Adrenalina,
which recently reached an agreement to end its takeover efforts of Pacific
Sunwear, has made a bid to acquire West 49 Inc., the Burlington, Ont.-based action sports
retailer. Adrenalina made an offer of Canadian 55 cents per share in cash and stock,
valuing West 49 at Canadian $35 million (U.S. $29.7 million).

 

Adrenalina,
which has stores in three Florida cities and one in Texas, said Monday its bid
“represents our confidence that Adrenalina can reinvigorate West 49 Inc.,
by applying our innovative approach of fusing an exceptional product mix to an
exciting entertainment destination.”

 

The
proposal represented a 62% premium to West 49's closing price of 34
cents Friday on the TSX. It's conditional on approval by the board and
shareholders of West 49 and Adrenalina's ability to obtain financing.

 

“Our
offer of $0.55 per share represents a significant increase in value for WEST 49
Inc. stockholders. This action also represents our confidence that Adrenalina
can reinvigorate WEST 49 Inc., by applying our innovative approach of fusing an
exceptional product mix to an exciting entertainment destination,” said
Ilia Lekach, Chairman and CEO of Adrenalina. “Not only does the proposed acquisition
price represent a premium to the current price of WEST 49 Inc. shares, but the
cash/stock structure of the transaction would allow shareholders to participate
in the future growth and performance of the re-energized combined company,”
continued Mr. Lekach. “In addition, the business synergies from joining
WEST 49 Inc.'s substantial store footprint with Adrenalina's high-growth
lifestyle retailing concept are compelling — especially in this challenging
economic environment.”

 

West 49,
which has about 130 stores in nine provinces under the West 49, Billabong, Off
The Wall, Amnesia/Arsenic, D-Tox and Duke's Northshore banners, had a net loss
of $8.5 million in its latest quarter, including $9.6 million in writedowns of
goodwill and other assets. Sales were up 3.8% to $64.8 million in its fourth
quarter ended Jan. 31, thanks to an extra selling week compared with the
year-ago period.

 

In
releasing those results on April 22, West 49 disclosed that it was in violation
of a bank covenant on which it had obtained a waiver until June 30, but it was
about to violate another lending covenant.

 

The full
text of Adrenalina's letter to the WEST 49 Inc. CEO and Board of Directors is
below:

 

May 4, 2009
 
Kenneth Fowler
West 49 Inc.
1100 Burloak Drive
200, Burlington, Ontario L7L 6B2

Dear Kenneth:

I am writing as Chairman
and Chief Executive Officer of Adrenalina to propose a combination of our
companies in a negotiated transaction that provides for the purchase by
Adrenalina of all issued and outstanding shares of common stock of West 49 Inc.
(“WEST49”) for a payment of 0.55 Canadian Dollars per share,
consisting of a combination of cash and stock of Adrenalina. The transaction
will require the approval of the Board of Directors of WEST49 (WXX.to).

We are confident that
this transaction will create value for WEST49 shareholders well in excess of
that which can be achieved by your company proceeding on its own. Not only does
the proposed acquisition price represent a premium to the current price of
WEST49 shares, but the stock structure of the transaction would allow your
shareholders to participate in the future growth and performance of the
energized combined companies

.
In addition, the business synergies from combining WEST49's substantial store
footprint with Adrenalina's high-growth lifestyle retailing concept are
compelling — all the more so in this challenging economic environment.

Completion of the
proposed transaction is anticipated to occur no later than August 2009 and is
subject to customary conditions, including satisfactory completion of our due
diligence, the execution of a definitive agreement between the two companies
and completion of the funding, which we do not expect to present a problem.

The power of Adrenalina's
retailing concept in today's market

WEST49 would benefit
greatly from the application of our proven entertainment retailing concept,
which we believe will re-energize the performance of your stores.

Adrenalina stores are
becoming a destination of choice for generation Y and Z'ers. Major landlords
continue to approach us with a wide variety of proposals in the best retail
centers across the nation. All our future store buildouts of $2,000,000 are entirely
paid by tenant allowances. The Company's leasing team is constantly researching
and evaluating new locations in the most important markets and busiest malls
throughout the US.

The stores are designed
and positioned as a focal point for extreme sport enthusiasts of all
generations and those who want to learn more about this Lifestyle. In this
regard, the store offers dedicated areas which are focused on a particular
extreme sport, and the coordination of FlowRider® sessions and lessons with
qualified instructors, all with the intent of promoting the Adrenalina stores
as the place to go, congregate and be seen for all who are interested in
extreme sports and its Lifestyle.

Synergistic opportunities

We see many synergies
between Adrenalina and WEST49, and we welcome you to consider some of them:

More than 1,000,000
people go through each Adrenalina store per year, vendors want to be in
Adrenalina. Because of this great visibility we are able to market specific
deals with national suppliers.

Exponential business
revenue and profit growth: Adrenalina is in expansion mode, and it has a long
way to go before saturating the market. This provides WEST49 with a tremendous
new business growth
path that will enhance the overall growth rate of WEST49. Furthermore because
of WEST49's operational efficiencies of current infrastructure, purchasing
power and back end operations, Adrenalina stores could leverage the backbone of
WEST49 and open stores at a faster rate. The combined company could take
meaningful advantage of landlords seeking Adrenalina stores.

In conclusion, combining
with Adrenalina will achieve that trendsetter goal, drive revenue and improve
profitability. The Adrenalina traffic level is highly coveted by suppliers, in
conjunction with WEST49, this will drive considerable visibility to the
combined company and ensure our success.

We urge your Board of
Directors to seriously consider this proposal and would welcome the opportunity
to meet with your Board to explore further. Please get back to me to schedule a
meeting. You
may reach me on my cell phone at (786) 877-5521 or by email ilia@adrenalina.tv.

Very truly yours,

Ilia Lekach