Message #26 From:
NewsBot Date: January 9, 2007 08:49:00 AM
SPGR News DGSE Companies, Inc. Announces Material Changes to Definitive Agreement to Acquire Superior Galleries, Inc.; Immediate Interim Agreement to Manage Superior
DALLAS--(BUSINESS WIRE)--DGSE Companies, Inc. (Nasdaq: DGSE), which wholesales, retails and
auctions fine watches, jewelry, diamonds and precious metal and rare
coin products via traditional and Internet channels, today announced
that it has agreed to significant changes in its previously announced
agreement to acquire Superior Galleries, Inc. (OTCBB: SPGR). The changes
include the following:
1. The total number of DGSE shares to be issued to Superior stockholders
has been reduced to an estimated 3,700,000, using an exchange ratio of
0.2731 DGSE shares for each outstanding Superior share, subject to an
escrow equal to 15 percent of the total shares to be issued.
2. The DGSE acquisition subsidiary and Superior have entered into a
management agreement under which DGSE senior management assumed
day-to-day operational control of the business of Superior on January 6,
2006. William Oyster (COO of DGSE) has been appointed the new interim
Chief Executive Officer of Superior, Scott Williamson (Executive
Vice-President of DGSE) has been appointed the new interim Chief
Operating Officer of Superior and John Benson (Chief Financial Officer
of DGSE) has been appointed the new Vice-President, Finance and interim
Chief Financial Officer of Superior. All three individuals have also
been elected to fill the vacancies on Superior’s
Board of Directors created upon the resignations of Silvano DiGenova,
Paul Biberkraut, Lee Itner and Anthony Friscia. Mitchell Stolz and David
Rector remain on the Board of Superior and will serve as a Committee of
Independent Directors. Dr. L.S. Smith, Chairman and CEO of DGSE, will be
a non-voting observer to the Superior Board.
3. Stanford International Bank Ltd. (SIBL) has increased its existing
line of credit to Superior by $11.5 million to approximately $20,00,000,
and executed a forbearance agreement with respect to existing defaults.
As a condition to the closing of the merger, Stanford will have to
exchange approximately $8.4 million of its current debt for Superior
common stock at $1.70 per share, and to replace the existing credit
facilities with a new $11.5 million term facility that will be available
to the combined operations.
4. Both SIBL and Silvano DiGenova have converted their preferred stock
into common shares of Superior, and Superior has repaid Mr. DiGenova’s
$400,000 note in full.
5. Silvano DiGenova, the former Chief Executive Officer, President and
director of Superior, has exchanged 355,000 common shares in Superior
for a non-transferable warrant to acquire 96,951 DGSE shares at the
closing of the merger, which reflects the same exchange ratio being used
in the definitive merger agreement. Should the merger not be
consummated, the warrant will terminate and DGSE will transfer the
Superior shares to DiGenova’s designee. Any
shares acquired by DiGenova upon exercise of the warrant, in the merger
or otherwise will be subject to a one-year lock-up agreement.
Upon successful completion of the acquisition, Superior stockholders as
a group will own approximately 42.9 percent of the outstanding shares of
the combined entity, and SIBL will own approximately 30 percent of DGSE.
DGSE expects substantial continuity in the Superior staff. Superior’s
former CEO, Silvano DiGenova, has agreed to remain with the new
enterprise as the Managing Director-Numismatics, and Larry Abbott will
remain as Executive Vice-President of Auctions and Sales at Superior.
The acquisition will enhance the size of DGSE and diversify its
activities, making it one of the nation’s
largest rare coin firms. Upon the completion of the acquisition, the
inventory at the current showroom facility of Superior will be
significantly expanded to include a full inventory of jewelry, diamonds
and fine watches. In addition, with Superior’s
national and international activities and through a preferred provider
agreement with Stanford Coin and Bullion, DGSE expects to increase
substantially its wholesale and retail precious metals business.
Superior plans to expand its dynamic internet website (www.SGBH.com)
significantly and to integrate the website with DGSE’s
websites –www.DGSE.com,
www.USBullionExchange.com,
www.FairchildWatches.com
(Fairchild International), and www.CGDEInc.com
(Charleston Gold & Diamond Exchange).
“The revised terms of this transaction
represent a substantially enhanced opportunity for DGSE and its
stockholders,” noted William H. Oyster,
President and Chief Operating Officer of DGSE Companies, Inc. and
interim Chief Executive Officer of Superior. Mr. Oyster continued, “The
interim period leading up to the merger will give us the knowledge and
opportunity to effect a more efficient and accelerated integration of
the operations of the two companies post-acquisition. In addition, SIBL’s
commitment to the combined entity’s success
through the exchange of debt and the new credit facility provides robust
tools for the new combined enterprise. With expected revenues for the
combined entities more than double our current level, substantial
financing in place and a history that can be traced to 1930, we believe
that the infrastructure will be in place to have a major impact on our
revenues and earnings.”
DGSE and Superior expect the acquisition to close late in March 2007,
subject to the satisfaction or waiver of the various closing conditions
in the merger agreement, including the approval of the stockholders of
both companies and the effectiveness of a registration statement on a
Form S-4.
Additional Information and Where to Find It
In connection with the proposed acquisition, DGSE and Superior intend to
file relevant materials with the SEC. DGSE and Superior each have filed
a current report on Form 8-K related to the proposed acquisition on or
before the date of this release. In the near future, DGSE intends to
file a registration statement on Form S-4, which will contain a
prospectus and related materials to register the DGSE common stock to be
issued in the proposed acquisition, and a joint proxy statement, which
DGSE and Superior plan to mail to their respective stockholders in
connection with the approval of the proposed acquisition by their
respective stockholders.
The current report contains, and the registration statement and the
joint proxy statement/prospectus included therein will contain,
important information about DGSE, Superior, the proposed acquisition and
related matters. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
FILINGS CAREFULLY WHEN THEY ARE AVAILABLE. Investors and security
holders will be able to obtain free copies of these documents (when they
become available) and other documents filed with the SEC at the SEC’s
web site at www.sec.gov or by calling
the SEC at 1-800-SEC-0330. In addition, investors and security holders
may obtain free copies of the documents filed by DGSE with the SEC by
contacting
