Manchester, Inc. Announces Litigation Against Palm Beach Links Multi-Strategy Fund, L.P. |
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By: Manchester, Inc. Posted: 2008-02-02 05:35:02 |
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Manchester, Inc. (OTC Bulletin Board: MNCS)today announced that it has filed suit against its principal lender, Palm Beach Multi-Strategy Fund, L.P. (the Fund). Manchester's complaint alleges that the suit arose from a series of actions the Fund, and its principals took over the last few weeks in an effort to implement a scheme to take possession of all the assets of Manchester and its subsidiaries (collectively Manchester) to the detriment of all Manchester's shareholders, other creditors and employees. As part of the scheme, the complaint alleges the Fund and its principals fraudulently induced a consultant to Manchester to provide a temporary guaranty secured by real estate collateral to assist the Fund in getting through its year end audit. Once the Fund had the guaranty and collateral they immediately refused to carry out the agreements on which the temporary guaranty and collateral were provided. Manchester demanded that the Fund and its principals comply with their obligations under this and other applicable agreements, and, when the Fund refused to comply, declared the Fund in default. In response, the Fund made a demand based on a non-existent default and on the basis of such demand and default has purported to accelerate all the outstanding loans. To protect its interest and that of its shareholders, creditors and employees, Manchester filed suit against the Fund, its affiliated entities and its five individual principals in the 101st Judicial District Court in Dallas, County, Texas. In its suit, Manchester alleged, among other things, that (1) the Fund has engaged in fraudulent conduct as part of its scheme to unlawfully take control of Manchester's assets, and (2) that the Fund and its principals and certain employees have tortiously interfered with Manchester's contractual and other relations with its employees by unlawfully trying to intimidate them into leaving Manchester's employ. Manchester is seeking a variety of relief including injunction and compensatory and punitive damages. In response, the Fund, based on the aforementioned alleged default, has purported to schedule a sale of all the assets of Manchester and its subsidiaries for February 8, 2008.
Rick D. Gaines, Manchester's Executive Vice President of Corporate Development whose responsibilities include all legal matters related to the Company stated that the Company is taking all steps it considers necessary or appropriate to protect the interest of Manchester's shareholders, creditors and employees and will vigorously pursue its fraud, tortious interference and other claims against the Fund and the other parties to the lawsuit. He also announced the resignations of Rick L. Stanley, Manchester's CEO and Tony Hamlin, Manchester's Chief Accounting Officer. The Fund's continued unlawful efforts to dissuade Manchester employees, including Rick L. Stanley and Tony Hamlin, and consultants from working with Manchester is also part of the lawsuit filed against the Fund and its affiliates. As a result of the Fund's inability or unwillingness to finance any of Manchester's previously announced acquisitions, Manchester is unable to consummate its announced acquisitions and other potential acquisitions it was in the process of negotiating. To protect its shareholders, and employees, Manchester has entered into negotiations with another public company (the Public Company) to assume Manchester's rights in the acquisitions and acquire the companies among other things. These negotiations relate to announced acquisitions in the form of letters of intent and definitive agreements as well as potential acquisitions that Manchester was in the process of negotiating. Among the consideration being sought by Manchester is having the Public Company assume liabilities Manchester incurred in connection with the acquisition, particularly professional fees. In addition, Manchester is attempting to negotiate for the Public Company to agree to tender its common stock for existing common stock of Manchester, thereby providing an opportunity for Manchester shareholders to exchange their shares for shares in the Public Company. Payment of any consideration is expected to be contingent on the Public Company closing at least two such acquisitions. If these negotiations are successfully concluded, Manchester shareholders would have an opportunity to participate in the acquisitions Manchester had developed. As part of any such transaction, there would be potential cost sharing that could result in lowering Manchester's overhead expense. Although these negotiations are ongoing, there is no assurance that the negotiations will be successful or will lead to an agreement of any kind. In addition to the negotiations discussed above, the Board of Directors and Management are exploring other alternatives designed to reduce Manchester's operating expenses while giving it the ability to continue to grow and expand its business. In light of the termination of funding at this time by Palm Beach, Manchester will not have its year end audit completed in time to make a timely filing of its 10K due later this month. Manchester's Board and Management are working to rectify this deficiency. Manchester also announced the relocation of its headquarters to 3131 McKinny Avenue, Suite 360, Dallas, TX 75204. The Company's new headquarters telephone numbers are 214-347-4263 and 214-468-8965 facsimile. Larry Taylor, Manchester's CFO stated that the new headquarters provided Manchester with room to add additional staff while reducing its lease payments. About Manchester Inc. Manchester, headquartered in Dallas, Texas, is in the Buy-Here/Pay-Here auto business. Buy-Here/Pay-Here dealerships sell and finance used cars to individuals with limited credit histories or past credit problems, generally financing sales contacts ranging from 24-48 months. On October 4, 2006, Manchester acquired Nice Cars, Inc. and Nice Cars Capital Acceptance Corporation. Nice Cars, Inc., headquartered in Ft. Olgethorpe, Georgia, operates six automotive sales lots that focus exclusively on the Buy-Here/Pay-Here segment of the used car market. On December 29, 2006 Manchester acquired F.S. English, Inc. (now operating as Freedom Auto Sales) and GNAC, Inc. (now operating as Freedom Auto Acceptance), headquartered in Indianapolis, Indiana. Freedom Auto Sales operates three automotive sales lots that focus exclusively on the Buy-Here/Pay-Here segment of the used car market. On July 25, 2007, Manchester acquired substantially all of the assets of Royce Motors, Inc., which now operates as a unit of Freedom Auto Sales. This press release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on currently available competitive, financial, and economic data and management's views and assumptions regarding future events. Such forward-looking statements are inherently uncertain. Manchester cannot provide assurances that any prospective matters described in the press release will be successfully completed or that the Company will realize the anticipated benefits of any transactions. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to: global economic and market conditions; the war on terrorism and the potential from war or other hostilities in other parts of the world; availability of financing and lines of credit; successful integration of acquired or merged businesses; changes in interest rates; management's ability to forecast revenues and control expenses, especially on a quarterly basis; unexpected decline in revenues without a corresponding and timely slowdown in expense growth; the Company's ability to retain key management and employees; intense competition and the Company's ability to meet demand at competitive prices and to continue to introduce new products and new versions of existing products that keep pace with technological developments, satisfy increasingly sophisticated customer requirements and achieve market acceptance; relationships with significant suppliers and customers; as well as other risks and uncertainties, including but not limited to those detailed from time to time in the Manchester's SEC filings. Manchester undertakes no obligation to update information contained in this release. For further information regarding risks and uncertainties associated with the business of Manchester, please refer to the risks and uncertainties detailed in the Manchester's SEC filings. |
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