Sunstates Corporation Announces Sale of Wellco and Chaircraft Operations

Strategic Insights -

Sunstates Corporation, a diversified conglomerate engaged in specialized automobile insurance underwriting, furniture and textile manufacturing, and real estate development, has announced the sale of its controlling interest in Wellco Enterprises Inc. and its Chaircraft manufacturing operation. The Company will receive $5,460,205 in cash, 400,000 shares of Alba-Waldensian, Inc. common stock, and a note providing for 60% of Wellco's net income in excess of $400,000 per year for six years, not to exceed $1,531,272. The sale of Wellco is expected to result in a gain of approximately $172,000 or $0.07 per share for the year ended December 31, 1995. The Company will continue to own 26,000 shares of Wellco's common stock, representing 6.9% of the current outstanding stock.

Key Takeaways:

  • Sunstates Corporation sold its controlling interest in Wellco Enterprises Inc. to Wellco for $5,460,205 in cash, 400,000 shares of Alba-Waldensian, Inc. common stock, and a note providing for 60% of Wellco's net income in excess of $400,000 per year for six years, not to exceed $1,531,272.
  • The sale of Wellco is expected to result in a gain of approximately $172,000 or $0.07 per share for the year ended December 31, 1995.
  • Sunstates will continue to own 26,000 shares of Wellco's common stock, representing 6.9% of the current outstanding stock.
  • The Company will no longer report its share of the earnings or losses of Wellco in its consolidated financial statements.
  • Sunstates also sold its Chaircraft manufacturing operation to Century Furniture Industries, Inc. for total consideration of $4,111,387.
  • The sale of Chaircraft is not expected to result in a significant gain or loss for the Company.
  • The proceeds from the sale of Chaircraft were used to pay down the Company's loan with Citibank and to provide working capital to its furniture and other operations.

Statistics:

  • $5,460,205: amount received by Sunstates in cash for the sale of its controlling interest in Wellco.
  • 400,000: number of shares of Alba-Waldensian, Inc. common stock transferred to Wellco.
  • $1,531,272: maximum amount of the contingent note that Sunstates can receive.
  • 60.9%: expected gain on the sale of Wellco, approximately $172,000 or $0.07 per share.
  • 26,000: number of shares of Wellco's common stock retained by Sunstates.
  • 6.9%: percentage of Wellco's outstanding stock retained by Sunstates.
  • $4,111,387: total consideration received by Sunstates for the sale of Chaircraft.
  • $1,395,580: amount used to pay down the Company's loan with Citibank from the sale of Chaircraft.

Sources:

  • PRNewswire, "Sunstates Corporation Announces Sale of Wellco and Chaircraft Operations," January 2, 1996.
  • Sunstates Corporation, press release.