Anixter to buy Pentacon out of Ch. 11

Pentacon, Inc., Chatsworth, CA, a distributor of fasteners and other small parts and provider of related inventory management services, filed for protection under Chapter 11 and has signed an agreement to sell substantially all of its assets and operations to Anixter International, Inc., Skokie, IL. The transaction will be part of a reorganization plan. Anixter will pay $121 million in cash, subject to certain potential purchase price adjustments.

Pentacon plans to accomplish the sale as part of a plan of reorganization filed in the U.S. Bankruptcy Court for the Southern District of Texas. The sale to Anixter and the plan have the support of the holders of a majority of Pentacon's $100 million of 12ﾼ percent Senior Subordinated Notes due Apr. 1, 2009.

The noteholders agreed to support the sale and plan in lieu of finalizing the transaction previously announced where Pentacon had agreed with the holders to recapitalize Pentacon. Existing employees will be retained, all trade obligations will be assumed and paid in full, which positions the company to continue to provide uninterrupted service to its customers.

In addition, the company has reached an agreement in principle with the lenders under its senior revolving credit facility to provide debtor-in-possession financing during the Ch. 11 case and has filed court papers to seek approval of the DIP financing.

'Last month we announced that Pentacon had commenced a restructuring by signing an agreement with a majority of our noteholders to restructure the company,' said CEO Rob Ruck. 'Since that time, the company has negotiated an agreement with Anixter International that offers even greater overall value to the company's stakeholders and our customers, partners, suppliers and employees. Anixter was eager to add Pentacon's vast array of C-Class components and service offerings to their portfolio. Anixter's excellent reputation and solid financial position will provide a great deal of assurance to all that work for and do business with Pentacon.

'In addition, the synergy between the products and services of the two companies will substantially broaden the offerings provided to our respective customers. While the transaction must be affirmed through the bankruptcy process, which we determined was the most efficient way to consummate the transaction, I truly expect the combination of Anixter and Pentacon to be a formidable one in the months and years ahead.'

The sale to Anixter and approval of the plan of reorganization are conditioned on a number of factors, including approval by the Bankruptcy Court. The reorganization is expected to be completed in the third quarter of 2002.

Pentacon presently has 30 distribution and sales facilities in the U.S., along with sales offices in Europe, Canada, Mexico and Australia. Anixter International, Inc. is the largest global distributor and logistics services provider of wire, cable and connectors for use in data, voice, electrical and electronic applications.