April 23, 2007 – Finance Digest
Advanstar will be acquired for $1.1 billion
Advanstar Holdings Corp., the holding company for Advanstar Communications Inc., a media and event company that organizes the Dealer Expo, will be acquired through an investor group led by Veronis Suhler Stevenson (VSS), a private equity and structured capital fund management company.
VSS will acquire all of the outstanding stock of Advanstar Holdings Corp. for approximately $1.1 billion in cash. VSS is joined in this investment with co-sponsors in the transaction, including Citigroup Private Equity and New York Life Capital Partners.
Advanstar’s primary shareholder, DLJ Merchant Banking, has approved the transaction. Senior members of Advanstar’s management team will have equity interests in the acquiring entity at the closing of the transaction. The transaction is expected to close in the second quarter of 2007.
In its recently released 2006 financial report, Advanstar said its revenue increased 12 percent last year to $323 million. Part of that increased sales was due to a 13 percent growth in its powersports revenue. Overall, the company reported a $41.7 million loss in 2006 compard with a $4 million net income the previous year.
Service contract provider signs new insurance deal
Under a new agreement, a subsidiary of Bank America will now provide insurance backing for Interstate National Dealer Services Inc. (INDS), an administrator of vehicle service contracts and extended warranties.
The subsidiary, General Fidelity Insurance Company (GFIC), will provide the backing for many of INDS’ product offerings.
“We see a great opportunity for growth, and the need for professionally structured and insured service contracts,” Shaun Fetherston, INDS’ CEO said in a press release.
INDS is a full-service provider of service contracts and extended warranties for new and used motorcycles, watercraft and other recreational vehicles. The company, founded in 1980, was purchased by Golden Gate Capital, a $3 billion equity investor, in 2006.
Cycle Country expects weaker Q2 earnings
Cycle Country Accessories Corp. has reduced its guidance for the second quarter. The company cited the record warm winter, which adversely impacted snowplow reorders from distributors that traditionally occur during the second quarter. The reorders were light early in the quarter and stayed that way to the end of the quarter.
In addition, in implementing a new ERP software package, the company determined a few recent transactions had not been treated accurately. The transactions impacted both sales and cost of sales negatively. The company retained a consultant from the software supplier to review the implementation of the financial package. Based on the review, the company is comfortable the new package is now accounting for transactions properly.
The original guidance for the second quarter was zero cents to two cents. The revised guidance is negative five cents to negative two cents.
The company maintains its previous guidance for the fiscal year at $0.17 to $0.22. The company reaffirms the guidance based on the projected strength of new products and the anticipated increased sales of snow-related products during the fourth quarter. The fourth quarter increases will be a result of distributors and dealers replenishing their inventories.
