TORRANCE, Calif. – Action sports company Execute Sports
Inc. (OTCBB:EXCS) has purchased the Sugar Sand jet boat
line from IMAR, Inc., a wholly owned subsidiary of
Challenger Powerboats, Inc. (OTCBB:CPWB), for $5 million
in cash, it reported in a statement today.
In conjunction with the transaction, Execute and
Challenger entered into an agreement for exclusive right
of supply, through which Challenger will manufacture and
sell at wholesale Sugar Sand boats to Execute, and an
exclusive sales and marketing agreement through which
Challenger will market Sugar Sand boats on behalf of
Execute. These agreements are for periods of 10 years
each, with similar renewal terms. Sugar Sand generated
$7.7 million in revenue on net sales of 381 boats in
2006.
"One of our main goals this year was to strengthen our
balance without sacrificing top line growth," said
Challenger CEO Laurie Phillips in a separate statement.
"The divestiture of Sugar Sands will enable us to
eliminate approximately $5 million in liabilities and
$300,000 in monthly debt servicing."
Phillips added that its ancillary agreements with
Execute Sports will allow Challenger to benefit from
Sugar Sand boat sales, while retaining its other two
lines of boats, the high performance Challenger boat
line and the ski and tow boat Gekko line.
"We have been exploring growth through synergistic
acquisitions over the last several months,” said Geno
Apicella, CEO of Execute Sports. “The Sugar Sand
purchase will expand our product offering without the
added responsibilities of managing a manufacturing
process or marketing effort. The supply and marketing
agreements will enable us to benefit from Challenger's
operational expertise and existing sales network. This
acquisition puts us on pace to approach approximately
$10 million in sales for 2008. We will continue to
search for other acquisition opportunities that are
accretive to our P&L."
Celest Berouty, Execute Sports' president, added,
"Entering into the jet boat industry is in line with
Execute's marine sports genre. Since our water sports
products focus on the wake and ski markets, a direct
extension of our involvement in this industry leads our
expansion into one of the leading jet boat products
available in the marketplace. In addition to the
immediate accretion to our financial growth, we have
significant cross-selling potential through a large and
growing dealer network."
Based in Torrance, California, Execute Sports, Inc.
develops action sports products including wetsuits,
vests, wakeskates and rash guards.
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