From aftermarketNews.com Staff Reports
LAKEWOOD, NJ — In a letter issued to business partners, Frank Pagano, chief executive officer of Coni-Seal Inc., announced that the company has retained the services of The Oxbridge Group, LLC in New York City to prepare a feasibility study of the merger of Coni-Seal and Momentum USA, Inc., the holding company of AutoPartSource, LLC located in Richmond, VA, and New World Friction Corp. located in Cambridge, Ontario. Oxbridge has also been retained to prepare a second feasibility study to consider the prospect of an initial public offering of approximately $20 million during the last quarter of 2006.
The consolidated revenues for the two companies, which sell aftermarket products including brakes, chassis, hub bearings and filters, is in excess of $65 million. Customers include Aftermarket Auto Parts Alliance, Automotive Distribution Network, Automotive Parts Associates, CARQUEST, Federated, Pronto, Trustar and AutoZone.
In addition to its large domestic base, in recent years Coni-Seal has developed a significant export business to South America, which represents an important growth opportunity for the company. Another core driver of Coni-Seal’s business is its ability for direct sourcing from China. Over the past decade Pagano has developed multiple joint venture relationships in China. The company anticipates that several of these Chinese manufacturing business partners will seek to participate in any public or private offering of Coni-Seal. In addition, within the next 12 months, Coni-Seal expects to open at least three new offices in China and a headquarters office in Schenzen, ROC.
Pagano said the purpose of considering a public offering of Coni-Seal shares is to gain better access to lower cost financing from global capital markets while maintaining a strong Pagano family presence in the management and control of Coni-Seal.
Coni-Seal’s short term plan is to generate $100 million of annual revenues through internal growth in fiscal year 2008, on top of the 30 percent growth experienced in the last fiscal year. The company said it also hopes to dramatically increase sales through acquisitions in fiscal years 2009 and 2010. The company has been approached by a number of privately owned automotive entities to fold their operations under the Coni-Seal and private label marketing umbrella.
The automotive aftermarket industry retailers and distributors are increasing their sourcing of Chinese product for their proprietary distribution channels. Coni-Seal’s management believes that it is uniquely positioned to assist its customers in sourcing, quality assurance and logistics. To this end, Coni-Seal has successfully implemented global sourcing processes and is on the verge of launching a complete web-based tracking system from point of manufacture in China to the distributor or retailer’s dock under the direction and assurance of Coni-Seal.
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