Company description::
RIDGEFIELD, CT, MARCH 4, 2004 - Southridge Capital Management LLC (“Southridge”), a private investment firm that provides growth capital to small and microcap companies, announced today, on behalf of advised entities and other clients, the completion of the sale of LecStar Telecom Incorporated to Fonix Corporation. The stock and debt transaction is valued at $33 million. Since 1998, Southridge-advised entities have provided Fonix, an international provider of leading speech interface solutions, in excess of $70 million in order to help it pursue its long-term growth plans.
On November 25, 2003, Fonix announced that it had signed an agreement in principle to acquire all of the capital stock of LTEL Holdings Corporation, a provider of telecommunications and data services to business and residential customers and owner of an operating company that Southridge established in 1998. Privately held LTEL has two wholly owned subsidiaries, LecStar Telecom, Inc., an Atlanta-based competitive local exchange carrier, and its sister company, LecStar Datanet, Inc.
“The combination of these two companies accelerates the potential acquisition platform LecStar seeks and continues to deepen the distribution network for the Fonix current product offerings,” said Stephen Hicks, Founding Principal, Southridge Capital Management. “Southridge’s early investments in Fonix and LTEL five years ago demonstrate a long-term commitment to growing companies from both a financing and business perspective.”
The acquisition of LecStar is expected to significantly accelerate Fonix’s growth strategy by providing a recurring revenue stream, a growing customer base and new marketing channels. LecStar’s customer base - which historically has been growing at an annual rate of 60 percent or better - provides a demonstrable revenue stream and reduces Fonix’s cost of capital. LecStar’s revenue grew from $4.9 million in 2001 to $9.7 million in 2002 and the company expects to report approximately $16 million in revenue for the year ending December 31, 2003 and expects to be EBITDA positive for the fourth quarter.
“Fonix’s acquisition of LecStar will enable us to provide a greater range of services to our customers and will significantly accelerate our ability to grow,” said Roger D. Dudley, Executive Vice President and Chief Financial Officer of Fonix. “We’re very excited about the tremendous promise for our company, our shareholders, our customers and our partners. To reach this point in our growth cycle would have been impossible without a long-term financial commitment from Southridge. I look forward to continuing our relationship with the firm and making this business a success.”
About Southridge
Since its founding in 1996, Southridge advised funds have provided in excess of $1.25 billion in growth capital to emerging companies. Southridge is committed to funding companies with robust business models in the U.S. and Europe.
About LecStar Telecom, Inc.
LecStar Telecom, Inc. is a rapidly growing Atlanta-based regional provider of integrated communications services to businesses and consumers. LecStar offers a full array of wireline voice, data, long distance and Internet services to business and residential customers throughout BellSouth’s Southeastern operating territory. The Company is certified by the FCC and nine states - Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee - as a competitive local exchange carrier to provide regulated local, long distance and international telecommunications services.
About Fonix
Fonix Corporation provides speech interface solutions for mobile / wireless devices, computer telephony systems, the assistive market, automobiles and everyday consumer devices. Manufacturers and developers incorporate Fonix technology to provide their customers with an easy, convenient, reliable user experience.
Investor contact:
ECON Corporate Services
www.investorideas.com
(866) 894-3913
For media inquiries, please contact:
Kenny Juarez
The Abernathy MacGregor Group
T: 212-371-5999
E: kwj@abmac.com
The acquisition is closed. |
