Guatemala Minority Shareholder
S
PriceSmart's acquisition of the minority shareholder's interest involves a
two-step process. First, the minority shareholder will convey its 34% interest
in PriceSmart (Guatemala), S.A. to The Price Group, LLC, the Sol and Helen
Price Trust and the Robert and Allison Price Trust, in exchange for the payment
by those entities to the minority shareholder of a total of $6,600,000 in
cash. Second, as soon as reasonably practicable, the Price Group, LLC, the
Sol and Helen Price Trust and the Robert and Allison Price Trust will transfer
the 34% interest in PriceSmart (Guatemala), S.A. to the Company in exchange
for a total of 825,000 shares of the Company's common stock (valued for such
purpose at $8.00 per share). PriceSmart will not pay any other amounts to
the minority shareholder in connection with the settlement and release.
"We are pleased that all pending litigation and disputes with our former
minority shareholder have been resolved," stated Robert Price, Chairman
and Interim Chief Executive Officer of the Company. "PriceSmart is committed
to our PriceSmart members and employees in Guatemala. We will continue to
provide outstanding, high quality merchandise at the lowest possible prices
and look forward to many years of successful business in Guatemala."
In connection with the foregoing transactions, the Company's Board of Directors
has waived the conflict provisions of the Company's Code of Business Conduct
and Ethics, and its Audit Committee has approved the related party aspect
of this transaction.
About PriceSmart
PriceSmart, headquartered
in San Diego, owns and operates U.S.-style membership shopping warehouse clubs
in Central America, the Caribbean, and Asia, selling high quality merchandise
at low prices to PriceSmart members. PriceSmart now operates 26 warehouse
clubs in 12 countries and one U.S. territory (four each in Panama and the
Philippines; three in Costa Rica; two each in Dominican Republic, El Salvador,
Guatemala, Honduras, and Trinidad; and one each in Aruba, Barbados, Jamaica,
Nicaragua and the United States Virgin Islands).
This press release may contain forward-looking statements concerning the Company's
anticipated future revenues and earnings, adequacy of future cash flow and
related matters. These forward-looking statements include, but are not limited
to, statements containing the words "expect," "believe,"
"will," "may," "should," "project,"
"estimate," "scheduled," and like expressions, and the
negative thereof. These statements are subject to risks and uncertainties
that could cause actual results to differ materially, including the following
risks: the Company had a substantial loss in fiscal 2003 and 2004; the Company
has in the past violated, and in the future may fail to comply with, financial
covenants governing its outstanding indebtedness and is out of compliance
with certain covenants, which gives lenders the right to accelerate the Company’s
indebtedness; the Company’s financial performance is dependent on international
operations and is therefore exposed to associated political, legal and economic
risks; any failure by the Company to manage its widely dispersed operations
could adversely affect its business; although the Company has taken steps
to significantly improve its internal controls, there may be material weaknesses
or significant deficiencies that the Company has not yet identified; the Company
faces significant competition; the Company may encounter difficulties in the
shipment of and inherent risks in the importation of merchandise to its warehouse
clubs; the success of the Company’s business requires effective assistance
from local business people, and the Company currently is engaged in a dispute
with one of its minority shareholders in the Philippines; the Company is exposed
to weather and other risks associated with international operations; declines
in the economies of the countries in which the Company operates its warehouse
clubs would harm its business; a few of the Company’s stockholders have
control over the Company's voting stock, which will make it difficult to complete
some corporate transactions without their support and may prevent a change
in control; the loss of key personnel could harm the Company’s business;
the Company is subject to volatility in foreign currency exchange; the Company
faces the risk of exposure to product liability claims, a product recall and
adverse publicity; a determination that the Company's long-lived or intangible
assets have been impaired could adversely affect the Company's future results
of operations and financial position; and the Company faces increased costs
and compliance risks associated with Section 404 of the Sarbanes-Oxley Act
of 2002; as well as the other risks detailed in the Company's SEC reports,
including the Company's Form 10-Q filed pursuant to the Securities Exchange
Act of 1934 on January 14, 2005. We assume no obligation and expressly disclaim
any duty to update any forward-looking statement to reflect events or circumstances
after the date of this presentation or to reflect the occurrence of unanticipated
events.