RANEW'S COMPANIES SOLD

NEW YORK, Sept. 29, 2022 /PRNewswire/ -- ALJ Regional Holdings, Inc. (OTC PINK: ALJJ) ("ALJ") announced today that it has acquired the outstanding equity interests of certain operating companies doing business as Ranew's Companies from Lester and Susan Ranew. Ranew's Companies, headquartered in Milner, Georgia, are leading suppliers of industrial coating services to multinational manufacturers of equipment and a provider of precision fabrication and assembly and logistics services. The transaction was completed pursuant to a Securities Purchase Agreement, dated September 28, 2022 (the "Purchase Agreement"). Consideration paid by ALJ for the acquisition at closing was $20.8 million, subject to certain purchase price adjustments and certain earn-out payments set forth in the Purchase Agreement and described below.  The acquisition was consummated through Resin Acquisition Corp. (the "Purchaser"), a subsidiary of ALJ.

As a result of the transactions, Purchaser acquired 100% of the equity interests of Ranew's Truck & Equipment Company, LLC, Ranew's Outdoor Equipment, Inc., Ranew's Management Company, Inc., Ranew's Well Services Division, LLC, Ranew's Companies, LLC and Ranew's of Texas, Incorporated.  At the closing, Purchaser issued Mr. Ranew 19.99% of the equity interests in Purchaser in consideration of the rollover of certain of Mr. Ranew's equity interests.  ALJ and the Purchaser have entered into a stockholders' agreement with Mr. Ranew providing for certain customary rights, as well as a purchase/sale right commencing on the fifth (5th) anniversary of the closing date to cause ALJ to either, at ALJ's election, (i) purchase all of the common stock of Purchaser held by Lester Ranew or (ii) sell to Lester Ranew all of the common stock of Purchaser held by ALJ, in each case, at a value determined by Lester Ranew.

 

The unaudited consolidated revenue for Ranew's Companies for 2021 was approximately $42 million, with net income of approximately $5.5 million, and for the six months ended June 30, the unaudited consolidated revenue for Ranew's Companies was approximately $32.5 million with net income of approximately $2.7 million.  These results were not audited, were not prepared in accordance with GAAP and are subject to adjustment.

 

The Purchase Agreement includes two (2) earn-out payments in favor of Lester Ranew. Each earn-out payment is equal to the product of the increase in the adjusted EBITDA over  EBITDA in the trailing twelve (12) month ("TTM") period prior to the applicable earn-out payment date multiplied by 3.25.

 

Effective as of the closing date, ALJ has entered into employment agreements with each of (i) Robert Brock, as Chief Executive Officer, (ii) Clay Harmon, as Chief Financial Officer and (iii) Blake Reeves, as Director of Operations. The employment agreements include customary terms, including annual bonuses based upon increases in EBITDA.

 

Repurchase Transactions

 

Between August 31, 2022, and September 12, 2022, ALJ completed additional repurchases of approximately 1.5 million shares of its common stock for aggregate gross proceeds of approximately $2.9 million with a per share repurchase price range of $1.84 – $1.94. The stock repurchases were completed through unsolicited private transactions