Exhibit 99.1
Press Release
SOURCE: Peerless Systems Corporation
Peerless Systems Announces Status of Negotiations for Proposed Management Buyout
of Wholly Owned Subsidiary Netreon
EL SEGUNDO, Calif.--(BUSINESS WIRE)--Dec. 19, 2001--Peerless Systems Corporation
(Nasdaq: PRLS - news), a provider of software-based embedded imaging and
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networking systems and storage management systems to the digital document and
storage markets, announced today that it is negotiating a non-binding term sheet
in connection with the proposed management buyout of its wholly owned
subsidiary, Netreon, Inc. wherein Peerless will maintain a minority percentage
in the resulting company.
Adam W. Au, a current Peerless director and the General Manager of Netreon, is
leading a team of investors pursuing the management buyout. Further, Au
contemplates selling approximately 400,000 shares of Peerless common stock to
assist in financing Netreon on a go forward basis.
The proposed transaction is in line with Peerless' previously announced attempts
to divest itself of the storage business conducted by its Netreon subsidiary in
order to substantially reduce operating costs of Peerless and to assist in
returning Peerless to profitability. Peerless has decided to discontinue future
cash infusions into Netreon. The proposed management buyout calls for Au and
other investors to make cash infusions into Netreon of approximately $2,000,000
for an approximately 22% fully diluted ownership. It is also expected that
shares and options will be granted to Au and Netreon employees. Peerless expects
to retain a 30% fully diluted interest in the new company at the signing of the
term sheet. It is anticipated that there will be future rounds of capital needed
to be raised further diluting Peerless' interest.
The completion of the transaction is contingent upon the satisfaction of
customary conditions, including financing conditions and the execution of
definitive documents between Peerless and the buyout group. Peerless has formed
a Special Committee of three directors to consider the proposed management
buyout.
There is a significant risk that the transaction may not close because of the
number of commitments of Au, the need for additional investors for the
management buyout to complete the transaction, the completion of a third party
"fairness opinion," the
finalization of a definitive term sheet and a purchase agreement, and approval
by the respective Boards of Directors.
About Peerless Systems Corporation
Peerless Systems Corporation, headquartered in El Segundo, Calif., is a provider
of software-based embedded imaging and networking systems to original equipment
manufacturers of digital document products and software utilities to OEMs of
Network Attached Storage devices. Digital document products include printers,
copiers, fax machines, scanners and color products, as well as multifunction
products that perform a combination of these imaging functions. In order to
process digital text and graphics, digital document products rely on a core set
of imaging software and supporting electronics, collectively known as an
embedded imaging system. Embedded networking systems supply the core software
technologies to digital document products that enable them to communicate over
local area networks and the Internet. The Company is also developing software
utilities for OEMs of Storage Area Network devices. For more information, visit
the Company's Web site at www.peerless.com.
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Special Note on Forward-Looking Statements
This news release regarding the proposed sale of a majority interest in Netreon
contains forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Statements prompted by, qualified by
or made in connection with such words as "is negotiating," "is expected,"
"proposed," "buyout," "pursuing," "contemplates," "assist," "calls for," "to
make, " "may not close," and "finalization" and words of similar substance
signal forward-looking statements. Likewise, the use of such words in connection
with or related to any discussion of or reference to the Company's future
business operations, opportunities or financial performance sets apart forward-
looking statements.
In particular, statements regarding the Company's ability to complete the
Netreon transaction, the effect of such transaction on the Company and the
impact on future performance of organizational and operational changes all
constitute forward-looking statements.
These forward-looking statements are just projections and estimations based upon
the information available to the Company at this time. Thus they involve known
and unknown risks and uncertainties such that actual results could differ
materially from those projected in the forward-looking statements made in this
news release. Risks and uncertainties include those set forth in Peerless'
public filings with the Securities and Exchange Commission, including but not
limited to the Company's most recent Annual Report on Form 10-K dated January
31, 2001, in the Section called Risks and Uncertainties on pages 31 through 41,
inclusive, filed on or about May 1, 2001, and the
Company's Quarterly Report on Form 10-Q in the Section called Risks and
Uncertainties on pages 17 through 26, inclusive, filed on December 14, 2001.
Current and prospective stockholders are urged not to place undue reliance on
forward-looking statements, which speak only as of the date hereof. The Company
is under no obligation, and expressly disclaims any obligation, to update or
alter any forward-looking statements, whether as a result of new information,
future events or otherwise. All forward-looking statements contained herein are
qualified in their entirety by the foregoing cautionary statements.
Contact:
Peerless Systems Corporation
William Neil, 310/297-3146
or
The Financial Relations Board/BSMG Worldwide
Kristen Kopay, 310/996-7458 (General Information)
Tricia Ross, 310/996-7454 (Investor/Analyst Information)