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Contact:
Thomas K. Espel
701/297-4288
[email protected]
FOR IMMEDIATE RELEASE
RDO EQUIPMENT FILES SUIT AGAINST JOHN DEERE CONSTRUCTION EQUIPMENT COMPANY
SUIT ALLEGES THAT JOHN DEERE CONSTRUCTION HAS VIOLATED MINNESOTA DEALERS ACT AND
SEEKS A RULING THAT JOHN DEERE'S ATTEMPT TO TERMINATE DEALERSHIP AGREEMENTS WAS
IMPROPER
Fargo, N.D. - July 18,2000 - RDO Equipment Co. (NYSE: RDO) announced today that
it has filed suit in Minnesota state court against John Deere Construction
Equipment Company and related parties alleging that those companies have
violated the Minnesota Heavy and Utility Equipment Manufacturers and Dealers Act
and have intentionally and inappropriately interfered and conspired to interfere
with RDO Equipment's John Deere construction equipment dealership agreements.
The suit seeks unspecified monetary damages and a ruling that John Deere
Construction Equipment does not have the right to terminate RDO Equipment's
dealership agreements.
Late last month RDO Equipment received written notice from John Deere
Construction Equipment Company that, effective June 21, 2001, John Deere
Construction would terminate RDO Equipment's dealership agreements for the
Burnsville, Minnesota and Phoenix, Arizona areas of responsibility for the sale
and servicing of Deere construction, utility and forestry equipment. In the
termination notice John Deere Construction cited its view that RDO Equipment was
in violation of certain provisions of its dealership agreements. John Deere
Construction also filed an arbitration demand that seeks confirmation of its
allegations that RDO Equipment construction equipment dealerships can be
terminated because RDO Equipment allegedly violated these agreements. Such a
termination would result in RDO Equipment losing its John Deere Construction
dealership agreements for the Southwest and most of the Midwest regions. The
termination would not affect the Company's Montana or Texas construction
dealerships or its John Deere agricultural dealerships. Over the last several
weeks, representatives of both companies have been exploring ways to settle
their dispute relating to Deere's attempt to terminate these two RDO Equipment
dealerships.
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RDO Equipment's suit alleges that John Deere Construction Equipment's
notice to terminate RDO Equipment's dealership agreements is in large part based
upon Deere's strategic objective to own or control a significant percentage of
its distribution channel. As a result, the ongoing operation of the RDO
Equipment Construction dealerships is viewed by Deere as a substantial
impediment to its achieving its objectives. Recently, John Deere Construction
Equipment entered into a joint venture with Credit Suisse First Boston Equity
Partners, L.P. called Nortrax, L.L.C. Deere has stated that the reason for the
Nortrax joint venture is "to assist in the consolidation, development and
management" of its construction dealerships.
Ronald D. Offutt, Founder, Chairman of the Board and Chief Executive
Officer of RDO Equipment, stated, "We strongly deny John Deere Construction's
contention that it can terminate our dealership agreements. Their reason for
wanting to do so is clearly transparent and self-serving. Our announcement today
sends the strong message that we intend to vigorously defend our right to remain
a John Deere construction equipment dealer under all the means available to us."
RDO Equipment's Construction Equipment Division is the Company's
largest division. With 31 total retail locations, the division accounted for
almost one-half of the Company's total revenues for the twelve months ended
January 31, 2000. The areas of responsibility covered under the termination
notice accounted for approximately two-thirds of the Division's total revenue.
Termination of certain or all of RDO Equipment's dealership agreements with John
Deere Construction as requested in the arbitration demand could have a
significant negative impact on the results of operations, liquidity,
profitability and financial condition of RDO Equipment.
RDO Equipment Co. specializes in the distribution, sale, service,
rental and finance of equipment and trucks to the agricultural, construction,
manufacturing, transportation and warehousing industries, as well as to public
service entities, government agencies and utilities. These operations, which
consist of 54 retail stores in 9 states, include the largest network of John
Deere construction and agricultural stores in North America, as well as Volvo
and Mack truck centers.
The future results of RDO Equipment Co., including results related to
forward-looking statements in this news release, involve a number of risks and
uncertainties.
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Important factors (such as customer confidence, economic conditions, weather,
actions of the Company's suppliers and competitors, and risks associated with
the Company's growth strategies) that will affect future results of the Company,
including factors that could cause actual results to differ materially from
those indicated by forward-looking statements, are discussed in the Company's
filings with the Securities and Exchange Commission. The Company's
forward-looking statements are based upon assumptions relating to these factors.
These assumptions are sometimes based upon estimates, data, communications and
other information from suppliers, government agencies and other sources that are
often revised. The Company makes no commitment to revise forward-looking
statements, or to disclose subsequent facts, events or circumstances that may
bear upon forward-looking statements.
