Washtenaw to Receive Capital Infusion; The Washtenaw Group, Inc. Signs Letter of Intent to Sell 57% Ownership
12 11월 2005 - 12:57AM
PR Newswire (US)
ANN ARBOR, Mich., Nov. 11 /PRNewswire-FirstCall/ -- The Washtenaw
Group, Inc. (AMEX:TWH), the holding company for Washtenaw Mortgage
Company, has signed a Letter of Intent to receive an immediate
infusion of $1.5 million from GenStone Financial in exchange for 6
million newly issued shares of common stock, representing 57% of
the common shares outstanding, to be followed by an additional
investment of $3.5 million in Convertible Preferred shares, by
February 2006. GenStone Financial is a unit of GenStone Acquisition
Company, LLC, a certified Minority Business Enterprise. Charles C.
Huffman, Washtenaw's Chairman, and Richard Coleman, President and
CEO of GenStone, today jointly announced the cash infusion and
change of management. Under the terms of the Letter of Intent, The
Washtenaw Group, Inc. will negotiate a management agreement that
will eventually cede management control to GenStone Financial. Upon
completion of the transaction, the new senior- management team of
The Washtenaw Group, Inc. will include Mr. Coleman, who will become
CEO; Ronald Evans, currently EVP of Washtenaw Mortgage, who will
become President; and Howard Nathan, currently The Washtenaw Group,
Inc.'s and Washtenaw Mortgage Company's CFO, will retain these
posts. All three will join the Board of the new The Washtenaw
Group, Inc. Mr. Coleman said, "We believe Washtenaw's top
management, their tradition of excellence in client services, along
with their 40-state distribution network, will generate significant
growth and help to lead the Company back to profitability over the
near and intermediate term." The Company's headquarters will remain
in Ann Arbor and only nominal changes to personnel and operations
are anticipated. Board composition is expected to change to reflect
the new thrust of the Company. Mr. Coleman added, "With the influx
of our investment, we believe that Washtenaw will become the
largest Minority-owned mortgage-banking company in the United
States. We believe that Washtenaw will become an even more
attractive partner for its customers, lenders and portfolio
partners." Washtenaw will ask its shareholders to approve the
transaction. The Huffman family, which has maintained an active
interest in Washtenaw since it was spun-off from Pelican Financial,
Inc. in 2003, has committed that they will vote their shares in
favor of the transaction. Mr. Huffman added, "We believe the new
Washtenaw business model and management combined with additional
capital and Minority Business Enterprise designation, will have a
significant advantage and add to the solid Washtenaw business
platform." "Washtenaw will aggressively pursue the residential
rehabilitation and upgrade housing market. Washtenaw will also
broaden its marketing efforts toward the Emerging Domestic Market
(EDM), which is comprised of US ethnic- minority groups. The buying
power of the US EDM is in excess of $1.6 trillion and growing much
faster than the overall economy. In fact, the US EDM would rank as
the 6th largest economy in the world, ahead of China and Brazil.
However, home ownership within this market is only 54%, as compared
to 77% in the majority community," said Mr. Coleman. Washtenaw will
promptly make the necessary filings with regulatory authorities and
the American Stock Exchange and will provide additional details to
shareholders by year-end 2005, it is anticipated. The transaction
is expected to be completed within 90 days, subject to regulatory
and shareholder approval. Washtenaw Mortgage Company, one of the
nation's leading wholesale mortgage companies, originates,
acquires, sells and services mortgage loans. The Company is
headquartered in Ann Arbor, Michigan, and conducts business through
approximately 2,000 correspondent lenders in approximately 40
states. Additional Information about the Transactions and Where to
Find It The proposed transactions will be submitted to The
Washtenaw Group's shareholders for approval. The Washtenaw Group
will prepare an information statement and related materials
describing the transactions that will be mailed to The Washtenaw
Group's shareholders. These information statement materials and
other relevant materials, when available, including the definitive
agreement, may be obtained free of charge at the Securities and
Exchange Commission's website at http://www.sec.gov/ . In addition,
shareholders may obtain free copies of the documents that The
Washtenaw Group files with the SEC on The Washtenaw Group's website
at http://www.thewashtenawgroup.com/ or by written request directed
to: Howard Nathan The Washtenaw Group, Inc. 3767 Ranchero Drive Ann
Arbor, Michigan 48108. SHAREHOLDERS OF THE WASHTENAW GROUP ARE
URGED TO READ THESE MATERIALS AND TO READ THE DEFINITIVE
INFORMATION STATEMENT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE
THEY CONTAIN AND WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED MERGER AND RELATED ITEMS. Shareholders are urged to read
the information statement and other relevant materials before
making any voting or investment decisions with respect to the
proposed transactions. The executive officers and directors of The
Washtenaw Group have interests in the proposed transactions, some
of which differ from, and are in addition to, those of The
Washtenaw Group's shareholders generally. In addition, The
Washtenaw Group and its executive officers and directors may be
participating or may be deemed to be participating in the
solicitation of consents from the security holders of The Washtenaw
Group in connection with the proposed transactions. Information
about the executive officers and directors of The Washtenaw Group,
their relationship with The Washtenaw Group and their beneficial
ownership of The Washtenaw Group securities will be set forth in
the information statement materials filed with the Securities and
Exchange Commission. Shareholders may obtain additional information
regarding the direct and indirect interests of The Washtenaw Group
and its executive officers and directors in the proposed
transactions by reading the information statement materials
relating to the transactions when they become available.
Forward-Looking Statements and Safe Harbor: This news release
contains forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. Such statements are based on management's current
expectations and are subject to risks and uncertainties, which
could cause actual results to differ materially from those,
described in the forward-looking statements. Among these risks are:
risks that the proposed transactions will not be consummated on the
terms disclosed in the letter of intent, or at all; risks resulting
from the potential adverse effect on The Washtenaw Group's business
and operations of the transactions contemplated by the letter of
intent; risks resulting from the decrease in the amount of time and
attention that management can devote to The Washtenaw Group's
business while also devoting its attention to completing the
proposed transactions; risks associated with the increases in
operating costs resulting from the additional expenses The
Washtenaw Group has incurred and will continue to incur relating to
the proposed transactions; regional and national economic
conditions, competitive and regulatory factors, legislative
changes, mortgage-interest rates, cost and availability of borrowed
funds, our ability to sell mortgages in the secondary market, and
housing sales and values. These risks and uncertainties are
contained in the Corporation's filings with the Securities and
Exchange Commission, available via EDGAR. The Company assumes no
obligation to update forward-looking statements to reflect
occurrences or unanticipated events or circumstances after the date
of such forward-looking statements. DATASOURCE: The Washtenaw
Group, Inc. CONTACT: Howard Nathan of The Washtenaw Group, Inc.,
+1-800-765-5562; Rich Coleman of GenStone Financial,
+1-513-579-0302; or Mike Marcotte of Marcotte Financial Relations,
+1-248-656-3873, for The Washtenaw Group, Inc. Web site:
http://www.thewashtenawgroup.com/
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