SDC Announces Sale of TATRA Truck Unit
Palm Beach, Florida, September 3, 2003 - SDC International, Inc.
(OTC:SDCN) today announced that its Czech Republic subsidiary,
SDC Prague, s.r.o., has sold its 51% interest in the company's
operating unit, Czech truck manufacturer, TATRA, a.s. to another
TATRA shareholder, Terex Corporation (NYSE:TEX). The sale was
made for a combination of cash, Terex shares, and forgiveness of
acquisition-related debt incurred by SDC in its original
acquisition of TATRA in late December 2001. SDC Prague had paid
approximately US$6.1 million to the Czech government for its 51%
interest, and the value of the sale to Terex is approximately
US$12.5 million.
The sale of its interest in TATRA ends a difficult operating
period for SDC. The Company purchased TATRA from the Czech
government on late 2001, only to see the Czech crown make a
significant move against the US dollar in 2002, causing losses of
almost US$15 million to its operations while revenues slipped
from US$150 million to US$138 million in 2002. During the same
year, while attempting to consolidate all seven TATRA companies
into SDC and convert from Czech Accounting Standards (CAS) to U.
S. GAAP accounting, the company's auditor resigned after
completing the Czech accounting audit but before completion of
the U. S. GAAP consolidated audit. Although the audit services
of BDO were engaged soon after, SDC lost almost one year in its
effort to file its financial statements with the U. S. Securities
and Exchange Commission. According to the company's Chief
Financial Officer, Thomas B. Walker, "That problem, combined with
the unexpected losses at TATRA due largely to the currency
change, prevented SDC from being able to raise the necessary
working capital for TATRA". According to company reports, its
restructuring efforts at TATRA lowered operating costs by over
US$15 million per year and new order flow was good, but TATRA
continued to struggle against the working capital deficiency.
TATRA reduced its workforce this year from 5,600 to about 4,000
workers.
Shortly after SDC's initial acquisition of its interest in TATRA,
Terex provided TATRA with a secured working capital facility. Due
to the adverse financial position of TATRA and SDC's inability to
provide adequate working capital to the operation, Terex provided
TATRA with additional secured working capital loans during 2003.
However, in June 2003, Terex, as the major secured lender to SDC
and TATRA, warned both SDC and TATRA that it would possibly
foreclose on its security interest in the 51% TATRA shares owned
by SDC Prague if SDC was not able to provide TATRA the additional
working capital necessary to produce the trucks on order by TATRA
customers. According to SDC Chairman and CEO Ronald Adams,
"after attempting to raise the necessary capital and after
discussions with many qualified lenders and investors, we had the
choice to either sell our interest to Terex or face a foreclosure
which would most likely lead to SDC's bankruptcy. By agreeing to
this sale of our interest, we have avoided a likely bankruptcy or
liquidation of SDC, have generated cash for SDC and have left
TATRA in good hands. According to the reports of fairness
opinion experts, this was the best commercially viable solution
for SDC and its shareholders."
Terex Chairman and CEO Ronald M. DeFeo said that now that Terex
is the controlling shareholder of TATRA, Terex will be in a
position to provide TATRA with the additional working capital
funding necessary at TATRA. Upon completion of the acquisition,
Terex now owns approximately 71% of TATRA. Terex is a
diversified global manufacturer based in Westport, Connecticut,
with 2002 revenues of $2.8 billion.
About SDC International
SDC International is a publicly traded U.S.-based company focused
on acquiring well-established industrial manufacturers with
substantial revenues within Central and Eastern Europe. TATRA
was the first acquisition in SDC's plan. Visit the SDC website
at www.sdcn.com.
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Contact: SDC International, Philip Huber, SDC Vice President,
email at phuber@sdcinternational.com.
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Certain information in this announcement includes forward-looking
statements regarding future events or the future performance of
SDC International that involve certain contingencies and
uncertainties. Such statements are inherently subject to a
variety of risks and uncertainties that could cause actual events
or performance to differ materially from those reflected in such
forward-looking statements. Such risks and uncertainties, many of
which are beyond SDC's control, include, among others: the
effects of changes in laws and regulations; the effect of
interest rates, government spending, and general economic
conditions on construction, mining and other activities in which
SDC's products are sold; national and international political
climate and military activities; and other factors, risks and
uncertainties set forth in more detail in SDC's filings with the
U.S. Securities and Exchange Commission. Actual events or
performance may differ materially from any forward-looking
statement due to these and other risks, uncertainties and
significant factors.