Bateman Litwin to initiate litigation
against former owners of Delta-T
Amsterdam, the Netherlands, 24 December 2007 - Bateman Litwin N.V. (“Bateman Litwin”, “the “Company” or the “Group”) has commenced a civil action (the “Complaint”) in the U.S. District Court for the Eastern District of Virginia against Mr. R. L. Bibb Swain and Mr. Robert L. Swain (“the Swains”), from whom it purchased Delta-T Corporation (“Delta-T”), a specialist contractor and technology provider for the design and construction of bio-ethanol manufacturing facilities. The acquisition was made through Bateman Litwin’s wholly-owned U.S. subsidiary, Bateman Engineering, Inc.
Under the terms of the transaction announced on 17 July 2007, Bateman Litwin agreed to pay the Swains a conditional purchase price of US$45 million in cash and 11.8 million in Bateman Litwin shares. The purchase price was conditional upon Delta-T’s performance, and upon representations and warranties made by the Swains as to the financial condition of Delta-T.
In line with the pre-audit results and in accordance with the agreed formula in the sale agreement, the Company anticipates the return of the 11.8 million Bateman Litwin shares which formed the stock element of the consideration in the transaction, following finalisation of Delta-T results for the year to 31 December 2007.
Furthermore, Bateman Litwin asserts in the Complaint that the financial condition of Delta-T upon acquisition has subsequently been shown to be materially different from that represented by the Swains. The Group maintains that the Swains failed to make material disclosures as required under the contract and provided inaccurate and misleading disclosures, and that this amounted to “willful misconduct” under the sale agreement. Bateman Litwin is seeking reparations up to, and beyond, the value of the complete purchase price of Delta-T. The Complaint was filed late on 21 December following a break down in discussions with the Swains regarding these matters.
Bateman Litwin took control of Delta-T on 22 August 2007 and has since applied its rigorous approach to the execution of Delta-T’s contracts and projects. Bateman Litwin has also had to address the issues arising from the Delta-T legacy contracts and projects. Following preliminary post acquisition audit work by the Group Auditors, the Group believes that Delta-T as a stand-alone business will report a loss for the year ended 31 December 2007. The loss to be reported by Delta-T will be reflected in the Delta-T closing balance sheet at 22 August 2007 as it relates to historical projects signed during 2006. Such losses will not impact the current year financial performance of Bateman Litwin. Bateman Litwin’s next reported Balance Sheet at 31 December 2007 will reflect the value of the purchased technology, brand and goodwill. Delta-T has been operating profitably since the date of acquisition. Any additional requirements for working capital for Delta-T will be met out of the Group’s current cash resources.
One of the major elements of the willful misconduct by the Swains relates to a major supplier claiming substantial sums due to change orders. This undisclosed situation has since been settled by Delta-T and Bateman Litwin, with the supplier now operating in line with the settlement.
Bateman Litwin expects that a court decision regarding the Complaint should take approximately six months.
Roy Franklin, Chairman of Bateman Litwin said:
“Management has responded swiftly and decisively to the issues discovered at Delta-T and we are confident of the merits of our Complaint. We have added more management and operational resource to Delta-T and remain confident that the opportunities available in the North American biofuels market present an attractive platform to enhance shareholder value.”
Shuki Raz, Chief Executive Officer of Bateman Litwin said:
“In holding the former owners of Delta-T to the terms of the sale agreement, Bateman Litwin is showing its determination to use every available measure to protect and develop shareholder value. Since acquiring Delta-T, Bateman Litwin has brought more than twenty key personnel into Delta-T and appointed a new Chief Executive Officer. Since 22 August we have imposed our project management disciplines on Delta-T, which is now operating profitably. Losses incurred at Delta-T prior to 22 August will not be consolidated into Bateman Litwin results and in accordance with the formula in the sale agreement the value of the purchase will be reduced accordingly. We believe that Delta-T’s technology and our EPC skills remain a winning combination for ethanol producers in the US and overseas."
Notes to Editors
Bateman Litwin announced the acquisition of Delta-T on 17 July 2007. In the preliminary results statement on 7 November 2007, it was announced that Delta-T would be consolidated from the actual closing of the acquisition on 22 August 2007.
About Bateman Litwin N.V.
Bateman Litwin N.V. is a mid-sized Oil, Gas, Power and Renewable Energy EPC (engineering procurement and construction) contractor and a proprietary technology provider in the Renewable Energy and the Phosphate and Solvent Extraction dependent industries. It is increasingly furthering its reputation by combining its world class EPC skills with its leading technology expertise.
To find out more about Bateman Litwin please visit: www.bateman-litwin.com
Enquiries:
Bateman Litwin
Shuki Raz, Chief Executive Officer Tel: +44 (0) 7920292807 /
+972 (0)54 4260785
Irad Rekem, Group General Counsel Tel: +972 (0)54 5299 096
Tal Rappoport, Marketing Communications Tel: +31 (0) 64 399 2621
Credit Suisse Securities (Europe) Limited
Jon Grussing Tel: +44 (0) 20 7888 8888
Brunswick Group LLP
Patrick Handley Tel: +44 (0) 20 7404 5959
Deborah Spencer
|
