Challenger Powersboats - Debt Free?
As if reporting record second quarter revenues of $3.6 million wasn’t news enough in the slow summer months, Challenger Powerboats Inc. (OTCBB: CPWB) announced a deal today that is expected to make the company 100% debt-free. Although the market missed out today, which is quite apparent as ZERO shares were traded, there is a tremendous upside here for both CPWB and the purchasing party. I know it’s hard to let summer go, but cmon people, this is BIG!!!
CPWB has agreed to sell off the recently acquired Sugar Sand (www.sugarsand.com) Jet boat line to Execute Sports Inc. (OTCBB: EXCS), a leading developer of performance products including wetsuits, vests, and rash guards for the action sports industry. The agreement, worth approximately $5 million, will send Sugar Sand to EXCS and provide the purchaser with an invaluable new revenue stream while allowing Challenger to pay off the recent acquisition of IMAR group back in January, essentially bringing CPWB cash flow positive.
On a very promising note, CPWB doesn’t really take on too much of a risk here since the agreement stipulates that Sugar Sand may be bought back at a later date if deemed beneficial.
Commenting on the announcement, Challenger CEO Laurie Phillips stated, "One of our main goals this year was to strengthen our balance without sacrificing top line growth. The divestiture of Sugar Sands will enable us to eliminate approximately $5 million in liabilities and $300,000 in monthly debt servicing. While we will no longer own the Sugar Sand asset, the ancillary agreements will provide Challenger the right to continue to produce and market the line for Execute, making it possible for Challenger to benefit from its sales and participate in its gross margin contribution. We look forward to a fruitful partnership with Execute and believe we can further exploit other potential opportunities between the two companies in the marine sport sector."
Now debt free, Challenger is better positioned to execute future strategic moves that will both add to the bottom line and increase shareholder value. This deal is clearly a win-win for all parties involved. That almost goes without saying. The real question here is: when will investors realize?
CPWB has agreed to sell off the recently acquired Sugar Sand (www.sugarsand.com) Jet boat line to Execute Sports Inc. (OTCBB: EXCS), a leading developer of performance products including wetsuits, vests, and rash guards for the action sports industry. The agreement, worth approximately $5 million, will send Sugar Sand to EXCS and provide the purchaser with an invaluable new revenue stream while allowing Challenger to pay off the recent acquisition of IMAR group back in January, essentially bringing CPWB cash flow positive.
On a very promising note, CPWB doesn’t really take on too much of a risk here since the agreement stipulates that Sugar Sand may be bought back at a later date if deemed beneficial.
Commenting on the announcement, Challenger CEO Laurie Phillips stated, "One of our main goals this year was to strengthen our balance without sacrificing top line growth. The divestiture of Sugar Sands will enable us to eliminate approximately $5 million in liabilities and $300,000 in monthly debt servicing. While we will no longer own the Sugar Sand asset, the ancillary agreements will provide Challenger the right to continue to produce and market the line for Execute, making it possible for Challenger to benefit from its sales and participate in its gross margin contribution. We look forward to a fruitful partnership with Execute and believe we can further exploit other potential opportunities between the two companies in the marine sport sector."
Now debt free, Challenger is better positioned to execute future strategic moves that will both add to the bottom line and increase shareholder value. This deal is clearly a win-win for all parties involved. That almost goes without saying. The real question here is: when will investors realize?
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