Collegiate Pacific on Thursday stated that its shareholder equity will increase by $7,250,000 due to a change in a guarantee provision in the comapny's acquisition of Kesslers Team Sports.
The acquisition of Kesslers Team Sports included the issuance of approximately 908,000 shares of Collegiate Pacific common stock. The Company had guaranteed the previous owners of Kesslers Team sports $7.25M upon sale of the shares. This guarantee was reflected as a liability referred to as 'redeemable common stock' on our June 30, 2004 balance sheet.
The Dickman family – previous owners of Kessler Team Sports – have decided to retain the majority of the Collegiate Pacific shares issued and to release Collegiate Pacific from the guarantee.
As a result the guarantee has been terminated and Collegiate Pacific will now re-class the $7.25M as an increase in stockholders' equity. Stockholders' equity will now increase to approximately $39.5m as compared to $6 million on June 30, 2003.
“We take great pride in maintaining a debt-free balance sheet while executing our current expansion plans. This strong financial condition increases our ability to react quickly to new opportunities,” said Michael Blumenfeld, CEO of Collegiate Pacific.
