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8-K - RESOURCES CONNECTION, INC. | v164118_8k.htm |
EX-2.2 - RESOURCES CONNECTION, INC. | v164118_ex2-2.htm |
EX-2.1 - RESOURCES CONNECTION, INC. | v164118_ex2-1.htm |
Analyst Contact:
Nate
Franke, Chief Financial Officer
(US+) 1-714-430-6500 or nate.franke@resources-us.com
Media Contact:
Michael
Sitrick
(US+) 1-310-788-2850 or mike_sitrick@sitrick.com
Resources
Connection to Create New Corporate Advisory and
Restructuring
Business Through Acquisition of Sitrick And Company
and
Brincko Associates
IRVINE,
Calif., October 29, 2009
/PRNewswire/
— Resources Connection, Inc., (NASDAQ: RECN), today
announced the formation of a Corporate Advisory and
Restructuring subsidiary through the acquisition of the business of
Sitrick And Company, Inc., one of the nation’s leading strategic communications
firms and Brincko Associates, Inc., a widely-respected corporate advisory and
restructuring firm.
The
acquisitions, which include the purchase of certain assets of both Sitrick And
Company and Brincko Associates, and the personal goodwill of Michael Sitrick,
CEO of Sitrick and Company, will be made for aggregate initial consideration of
$43.3 million, comprising $28.2 million in cash and approximately 810,000 shares
of restricted stock which, for financial reporting purposes, will be valued at
the closing price of Resources’ stock on the date the transaction closes, plus
an earn-out based on the achievement of certain adjusted earnings before
interest, income taxes, depreciation and amortization
(“EBITDA”) levels over a period of four years from the date of
closing. The transaction is subject to customary closing conditions, including
the completion of the audited financial statements for Brincko Associates, and
is expected to close within the next 30 days. The principal
acquisition agreement provides that the employees of the new subsidiary would
share in up to 20 percent of the earn-out based upon the achievement of certain
growth targets.
Following
the closing, this new Resources subsidiary will be called Sitrick Brincko Group,
LLC. Michael Sitrick will be Chairman and CEO of the new subsidiary
and will report directly to Donald B. Murray, Chairman and CEO of
Resources. John Brincko will be President and COO of the new
subsidiary.
Sitrick
And Company, with offices in Los Angeles, New York, San Francisco and Miami,
specializes in corporate, financial, transactional and crisis communications. It
was founded in 1989. Headquartered in Southern California, Brincko Associates is
an international management consulting firm established in 1979.
Mr.
Murray said the transaction, which is expected to be immediately accretive, will
make Resources a meaningful player in the corporate advisory and restructuring
market.
“Strategically,
the acquisition of the business of Sitrick And Company augments Resources’
“first in” capabilities as corporate issues arise and require immediate
communication strategy formulation and execution,” Mr. Murray
said. “In such situations, companies often require significant
assistance to react proactively to the business issues at hand. Such
matters include business and financial restructuring, dispute resolution
assistance, interim senior-level management or forensic accounting
assistance.”
“Brincko
Associates brings significant, added expertise in each of these areas to
Resources. By combining the specialized skill sets of these two
businesses with Resources’ consultant capabilities, geographic footprint and
client base, we believe we will greatly increase our ability to assist clients
during challenging periods in a more cost effective manner than currently
offered by traditional consulting firms,” he said.
“All one
has to do is to read the daily headlines to see why we are so excited about this
acquisition,” Mr. Murray said. “Despite predictions that the
recession is over, the business landscape remains littered with troubled
companies and indeed whole industries. The constricted financing environment
over the past couple of years has further exacerbated these problems and
deepened the pipeline of troubled companies. We believe this
transaction provides significant opportunities for growth.”
“The
anticipated synergies between Sitrick, Brincko and Resources not only provide
this vehicle for growth,” he stated, “but what we all believe is a
cost-effective means for companies undergoing change to work through their
problems. Sitrick’s and Brincko’s ability to provide expert
senior-level corporate advisory, turnaround and communications counsel is
recognized nationwide. Resources, with over 2000 consultants and 82
locations throughout the world, provides the means to staff assignments with as
many highly-qualified accounting, human resources and IT professionals as
required, at a cost that is considerably less than comparable turnaround firms
are charging.”
Mr.
Sitrick added, “We believe there is a paradigm shift occurring in the advisory
and restructuring business due to the cash squeeze that companies in the current
economic environment are experiencing. This is particularly true for
those attempting a restructuring.”
He
continued, “What we are hearing from Boards, companies and creditors is they
recognize that to get the best talent, they have to pay the going rate for the
top people – lawyers, turnaround professionals and communications executives.
They are looking for alternatives, with respect to the rates they have to pay,
when they must replace or augment an accounting, human resources or IT
department. Sitrick’s and Brincko’s combination with Resources
provides us – and our clients – with a very attractive quality and financial
alternative.”
Mr.
Brincko stated, “By way of example only, a review of one bankruptcy court filing
showed that if the debtor used Resources’ professionals for a number of finance,
accounting and IT roles instead of the service provider whose professionals were
included in the fee application, the entity would have achieved substantial
savings.”
Mr.
Brincko continued, “There is a lot of money that could be saved by just
replacing one group of accountants and IT professionals for another with
comparable or greater experience. And remember, we are not talking
about changing out the top executives in this matter, but the mid- and
lower-level professionals with like or more experienced people.”
Mr.
Sitrick added, “The change that John and I are talking about could make the
difference between a company surviving and successfully emerging from a
restructuring and one going into liquidation – at the very least, it should
result in an increased recovery for creditors.”
Mr.
Murray added, “We believe that Mike Sitrick, John Brincko and their teams are
among the best known and most respected professionals in their fields. In the
restructuring segment of Sitrick’s business, for example, over the past 20
years, his firm has managed the strategic communications for approximately 300
companies in Chapter 11. These include such well-known matters as
Delphi, Conseco, Inc., Collins & Aikman, Federal-Mogul Corporation, Global
Crossing, Interstate Bakeries, Laidlaw, Mirant Corporation, Public Service of
New Hampshire, Purina Mills, Refco, Service Merchandise, Singer, Solutia, US
Airways, Orange County, CA, America West Airlines, Barneys New York
and Worldcom. This year, the firm is handling or has handled 15
Chapter 11 cases and five out-of-court restructurings.”
He
continued, “John Brincko, who is in the process of completing a chapter 11
restructuring assignment at Spansion, Inc., has managed such restructurings as
Barneys New York, Consolidated Freightways, Mossimo, Inc., Knudsen Foods, Inc.,
CalComp Technology, Sun World International, Sahlen & Associates, Strouds
and Omnimedical. In each of these matters, John Brincko served as the
CEO (or, as to Barneys New York, President and COO, and as to Spansion as CRO)
of each company during a portion of the restructuring.”
In
addition to its strategic communication counseling in restructuring cases, the
Sitrick firm has been involved in a wide spectrum of matters including mergers
and acquisitions, proxy contests, withhold vote contests, product recalls,
business litigation of all kinds - from patent infringement suits to
allegations of stock manipulation, financial restatements and write-downs, state
and federal government investigations, criminal indictments, insurance fraud,
labor issues (including emergency executive transitions, sexual harassment and
sex discrimination cases), fraudulent conveyance cases, trade disputes,
environmental issues and product liability claims.
Brincko
Associates, in addition to restructuring services, debtor representation,
liquidation management and business dissolution management, provides such other
services as customer, vendor and employee relations consulting, crisis
management, financial structure analysis, cash management, interim management,
complex negotiations, risk assessment, cost reduction and seller
representation.
Mr.
Murray said that Sitrick and Brincko’s work in these and other areas should also
provide synergy for both Sitrick and Resources to grow their other lines of
business.
“We have
over 2,100 clients worldwide,” he said, “and all of them will likely have a
situation at one time or another that could benefit from Sitrick Brincko Group’s
help across all areas of specialty.”
Mr.
Sitrick said, “Like John, I have had many opportunities to sell or merge my
business over the years but chose to stay independent. This combination gives me
an opportunity to not only partner with one of the most respected people in the
corporate advisory and restructuring business, but to operate on a global
platform utilizing the outstanding professionals of Resources Global
Professionals. Most importantly, it provides both John and me with
the opportunity to provide real added value to clients and potential clients on
a global basis.”
Mr.
Brincko said, “Both Mike and I feel that this transaction provides a unique
opportunity: to help companies, to help creditors and to take our
practices to a new level. Like Mike, I am very excited about the
opportunity this combination provides and look forward to the weeks, months and
years ahead.”
For the
twelve months ended December 31, 2008 and the six months ended June 30, 2009,
Sitrick And Company and Brincko Associates had combined revenue of approximately
$24.4 million and $14.4 million, respectively, and adjusted EBITDA of $10.5
million and $6.6 million, respectively. Adjusted EBITDA represents EBITDA
adjusted for certain expenses which are not anticipated to recur
post-transaction.
In connection with the acquisition, at
the closing, Michael Sitrick and John Brincko will enter into a 54-month
employment contract with the Resources subsidiary.
ABOUT
RESOURCES GLOBAL PROFESSIONALS
Resources
Global Professionals, the operating subsidiary of Resources Connection, Inc.
(NASDAQ: RECN), is a multinational professional services firm that helps
business leaders execute internal initiatives. Partnering with business leaders,
Resources Global Professionals drives internal change across all parts of a
global enterprise - finance and accounting, information management, internal
audit, human capital, legal services and supply chain management.
Resources
Global was founded in 1996 within a Big Four accounting firm. Today, it is a
publicly traded company with over 2,700 professionals, from 82 practice offices,
annually serving 2,100 clients around the world. Its professionals have an
average of 18-years of experience in fields such as finance and accounting,
human capital, information management, internal audit, legal and supply
chain.
Headquartered
in Irvine, California, Resources Global has served 84 of the Fortune 100
companies.
The
Company is listed on the NASDAQ Global Select Market, the exchange's highest
tier by listing standards. More information about Resources Global is available
at http://www.resourcesglobal.com.
Resources
will hold a conference call for interested analysts and investors at 8:30 a.m.,
ET tomorrow, October 30, 2009. This conference call will be available
for listening via a webcast on the Company’s website: http://www.resourcesglobal.com.
Certain
statements in this press release are “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such forward-looking statements may
be identified by words such as “anticipates,” “believes,” “can,” “continue,”
“could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,”
“predicts,” “should,” or “will” or the negative of these terms or other
comparable terminology. In this press release, such statements
include our belief that the closing of the acquisitions will occur within the
next 30 days, that the acquisitions will be immediately accretive to Resources,
that the acquisitions will make Resources a meaningful player in the corporate
advisory and restructuring market, that the acquisitions will greatly increase
our ability to assist clients in a more cost effective manner than offered by
traditional consulting firms, that troubled companies and industries and the
constricted financing environment provides opportunity for growth, that the
anticipated synergies between Sitrick, Brincko and Resources provide a vehicle
for growth and is a cost-effective means for companies undergoing change, that
the use of Resources’ professionals would have resulted in substantial
savings, that there is a paradigm shift in the advisory and
restructuring business, that the combination of Sitrick and Brincko with
Resources provides clients with an attractive quality and financial alternative,
and that Resources’ clients will benefit from Sitrick’s and Brincko’s help. Such
statements and all phases of Resources Connection’s operations are subject to
known and unknown risks, uncertainties and other factors, including seasonality,
overall economic conditions and other factors and uncertainties as are
identified in our most recent Annual Report on Form 10-K and our other public
filings made with the Securities and Exchange Commission (File No.
0-32113). Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date
hereof. Resources Connection’s, and its industry’s, actual results,
levels of activity, performance or achievements may be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements. The Company undertakes
no obligation to update the forward-looking statements in this press
release.
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