U.S. Automotive Manufacturing, Inc. (Nasdaq: USAM) reported that the previously announced letter of intent with Satisfied Brake Products has been terminated and that the Company had, effective May 9, 2000, entered into a letter of understanding with another strategic investor, FDP Brakes, Inc. (“FDP”).
FDP Brakes, a privately owned Company, with facilities in Pennsylvania and New Jersey, is a manufacturer of automotive brake parts, and is a tier one vendor for original equipment manufacturers. Due diligence is expected to be concluded within the next ten days. Subject to the satisfactory completion of due diligence, discussions will be held with the holders of the Reg S Debentures and affiliated notes. These discussions are anticipated, in the context of an FDP investment, to result in the reorganization of the liability and capital accounts of the Company. Subject to agreement and acceptable documentation among the parties, FDP, or a group it will represent, has expressed the intent to invest up to $7,000,000 in cash, inventory and process equipment into the Company, in exchange for 2/3rd ownership in the reorganized Company.
Martin Chevalier, President and CEO of USAM, stated that while he was personally disappointed that the Company had not found common ground with the previously announced strategic investor, “USAM was gratified by FDP’s belief in our Company and its prospects.” Mr. Chevalier noted that while “there are no overlapping markets between USAM and FDP, the two Companies had discussed various joint venture opportunities over the last several years.” He said that “FDP is known for their formulations and processes and working with them in improving and upgrading the Company’s production facilities is a cornerstone of this venture.”
Mr. Chevalier concluded by stating that, “I have known the principals involved in the FDP operation for over seventeen years. I cannot think of a better strategic partner for our Company.”
U.S. Automotive Manufacturing, Inc., through its wholly-owned subsidiaries, Quality Automotive Company and U.S. Automotive Friction, Inc., manufactures, assembles and distributes new and rebuilt automotive products (brake pads, linings and remanufactured brake shoes) to other automotive manufacturers and to the automotive after-market. The Company intends to position itself to compete more formidably in the manufacture and sale of friction materials as well as other “under car” automotive parts through both acquisition and internal growth.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The Statements which are not historical facts contained herein are forward-looking statements that relate to plans for future activities. Such forward-looking information involves a number of important known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements of the Company expressed or implied by such forward-looking statements. Such risks, uncertainties and factors, include, but are not limited to, those relating to the integration of recently acquired companies, industry competition, any remaining Year 2000 issues, the possible need for future financing and possible obsolescence of equipment and other risks detailed in the Company’s filings with the Securities and Exchange Commission. The words “believe”, “expect”, “intend”, “plan” and similar expressions identifying forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which only speak as of the date the statement was made.