EXHIBIT 99.1
[LOGO]
PRESS RELEASE
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20 Mansell Ct. E., Suite 200 o Roswell, GA 30076 o 770/587-0208
o FAX 770/641-7528
Contacts: Vincent C. Bisceglia, President & CEO
William H. Thompson, CFO
(770) 587-0208
TECHNOLOGY SERVICE GROUP, INC.
ANNOUNCES AGREEMENT TO MERGE WITH ELCOTEL, INC.
Roswell, Georgia, August 14, 1997 -- Technology Service Group, Inc. (Nasdaq:
"TSGI") announced today that the Company has entered into an Agreement and Plan
of Merger with Elcotel, Inc. (Nasdaq: "ECTL") under which the companies will
form a strategic combination of their businesses.
Technology Service Group, Inc. (the "Company" or "TSG"), based in Roswell,
Georgia, is a leading provider of smart payphone systems to the domestic
Regional Bell market with sales revenues of $33.5 million for the fiscal year
ended March 28, 1997. Elcotel, Inc., based in Sarasota, Florida, is a leading
provider of smart payphone systems to domestic private payphone operators with
sales revenues of $26.8 million for the fiscal year ended March 31, 1997. Both
companies have also been successful in marketing products in foreign markets.
TSG has targeted foreign markets with its wireless payphone systems while
Elcotel has targeted foreign markets with its wireline payphone systems.
Under the terms of the Merger Agreement, TSG's stockholders will receive 1.05
shares of Elcotel common stock, par value $.01 per share, for each share of
TSG's common stock outstanding on the effective date of the Merger irrespective
of the trading prices of the stocks on the effective date. As of August 13,
1997, the Company had 4,708,476 shares of common stock outstanding, and Elcotel
had 8,182,216 shares of common stock outstanding. On August 13, 1997, the
closing market price of TSG's common stock was $6.875 per share, and the closing
market price of Elcotel's common stock was $6.25 per share.
Vincent C. Bisceglia, TSG's President and Chief Executive Officer said, "This
Merger will create a strong, aggressive and powerful supplier of smart payphone
systems in the domestic public communications industry. It will position the
combined company to play a more significant role in the global market, and
should enhance shareholder value."
"Historically, each company has targeted different market segments and
therefore, the combination is strategically and technologically complementary.
The merged companies will be well-positioned to take advantage of the growth
opportunities in the United States created by the Telecommunications Reform Act
of 1996 and in rapidly expanding foreign telecommunication markets from
privatization initiatives that are creating significant demand for new
technology. Our customers can be assured that the combined company's operations
will continue without interruptions or delays in delivering our products and
services since they will be working with the same dedicated staff. The combined
business will be structured to focus its resources on each of its markets so
that we will continue to fulfill our respective customers' unique requirements."
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The completion of the Merger is subject to various conditions, including: (i)
approval of the stockholders of each company; (ii) compliance with the
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976; (iii)
the listing of the shares of Elcotel's common stock to be issued in the
combination on the Nasdaq National Market; (iv) the registration of shares of
Elcotel's common stock to be issued in the combination in accordance with the
provisions of the Securities Act of 1933; and (v) the execution of employment
agreements with C. Shelton James, who will be Chairman, and Tracey Gray, who
will be President and Chief Executive Officer of the combined entity and Mr.
Bisceglia, who will be its Executive Vice President and Chief Operating Officer.
In addition, the Board of Directors will consist of five Elcotel and four TSG
nominees. The name of the combined entity will be announced at a later date.
Mr. James said, "This fulfills a strategic initiative on the part of both
companies to diversify their businesses and establish a strong presence in both
market segments of the domestic public communications industry. At the same
time, the companies bring together complementary coin, card, wireline and
wireless technology to address rapidly expanding foreign markets."
In connection with the Merger, Wexford Partners Fund, L.P., which owns 52% of
TSG, and Fundamental Management Corporation, which owns 17.6% of Elcotel, will
enter into agreements that will include provisions for each of them to vote for
the Merger and that restrict their sales of Elcotel securities after the Merger.
For its fiscal year ended March 28, 1997, TSG reported net income of $1.1
million, or $.22 per share. Elcotel reported net income of $1.6 million, or $.20
per share, for its fiscal year ended March 31, 1997.
The statements contained in this release which are not historical facts contain
forward looking information with respect to plans, projections or future
performance of the Company, the occurrence of which involve certain risks and
uncertainties that could cause the Company's results to differ materially from
those expected by the Company, including the success and timely completion of
development projects, the risk of adverse regulatory action affecting the
business of the Company or its customers, competition, the risk of obsolescence
of its products and uncertainties detailed in the Company's filings with the
Securities and Exchange Commission.
"Visit us @ www. tsgicom.com"
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