EXHIBIT 99.1
NEWS RELEASE Castle Dental Centers
3701 Kirby Drive, Suite 550
Houston, TX 77098
(713) 490-8400
(OTC Bulletin Board: CASL.OB)
For information about For information about
Castle Dental contact: Sentinel Capital Partners contact:
James M. Usdan Joseph P. Keane David S. Lobel
President, Chief Executive Chief Financial Officer Managing Partner
Officer
(713) 490-8603 (713) 490-8602 (212) 688-3100
CASTLE DENTAL ANNOUNCES PROFITABLE FIRST QUARTER
SAME STORE SALES IMPROVE
COMPLETES FINANCIAL RESTRUCTURING
HOUSTON, May 15, 2003 -- Castle Dental Centers, Inc. (OTC Bulletin
Board: CASL.OB) today reported that it had net income of $462,000, $0.01 per
share, for the three months ended March 31, 2003, its first quarterly profit in
three years. This compares to a loss of $1.4 million for the same period last
year, before a charge of $37.0 million recognized in the first quarter 2002 to
reflect the cumulative effect of a change in accounting principle. Revenues were
$24.5 million for the first quarter 2003, $1.0 million less than revenues of
$25.5 million last year. Revenues from dental centers open for more than one
year improved by 1.6 %, offset by reduced revenues from dental centers closed or
sold in the past twelve months. During the first quarter 2003, the Company
managed 77 dental centers compared to 85 dental centers in the first quarter
2002.
The Company also announced that it completed its previously announced
recapitalization plan, which included the sale of $13.0 million in subordinated
notes and preferred stock to a group of investors led by Sentinel Capital
Partners II, L.P., and the restructuring of its senior credit facility,
resulting in a $27 million reduction in the Company's outstanding debt. Sentinel
Capital Partners is a New York-based institutional private equity investment
firm that specializes in buying and building smaller middle market companies in
the United States and Canada in partnership with management.
The new senior credit facility consists of a $16.0 million term loan and
revolving credit facility provided by GE Healthcare Financial Services, with a
final maturity date of November 2007. Sentinel and certain other investors,
including members of Castle Dental's management, purchased $6.0 million in
Series B preferred stock and $7.0 million in subordinated notes due in five
years. Sentinel will own a majority of the voting stock of the Company and will
be entitled to elect a majority of the board of directors of Castle Dental.
James M. Usdan, president and chief executive officer, had the following
comments, "We are extremely pleased to announce the completion of our debt
restructuring and recapitalization efforts, which have been ongoing for more
than two years. The infusion of new equity into the Company by Sentinel Capital
Partners and the replacement of our senior credit facility with the new line of
credit provided by GE Healthcare Financial Services substantially reduces our
debt and provides Castle Dental a stable capital structure for the first time in
several years. We have been able to achieve this result through the hard work of
our employees and affiliated dentists, as evidenced by the improved operating
results that we are also pleased to announce today. The net income of $462,000
reported for the first quarter is Castle Dental's first profitable quarter since
the first quarter of 2000. This has been achieved by focusing on improving the
quality of services provided to our patients, stringent cost controls, improving
provider relations with our affiliated dental professionals, and selling or
closing poorly performing dental centers. With our strengthened balance sheet
and new financial partners, we will be able to continue our efforts to become
the leading dental healthcare provider in the markets that we serve."
"This investment is consistent with Sentinel's plan to selectively
invest in quality niche service businesses," said David Lobel, Sentinel's
Founder and Managing Partner. "Castle Dental is a highly respected and
recognizable brand in the dental services industry and has established a
leadership position in its markets," Lobel noted. "We are also delighted to
partner in this deal with Castle Dental's senior management, and look forward to
working closely with them and assisting in the company's growth plan," Lobel
added.
"Castle Dental is well positioned to expand the range of specialty
services it offers its patients and thereby to take advantage of the company's
strong dental office system," said Paul Murphy, a Principal at Sentinel. "Our
objective is to substantially increase Castle Dental's profitability over the
next several years. The Company has the management and infrastructure in place
to accomplish this goal."
Castle Dental Centers, Inc. develops, manages and operates integrated
dental networks through contractual affiliations with general, orthodontic and
multi-specialty dental practices in the U.S. Castle manages 77 dental centers
with approximately 170 affiliated dentists in Texas, Florida, Tennessee and
California with annual patient revenues of approximately $100 million.
Information contained in this press release, other than historical
information, may be considered forward-looking in nature and is subject to
various risks, uncertainties and assumptions. Among the key factors that may
have a direct bearing on the Company are fluctuations in the economy, the degree
and nature of competitions and the demand for the Company's services, changes in
laws and regulations affecting the Company's business, the Company's inability
at any time to complete acquisitions and integrate the operations of acquired
businesses, and numerous other factors discussed in Castle Dental's filings with
the Securities and Exchange Commission.