FORT WORTH, Texas--(BUSINESS WIRE)--Teletouch Communications, Inc. (OTCBB: TLLE), a leading U.S. wireless services, cellular, consumer electronics and public safety equipment provider today announced that it has reached a comprehensive, multi-part settlement in the ongoing litigation between its wholly-owned subsidiary, Progressive Concepts, Inc. dba Hawk Electronics (“PCI”) and AT&T (NYSE: T).
Material terms of the multi-part settlement include:
- Amended and renewed 3-Yr Distribution Agreement for all of PCI’s current and prior market areas, including the DFW, San Antonio, Houston/South Texas, Austin/Central Texas, Tyler/East Texas and Arkansas service areas;
- A new 6-Yr Exclusive Dealer Agreement, the first half of which runs coterminously with the amended and renewed Distribution Agreement, then continuing for 3-years thereafter;
- PCI’s contracted right and authorization to sell, activate and provide services to Apple iPhone and iPad models as a Distributor and to sell and activate such models as a Dealer, subject to the terms set forth in supplements to each Agreement respectively, and from the locations described therein;
- Cash and other consideration in excess of $18.5 million, including: $5 million in cash and a $5 million credit against PCI’s outstanding accounts payable to AT&T at closing, and an agreement for the transfer of all remaining subscribers to AT&T by the end of the 3-year Distribution Agreement term for a maximum cash payment of $8.5 million, subject to certain terms and conditions, at which point, such Distribution Agreement ends, and PCI then acts solely as a Dealer for the remaining three year term of the Dealer Agreement;
- Mutual releases by and between AT&T and PCI from and against any and all claims, demands, obligations, liabilities, and causes of action, of any nature whatsoever, at law or in equity, known or unknown, whether or not arising out of or related to the Claims, Counterclaims, DFW Distribution Agreements, Other Market Agreements, or Arbitration, as of the Effective Date.
Aside from the information contained in this press release and in the related Current Report on Form 8-K filed with the SEC, available on EDGAR and at the Company’s corporate website, further details of the settlement shall remain confidential.
“We are very pleased that a mutually satisfactory resolution and full settlement of the litigation matters was able to be achieved, eliminating further uncertainty and establishing a renewed, positive distribution and sales relationship with AT&T,” stated T. A. "Kip" Hyde, Jr., President, Chief Operating Officer and Director of Teletouch. “The comprehensive settlement and new distribution and dealer agreements will allow PCI to once again be a strong regional distribution channel for AT&T.”
Hyde continued, “In addition to the $18.5 million cash and in-kind consideration to be received as part of this settlement, we estimate that the renewed three year Distribution Agreement and related six year Dealer Agreement, will generate an additional $25-30 million incremental contribution margin to the Company over the term, based on historical results. These agreements are of critical importance to our ongoing operations. Accordingly, we look forward to growing our core cellular services segment. With the cellular business stabilized and growing, we will once again have a solid operating platform to facilitate future organic growth in each of our business segments, as well as support for complementary acquisitions.”
Hyde concluded, “Given the total consolidated settlement value of approximately $40-$50 million, resolving the litigation in this manner provides further benefits to the Company and our shareholders, including enhancing our liquidity to fund future growth, settling our banking and other business partners, and substantially improving our balance sheet for this fiscal year, which will also assist in our efforts to becoming relisted on a national stock exchange. With the certainty that this settlement provides, we are now able to move forward.”
As initially reported on September 30, 2009, Teletouch’s subsidiary, PCI dba Hawk Electronics, the largest regional Distributor for AT&T cellular products and services in the U.S., initiated legal action against AT&T. For a more detailed description of the Company’s legal action Notice and detailed Initial Statement of Claim, please refer to the related Form 8-K, filed October 1, 2009 (also available at the Company’s website: www.teletouch.com and on EDGAR at www.sec.gov), as well as updates provided through press releases and the Company’s public filings over the period.
About Teletouch Communications
For over 47 years, Teletouch has offered a comprehensive suite of wireless telecommunications solutions, including cellular, two-way radio, GPS-telemetry and wireless messaging. Teletouch is a leading Authorized Services Provider and billing agent of AT&T (NYSE: T) products and services to consumers, businesses and government agencies, as well as an operator of its own two-way radio network and LTR systems in Texas. Teletouch operates a chain of 20 retail and authorized agent stores under the “Teletouch” and “Hawk Electronics” brands, in conjunction with its direct sales force, call center operations and various retail eCommerce websites including: www.hawkelectronics.com, www.hawkwireless.com, www.hawkexpress.com and www.shop.teletouch.com. Through its wholly owned subsidiary, Progressive Concepts, Inc., Teletouch operates a national distribution business, PCI Wholesale, primarily serving large cellular carrier agents and rural carriers, as well as auto dealers and smaller consumer electronics retailers, with product sales and support available through www.pciwholesale.com and www.pcidropship.com, among other B2B oriented websites.
Teletouch's common stock is traded Over-The-Counter under stock symbol: TLLE. Additional information about the Teletouch family of companies can be found at www.teletouch.com.
The registered trademarks of AT&T, Apple, Inc. and each, any and all product or service names discussed in relation to Teletouch Communications, Inc. and its affiliates are the property of their respective owners.
All statements from Teletouch Communications, Inc. in this news release that are not based on historical fact are "forward-looking statements" within the meaning of the PSLRA of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. While the Company's management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control, that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the caption "Risk Factors" in the Company’s most recent Form 10-K and 10-Q filings, and amendments thereto, as well as other public filings with the SEC since such date. The Company operates in a rapidly changing and competitive environment, and new risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. The Company disclaims any intention to, and undertakes no obligation to, update or revise any forward-looking statement.