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Exhibit 99.1
Press Release
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Contact: Scot McCormick, CFO
Avery Communications, Inc.
(312) 419-0077
[email protected]
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Paul Goodson, General Inquiries
Lisa Mueller, Analyst Inquiries
Carl Dameron, Financial Media Inquiries
The Financial Relations Board
(310) 442-0599
Tracy Engeleiter
Bock Communications, Inc.
(714) 540-1030
[email protected]
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AVERY COMMUNICATIONS REVISES SPIN-OFF PLAN
Primal Solutions to be Spun-Off Rather than HBS; Tax Impact Reduced
CHICAGO, IL. August 10, 2000 -- Avery Communications, Inc. (OTC Bulletin Board:
ATEX) today announced that it will spin-off 100% of its wholly-owned subsidiary
Primal Solutions, and will retain ownership of its HBS local exchange carrier
(LEC) billing clearinghouse business. The decision revised its plan announced
March 10, 2000 to spin-off its wholly-owned HBS subsidiary to Avery
stockholders.
The Primal spin-off, which has been approved by Avery's Board of Directors, is
expected to be accomplished through a taxable distribution of common stock in
Primal Solutions to Avery's shareholders utilizing a structure intended to
minimize any tax consequences. Pending regulatory approvals, Avery
Communications shareholders of record on October 2, 2000 will receive one share
of stock in Primal Solutions, Inc. for every Avery common share held on the
record date. Primal will file a registration statement with the Securities and
Exchange Commission to register the Primal shares to be issued in the spin-off.
Avery anticipates that the distribution will be completed by October 31, 2000,
assuming all necessary approvals are obtained.
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"Avery continues to believe that this spin-off will create value for all of our
stockholders," commented Patrick J Haynes III, Chairman of Avery. "Because
Primal and HBS are truly two separate businesses, operating in different markets
with different customer bases and having different capital requirements, we
believe the equity markets value these businesses on very different measures.
By making both companies independent and separately tradable, Avery's Board
believes that Primal's potential will become more apparent to investors, and the
combined value of both companies will be greater than they are today under
Avery's ownership. In addition, investors will obtain a clearer view of the
earnings being generated by our LEC billing operation which produced $4.2
million of EBITDA in calendar 1999."
The company's decision to spin-off Primal rather than HBS has been motivated
primarily by the expectation that Avery shareholders will pay less in taxes
under a spin-off of Primal than would have been the case with a spin-off of HBS.
Commenting on the tax implications of the transaction Mr. Haynes said, "Although
our shareholders will still own both companies after the final distribution, we
are now confident that our shareholders will pay significantly less in taxes by
spinning off Primal to them rather than our original plan to spin off HBS."
Commenting on Avery's future strategy Mr. Haynes said, "Avery will continue to
execute its strategy of reinvesting the significant cash flow from HBS into high
growth opportunities, primarily focusing on additional wireless applications.
This strategy will provide Avery's shareholders with participation in one of the
fastest growing communications industry segments."
Following the spin-off, Primal will be a public company and Avery's only
significant asset will be its wholly-owned subsidiary, HBS Billing Services
Company. Avery's common stock will continue to trade on the NASDAQ over-the-
counter bulletin board under the symbol ATEX. Primal will apply for the symbol
PRML, and presently anticipates that its shares will also be traded on the
NASDAQ over-the-counter bulletin board.
As part of the transaction, the original Primal owners, who could have received
40% of the total of Avery's primary shares outstanding and its convertible
securities, have agreed to receive 20% and 32% of Avery and Primal,
respectively, on the same basis. In addition, the former Primal
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shareholders have agreed to waive their right for Avery to re-purchase $3.9
million of their Avery stock and their right to a seat on the Avery board of
directors. Mr. Mark Nielsen, former Avery CEO, has resigned from the Avery board
of directors and Avery has agreed to provide $4 million in working capital to
Primal. Also in conjunction with the transaction, Thurston Group has agreed to
issue a proxy on it's post distribution Primal shares to the former Primal
shareholders in exchange for a proxy to vote the former Primal shareholders'
shares in Avery.
Primal is currently conducting a search for a new Chief Executive Officer, and
is forming its new Board of Directors. Mr. Haynes commented, "Bill Salway, who
is currently President and Chief Operating Officer of Primal, will assume the
additional position of acting CEO until a new CEO is hired. Bill has been
responsible for the dramatic turnaround in Primal's core business. The new CEO
will compliment Bill's numerous talents." After the spin-off, Primal's Board
will consist of 7 members: Mr. William Salway (Interim CEO and President/COO of
Primal), Mr. John Faltys (Chief Technology Officer of Primal), Mr. Joseph
Simrell (Executive Vice President and Chief Financial Officer of Primal), the
following Avery board members; Mr. J. Alan Lindauer, Mr. Norman Phipps and Mr.
Spencer Brown and an additional independent director who will be named at a
later date.
Avery Communications, Inc. is currently the public parent of two wholly owned
subsidiaries. HBS Billing Services Company is a local exchange carrier (LEC)
billing clearinghouse that provides the information and systems necessary for
third parties, such as domestic long-distance telephone companies, to bill their
charges on the home telephone bill. HBS is based in San Antonio, Texas. Primal
Solutions, Inc., based in Irvine, California, is a software company focused on
providing web-enabled customer management and intelligence solutions that allow
evolving communications companies and Internet providers worldwide to stay
connected with and grow their customers. It does this through an integrated
suite of applications that can track and analyze customer behavior and
preferences, collect usage information, and support billing and customer-care
back office requirements, including those of the emerging IP billing markets.
Both companies operate in the business-to-business space, and have developed
blue-chip client lists.
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Primal is already focused on the fast growing markets of wireless and Internet,
with B2B applications that manage a carrier's customer base and infrastructure.
Its current client roster includes British Telecom, Metrocall, Orange-Hutchison
Australia and Western Wireless. Building on its established customer care and
billing product line, Primal recently introduced its Outfront Customer
Relationship Management (CRM) product suite built specifically for
communications and Internet service providers. This CRM application allows
carriers to analyze customer behavior and trends from data collected across the
enterprise so that a carrier can personalize their services to the customer.
Using advanced data mining techniques and automated actions back into the
operations, Outfront is intended to help carriers address such issues as
customer "churn", usage analysis, revenue assurance and marketing campaign
effectiveness.
HBS is a leader in the LEC billing clearinghouse business in the U.S. Over the
past two years, HBS has grown its call processing volume by over 100% per year,
ending 1999 with over 230 million calls processed. Its future growth is
expected to come not only from its traditional long-distance business, but also
from the emerging markets driven by the Internet. These opportunities will
leverage the existing infrastructure of HBS with only minor capital
expenditures.
For more information, contact Paul Goodson, [email protected], or Valerie
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Christopherson, [email protected].
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Certain statements contained in this document are forward-looking statements
under federal securities laws, and Avery intends that such forward-looking
statements be subject to the safe-harbor created thereby. Such forward-looking
statements include, but are not limited to (i) expectations that Avery will
complete the spin-off of Primal Solutions, (ii) expectations of strategic
benefits and/or market value increases to be realized as a result of spinning-
off Primal Solutions,(iii) Mr. Haynes' quote, and (iv) Avery's success in
raising additional capital. Avery cautions that these statements are qualified
by important factors that could cause actual results to differ materially from
those reflected by the forward-looking statements contained herein. Such
factors include, but are not limited to, (a) the possibility that Avery will
decide not to complete the spin-off of Primal; b) a decline in the market
valuations of companies operating in the same industry segments as HBS and
Primal; (c) Avery's failure to obtain investor recognition for the full value of
HBS after a spin-off of Primal, and (d) other risks as detailed from time to
time in Avery's SEC reports, including Quarterly Reports on Form 10-QSB. Current
Reports on Form 8-K, and Annual Reports on Form 10-KSB.
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