Exhibit 99.1
Manchester, NH - August 9, 2000: WPI Group, Inc. (WPIC:OTC), a
leading provider of diagnostic hardware and software for the
transportation industry, announced today that it has entered into
certain financing arrangements with Sunrise Capital Partners,
L.P. ("Sunrise") designed to recapitalize the company and enhance
its short- and long-term financial outlook. Under the
transaction, Sunrise and certain participants (including certain
members of company management and some members of the Allard-
Nazarian Group) will invest up to $24.1 million in Convertible
Subordinated Notes, warrants and common stock of the Company.
WPI Group also announced that it has refinanced its existing
senior credit facility and reduced its borrowings thereunder.
The Convertible Subordinated Notes, which mature three years from
the date of issuance, will bear interest at a rate of 10.75%. At
the option of the Company, interest on the Notes will be payable
in additional Convertible Subordinated Notes. The Convertible
Subordinated Notes will be convertible at the election of the
holder into WPI Group common stock at a price of $1.75 per share.
If WPI Group's common stock is listed on the New York Stock
Exchange or the NASDAQ and trades above $4.50 for 45 consecutive
trading days, and certain daily trading volume levels in the
stock are maintained, the Company may require the holders convert
the Notes into common stock on the stated terms. The warrants to
be purchased by Sunrise and the other parties will be issued at
an exercise price of $1.75 per share.
On August 9th, Sunrise and its partners purchased the first
series of Convertible Subordinated Notes, in aggregate principal
amount of $14.1 million, along with warrants to purchase
approximately 1.6 million shares. Sunrise and the other parties
also purchased approximately 1.8 million shares of WPI Group
common stock, representing approximately 20% of the Company's
outstanding shares on a fully-diluted basis.
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WPI Group's shareholders will need to approve an amendment to the Company's
articles of incorporation to increase the number of authorized
shares of common stock before additional Convertible Subordinated
Notes and warrants may be issued. The Company will use the
proceeds from the sales of the Convertible Subordinated Notes to
refinance amounts owed by it under various loan agreements, as
well as to complete the development of "e-Technician," the
Company's new real-time remote diagnostics service.
Assuming the Company's stockholders approve the amendment and additional
Convertible Notes and warrants are issued, Sunrise would
beneficially own approximately 56% of the outstanding shares of
WPI Group common stock on a fully-diluted basis (assuming
exercise of the warrants and conversion of all the Notes). As
part of the transaction, Sunrise will be entitled to designate
four nominees to the Company's board of directors.
The Company also announced that Stephen Carlotti resigned from the Board of
Directors of WPI Group in June of this year. In connection with
the Sunrise financing transaction, four additional Board members,
Michael Foster, Irving Gutin, James Risher and Steven Shulman,
also resigned from the Board of Directors. David A. Presier,
Managing Partner of Sunrise, and Joseph A. Julian, Jr., Michael
D. Stewart and Irwin N. Gold, each a principal of Sunrise, were
appointed by the remaining Directors to fill the vacancies of the
Board created by the resignations. With these changes, WPI Group
President and CEO John R. Allard was elected to the additional
post of Chairman of the Board.
Commenting on the convertible note financing, Allard said, "As we
have previously stated, our focus has been on the growth of the
diagnostics business and on divesting the Company's other
business operations. Over the last year, we have sold our power
conversion operations, our handheld computers and terminals
business, and are close to divesting our instruments and
solenoids businesses. This Convertible Note refinancing is
another major step forward for the Company. We are resolving our
debt problems, and at the same time, funding for the substantial
growth we expect from our MPSI diagnostic products and services
business. Our agreement with Sunrise Capital Partners will enable
us to launch exciting new products and to fund additional
development required to provide a more robust mix of products and
services. At the same time, we also now have the resources to
continue enhancing and growing our core product lines."
WPI Group, Inc. is an industry-leading provider of diagnostic hardware,
software and Web-based services for the transportation industry.
An affiliate of Houlihan Lokey Howard & Zukin, Sunrise Capital Partners, L.P. is
a private investment fund with over $200 million of committed
capital focusing on the acquisition of controlling interests in
middle market companies. Houlihan Lokey Howard & Zukin is one of
the nation's premier providers of investment banking services to
middle-market companies. Houlihan Lokey Howard & Zukin
specializes in the placement of debt and equity capital, mergers
and acquisitions advisory services, valuation services and
financial restructuring advisory services.
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THE STATEMENTS CONTAINED IN THIS RELEASE CONCERNING THE COMPANY'S GOALS,
STRATEGIES AND EXPECTATIONS FOR BUSINESS AND FINANCIAL RESULTS
ARE "FORWARD-LOOKING STATEMENTS" BASED ON CURRENT EXPECTATIONS.
NO ASSURANCES CAN BE GIVEN THAT THE RESULTS IN ANY FORWARD-
LOOKING STATEMENTS WILL BE ACHIEVED AND ACTUAL RESULTS COULD
DIFFER MATERIALLY. PLEASE REVIEW THE REPORTS THAT THE COMPANY
FILES WITH THE SECURITIES AND EXCHANGE COMMISSION FOR INFORMATION
CONCERNING FACTORS WHICH COULD AFFECT THE COMPANY'S BUSINESS.
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