination between KBL and PRWT will be accomplished through the merger of KBL with and into a newly formed, wholly owned subsidiary of PRWT, with such subsidiary surviving the merger. In connection with the merger, PRWT will be recapitalized and all outstanding common stock and warrants of KBL will automatically convert into the same number of securities of PRWT with their substantive terms remaining the same. The merger is expected to close in the third quarter of 2009, and the parties will seek to obtain listing of PRWT's common stock and warrants on NYSE or NASDAQ. As a result of the business combination, PRWT will become the public company.
The total consideration in the business combination is approximately $140.2 million, consisting of:
* 11.95 million shares of the post-merger public company being issued to the current PRWT stockholders, valued at $91.7 million, assuming a stock price of $7.67 (closing KHA stock price as of March 13, 2009)
* $3.5 million in cash being paid to the current stockholders of PRWT
* The assumption of up to $45.0 million of PRWT's net debt
An additional 8.0 million shares of common stock of the public company may be issuable to the management of PRWT upon the occurrence of certain events, including the achievement of yearly EBITDA targets as defined in the merger agreement.
PRWT's senior management, under the direction of Mr. Johnson and a seasoned team of executives with average relevant industry experience of 28 years, will remain unchanged and will continue to operate the company. PRWT management will have a majority interest in the combined entity at closing.
About KBL Healthcare Acquisition Corp. III
KBL Healthcare Acquisition Corp. III is a blank check company organized under the laws of the State of Delaware on January 9, 2007. KBL was formed for the purpose of effecting a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination with one or more operating businesses in the healthcare industry in any geographic location. On July 25, 2007, KBL closed its initial public offering (``IPO') of 17.25 million units, including the underwriters' full over-allotment option, generating $138.0 million in gross proceeds. Each unit consisted of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $6.00 per share. As of December 31, 2008, KBL held approximately $135.7 million in a trust account maintained by an independent trustee, which will be released to KBL upon the consummation of the business combination. Additional information is available at kblhealthcare.com.
The PRWT merger is subject to customary closing conditions, including (a) approval by KBL stockholders of the business combination with PRWT pursuant to the Merger Agreement, (b) approval by KBL stockholders of certain amendments to the certificate of incorporation of KBL and (c) fewer than 30% of the shares of KBL Common Stock issued in its IPO voting against the Merger and demanding a cash conversion of their shares in accordance with KBL's amended and restated certificate of incorporation.
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