Press Releases
MTM Technologies Signs Term Sheet for a $25 Million Secured Subordinated Term Loan
Proceeds To Be Used For Acquisitions and Working Capital
STAMFORD, CT – October 11, 2005 – MTM Technologies, Inc. (NASDAQ: MTMC), a leading provider of innovative, end-to-end IT solutions and services, today announced that it has signed a non-binding term sheet with a major pension fund for a $25 million subordinated term loan. The Company expects to use the proceeds from this loan to finance the continued execution of its acquisition strategy, including the previously announced acquisition of NEXL, Inc., and to support its organic growth initiatives. The Company anticipates closing the financing and the NEXL acquisition no later than December 31, 2005. On a pro forma basis including NEXL, MTM Technologies’ FY 2005 revenue would have been approximately $275 million.
“This financing is expected to provide us with the funds to continue the execution of our growth strategy, and to solidify our balance sheet with a sound mix of working capital, debt and equity financing,” said Francis J. Alfano, MTM Technologies’ CEO. “The pending acquisition of NEXL, facilitated by the proposed financing, is expected to significantly increase our capabilities and market opportunities, and to enhance our competencies in several key areas such as storage solutions and managed services.”
CIT Group/Business Credit, Inc. and Textron Financial Corporation will continue to serve as the Company’s senior lenders for working capital financing. In connection with this financing the Company is committed to completing $10 million of its previously announced Series A-5 Preferred Stock financing.
The term sheet provides for a four year $25 million secured subordinated term loan with the loan coming due at the earlier of maturity or the occurrence of certain fund raisings or other liquidity events. The amount outstanding on the loan is expected to bear interest equal to the applicable federal rate, of which 2% per annum is expected to be payable quarterly in cash and all remaining interest is expected to accrue and only become due at maturity. In addition, upon maturity or upon the occurrence of certain liquidity events, the Company expects to pay a payment premium in respect of the loan equal to an amount which, when combined with previous payments made, will yield an internal rate of return to the lender of 11%. As part of the transaction, MTM Technologies expects to issue 700,000 common stock purchase warrants to the lender, with an exercise price equal to the greater of $4.06 or 125% of the trading price of its common stock. The loan will be secured by a subordinated lien on the assets of the Company. The completion of the loan is subject to the execution of definitive agreements, approval of MTM Technologies’ board of directors and other closing conditions, including the Company’s obtaining no less that an additional $10 million of equity financing.
About MTM Technologies, Inc.
MTM Technologies, Inc. is a leading computer and communications technology management company providing IT networking and data center services, including storage, security, messaging and VOIP solutions. MTM Technologies is an authorized reseller/partner and integrator for Microsoft, HP, Cisco Systems, Citrix, Intel Corp, IBM, Dell Computer, Nortel and Novell. For more information visit our web site at http://mtm.com.
“Safe Harbor” Statement Under The Private Securities Litigation Reform Act Of 1995
The statements contained in this release which are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include the Company's entry into new commercial businesses, the risk of obtaining financing, recruiting and retaining qualified personnel, and other risks described in the Company's Securities and Exchange Commission filings. The forward looking statements in this press release speak only as of the date hereof and the Company disclaims any obligation to provide updates, revisions or amendments to any forward looking statement to reflect changes in the Company’s expectations or future events.
For more information, contact:
Allen Bloomfeld
MTM Technologies, Inc.
Phone: (203) 975-3750
Fax: (203) 975-3701
Email: investorrelations@mtm.com
