FORT LEE, N.J., Dec. 2, 2014 /PRNewswire/ -- Pioneer Power
Solutions, Inc. (Nasdaq: PPSI) ("Pioneer" or the "Company"), a
manufacturer of specialty electrical transmission and distribution
equipment for applications in the utility, industrial and
commercial markets, and Titan Energy Worldwide, Inc. (OTC:
TEWI) ("Titan"), a Minneapolis-based provider of sales and
service for commercial and industrial-scale onsite power systems,
including generators and associated switching equipment, today
announced the acquisition of control of Titan by a subsidiary of
Pioneer.
The transaction adds onsite power generation equipment to
Pioneer's portfolio of products and a national service capability
to Pioneer's scope of solutions, enabling its existing Critical
Power business to more fully satisfy the needs of its customers
with each equipment sale, while retaining and building a stream of
multi-year, preventative maintenance contracts. Through Titan,
Pioneer also becomes one of Generac's (NYSE: GNRC) approximately
thirty-five Industrial Power distributors in the U.S., with a
designated market territory covering Minnesota, Iowa and Nebraska. As a result of the acquisition,
Pioneer expects that its overall revenues from equipment sales and
service of critical power projects will exceed $25 million in 2015, up from an estimated
$5 million in 2014.
"This acquisition augments our existing critical power business,
and should make our product and service offering more compelling in
our fastest growing target market," commented Nathan Mazurek, Pioneer's Chairman and Chief
Executive Officer. "We will now be able to offer our customers the
option of a comprehensive ongoing service plan for their onsite
power systems, whether or not they were originally manufactured or
sold by Pioneer. In addition, we look forward to leveraging Titan's
national service network and its proprietary remote monitoring
technology to build on Titan's installed base of national account
service customers, currently led by Target Stores and X/O
Communications. We believe this recurring revenue stream is more
scalable than our existing, project-driven business, and should
therefore help reduce volatility in our quarterly results."
"The transaction also serves to deepen our existing relationship
with the Industrial Power division of Generac. We are very excited
and proud of our expanded association with an industry leader like
Generac, and believe our respective business goals align well
towards mutual long-term benefits and success," added Mr.
Mazurek.
Mr. Mazurek continued, "Titan has a solid business with
significant growth opportunities in its own right, but it has been
hindered for years by a troubled balance sheet. With this challenge
now removed and the benefit of Pioneer's operational resources, we
expect Titan's team and business to be reinvigorated, just as other
financially-distressed businesses acquired by Pioneer have been in
recent years." Mr. Mazurek continued, "To ensure this happens,
Pioneer is committed to investing in the future stability and
growth of Titan, including $2.5
million of working capital on day one, followed by
additional investments in human capital to drive growth of Titan's
equipment and service sales businesses."
Transaction Structure
Through a series of privately-negotiated transactions with
existing shareholders of Titan, and the purchase of a new series of
super-voting convertible preferred stock, Pioneer acquired voting
control and the right to appoint the sole seat on Titan's board of
directors. Consequently, Titan's financial results will become
consolidated into Pioneer's effective December 2, 2014. By the end of December, Pioneer
intends to purchase the remainder of Titan's preferred stock and
debt from existing holders, followed by a statutory merger between
Titan and a newly formed acquisition subsidiary of Pioneer. Titan
will then cease to exist as a publicly-traded company and its
common shareholders will receive cash of $0.0007 per share.
Pioneer preliminarily values the purchase price for the
transaction at $6.8 million, which
value includes the purchase of Titan's equity and the estimated
cost to purchase and/or repay all of Titan's debt. The cash portion
of the purchase price, together with an initial working capital
infusion into Titan, are being financed by Pioneer through new
borrowings under Pioneer's existing bank credit facilities. A
portion of the purchase price is also being financed through the
issuance of approximately 300,000 shares of Pioneer's common stock
to holders Titan's preferred stock and notes.
Financial Outlook
"Based on our conservative estimates at this point in time, we
expect this acquisition to generate approximately $18 million of revenue during 2015 and be
accretive to us from the standpoint of core EPS," commented
Andrew Minkow, Pioneer's Chief
Financial Officer. "These current estimates do not yet take into
account any integration cost savings between Titan's operations and
our own, assumptions which we are still refining. Instead, our
expectation that Titan will be accretive is driven mostly by
organic growth within its own business, particularly through the
scalability of its national service account revenues, as well as
through its strategic alignment with Pioneer Critical Power Inc. We
will further update and clarify these assumptions when we issue
2015 guidance in March next year, in connection with announcing our
full year 2014 results."
About Titan Energy Worldwide, Inc.
Titan Energy Worldwide is engaged in the sales, service, and
management of onsite power generation assets for industrial,
commercial, and institutional customers. Since its founding, Titan
has provided thousands of customers with advanced power generation
equipment, including generator sets, automatic transfer switches
and paralleling switchgear, to enable customer operations to
continue uninterrupted during times of power failures or disasters.
Titan has also established a professional field service
organization that helps customers to maintain, repair and manage
their power generation assets nationally. Titan is headquartered in
Minneapolis, MN, and operates from
four additional locations in Iowa,
Nebraska, Miami and the New
York metro area. For more information, please visit the
company's website at www.titanenergy.com.
About Pioneer Power Solutions, Inc.
Pioneer Power Solutions, Inc. is a manufacturer of specialty
electrical transmission and distribution equipment and provides
through its subsidiaries a broad range of custom-engineered and
general purpose solutions for electrical applications in the
utility, industrial and commercial markets. The Company is
headquartered in Fort Lee, New
Jersey and operates from eight additional locations in the
U.S., Canada and Mexico for manufacturing, centralized
distribution, engineering, sales and administration. To learn more
about Pioneer, please visit our website at
www.pioneerpowersolutions.com.
Safe Harbor Statement:
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, as amended. Such statements may be preceded by the words
"intends," "may," "will," "plans," "expects," "anticipates,"
"projects," "predicts," "estimates," "aims," "believes," "hopes,"
"potential" or similar words. Forward-looking statements are not
guarantees of future performance, are based on certain assumptions
and are subject to various known and unknown risks and
uncertainties, many of which are beyond the Company's control, and
cannot be predicted or quantified and consequently, actual results
may differ materially from those expressed or implied by such
forward-looking statements. Such risks and uncertainties include,
without limitation, risks and uncertainties associated with (i) the
Company's ability to expand its business through strategic
acquisitions, (ii) the Company's ability to integrate acquisitions
and related businesses, (iii) the fact that many of the Company's
competitors are better established and have significantly greater
resources, and may subsidize their competitive offerings with other
products and services, which may make it difficult for the Company
to attract and retain customers, (iv) the Company's dependence on
Hydro-Quebec Utility Company and Siemens Industry, Inc. for a large
portion of its business, and the fact that any change in the level
of orders from Hydro-Quebec Utility Company or Siemens Industry,
Inc. could have a significant impact on the Company's results of
operations, (v) the potential loss or departure of key personnel,
including Nathan J. Mazurek, the
Company's Chairman, President and Chief Executive Officer, (vi) the
fact that fluctuations between the U.S. dollar and the Canadian
dollar will impact the Company's revenues, (vii) the Company's
ability to generate internal growth, (viii) market acceptance of
existing and new products, (ix) operating margin risk due to
competitive pricing and operating efficiencies, supply chain risk,
material, labor or overhead cost increases, interest rate risk and
commodity risk, (x) restrictive loan covenants or the Company's
ability to repay or refinance debt under its credit facilities that
could limit the Company's future financing options and liquidity
position and may limit the Company's ability to grow its business,
(xi) general economic and market conditions in the electrical
equipment, power generation, commercial construction, industrial
production, oil and gas, marine and infrastructure industries,
(xii) the impact of geopolitical activity on the economy, changes
in government regulations such as income taxes, climate control
initiatives, the timing or strength of an economic recovery in the
Company's markets and the Company's ability to access capital
markets, (xiii) the fact that unanticipated increases in raw
material prices or disruptions in supply could increase production
costs and adversely affect the Company's profitability, (xiv) the
fact that the Company's Chairman controls a majority of the
Company's combined voting power, and may have, or may develop in
the future, interests that may diverge from yours and (xv) the fact
that future sales of large blocks of the Company's common stock may
adversely impact the Company's stock price. More detailed
information about the Company and the risk factors that may affect
the realization of forward-looking statements is set forth in the
Company's filings with the Securities and Exchange Commission,
including the Company's Annual and Quarterly Reports on Form 10-K
and Form 10-Q. Investors and security holders are urged to read
these documents free of charge on the SEC's web site at
www.sec.gov. The Company assumes no obligation to publicly update
or revise its forward-looking statements as a result of new
information, future events or otherwise.
CONTACT:
Brett
Maas, Managing Partner
Hayden IR
(646) 536-7331
brett@haydenir.com
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SOURCE Pioneer Power Solutions, Inc.; Titan Energy Worldwide,
Inc.