Home > Sirit Technologies Inc. And Able Telcom Holding Corp. Reach Settlement Of $32.5 Million Judgment — Worldcom To Enlarge Contracts And Extend Financial Support
Sirit Technologies Inc. And Able Telcom Holding Corp. Reach Settlement Of $32.5 Million Judgment — Worldcom To Enlarge Contracts And Extend Financial Support
"Colson Hicks Eidson is recognized as one of the top litigation firms in the country, handling local, national and international litigation for a wide range of clients." - Chambers USA
MIAMI (July 12, 2000) — The law firms of Colson Hicks Eidson and Hanzman Criden Chaykin and Rolnick today announced the settlement of the lawsuit involving SIRIT Technologies Inc. (stock symbol: “SIRT” on the Canadian Dealing Network) and Able Telcom Holding Corp. (NASDAQ: ABTE) regarding the $32.5 million jury verdictawarded to SIRIT on May 16, 2000 by the U.S. District Court in Miami.
As part of the settlement, WorldCom will extend the Master Services Agreement with Able, which was formerly based in West Palm Beach, to July 1, 2006 and extend the terms of its existing cash advances to Able. In addition, WorldCom has agreed to assist Able in raising new working capital.
The settlement contains two principal elements. Firstly, SIRIT has received non-refundable cash payments of $5 million from Able and $650,000 from Davidson. Secondly, SIRIT and Able have agreed to the entry of a consent judgment of $20 million. This judgment has been entered by the U.S. District Court in Miami and has the effect of concluding the case and terminating all future litigation on this matter, including any appeals by both parties.
“The parties are very satisfied and pleased about the prospects for the companies and their shareholders as a result of this amicable resolution of this longstanding dispute,” stated Roberto Martínez, partner at Colson Hicks Eidson and co-counsel for SIRIT, along with Steven Chaykin of Hanzman Criden Chaykin and Rolnick, and Robert Fernandez also of Colson Hicks Eidson.
The original SIRIT judgment was for a total of $31.2 million in damages from Able and $1.3 million in damages from its co-defendant, Thomas M. Davidson (“Davidson”), an agent of Able. The lawsuit arose from SIRIT’s contemplated acquisition of MFS Network Technologies, Inc., a subsidiary of WorldCom, Inc. (“WorldCom”) in April 1998.
Both SIRIT and Able believe that this settlement will remove the major issues, which have prevented both companies from completing their own strategies for growth and profitability over the past two years.
The consent judgment can be satisfied in two ways:
1. A final cash payment of $20 million to SIRIT at Able’s option before November 30, 2000, in addition to the $5 million already received; or
2. the issuance to SIRIT of such number of Able common shares so that SIRIT holds 19.99% of Able’s outstanding common shares. These shares must be fully registered for trading and delivered to SIRIT on or before November 30, 2000. SIRIT also has pre-emptive rights to maintain its shareholding in Able at the 19.99% level for 2 years from the date of issuance of the shares. It is estimated that SIRIT will be entitled to approximately 5 million common shares of Able under this agreement, which are subject to shareholder and other regulatory approvals.
In addition, SIRIT’s rights are preserved in the event of a sale, merger or acquisition of Able. In such an event, Able may fully meet its obligations by paying SIRIT US$20 million on or before August 31, 2000. If such a payment has not been made, then for any transaction entered into before November 30, 2000, SIRIT will receive its pro rata share of cash or stock, with a ceiling of $26.2 million.
SIRIT also has the immediate right to have an observer attend Able board meetings. Able will include a SIRIT nominee in Able’s new slate of directors to be approved by the shareholders at the next annual meeting. Able has also agreed to withdraw its plan for supplemental compensation arrangements for management in the event of a change in control.
Also as part of the Settlement holders of Able’s Series C Convertible Preferred Shares have agreed either redeem the shares for cash or to convert them into Able’s common shares at a price of $4.00 per share.
Able will promptly file the terms of the settlement with the appropriate regulatory authorities.
SIRIT focuses its business on wireless, e-commerce payment solutions and identification systems in the transportation industry using radio frequency technology. SIRIT designs, develops and manufactures a range of radio frequency identification products marketed as theIDentity Series including IDentity HandsFree, IDentity Flex, and IDentity Title 21. SIRIT is the largest supplier of Title 21 compliant products to the United States market.
SIRIT Technologies Inc. (stock symbol: SIRT on the Canadian Dealing Network)
SIRIT has 34,067,843 common shares outstanding on a fully diluted basis.
NO STOCK EXCHANGE, SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN.