ELAM Elamex S.A. DE C.V. (MM)

Elamex Subsidiary Precision Tool, Die and Machine Company Files for Chapter 11 Protection Elamex Board Authorizes Potential Sale of Precision EL PASO, Texas, Dec. 19 /PRNewswire-FirstCall/ -- Elamex S.A. de C.V. , a diversified manufacturing services company with food, plastics and metals operations and real estate holdings in Mexico and the United States, announced that its Metal Stamping segment wholly owned subsidiary Precision Tool, Die and Machine Company ("Precision") has voluntarily filed for protection under Chapter 11 of the Federal Bankruptcy Code in the U.S. Bankruptcy Court to implement a restructuring of its debt. As previously announced, Precision has debt agreements that contain a number of affirmative and negative covenants, including limitations on additional borrowings and maintenance of certain financial ratios. Precision was not in compliance with certain of these covenants as of and for the quarter ended October 3, 2003. Precision is not expected to generate sufficient near term cash flow to fund its short-term liquidity requirements, including the ability to repay the indebtedness due to the bank and to be in compliance with the covenants under the loan agreement. Elamex President and Chief Executive Officer Richard P. Spencer commented, "Precision's Chapter 11 filing is necessary to protect the interests of its creditors while we establish and implement a plan for financial restructuring. Precision has established a debtor-in-possession (DIP) financing package through its existing bank, which should enable it to address its short-term cash requirements for operations as it enters the Chapter 11 proceedings." For the most recent three and nine months ended October 3, 2003, Precision sales were $18.7 million and $54.9 million, respectively, or 49% and 46%, respectively, of Elamex's consolidated net sales for the period. Precision's third quarter 2003 net loss was $1.8 million. In related news, Elamex also announced that its Board of Directors has authorized the adoption of a plan to sell Precision. Elamex will initiate a process to actively market and sell the subsidiary as soon as practicable. Any sale will be subject to the approval of the U.S. Bankruptcy Court. Management intends to engage the services of an investment advisor to assist in these efforts. About Precision Tool, Die and Machine Company Precision manufactures and powder paints metal stampings primarily for the U.S. appliance and automotive industries. Precision employs over 500 personnel at three facilities located in Louisville, Kentucky, and generated annual revenue of $75.3 million in 2002. About Elamex Elamex ("the Company") is a Mexican company with manufacturing operations and real estate holdings in Mexico and the United States. The Company is involved in the production of food items related to its candy manufacturing and nut packaging operations, and metal and plastic parts for the appliance and automotive industries. Elamex's competitive advantage results from its demonstrated capability to leverage low cost, highly productive labor, strategic North American locations, recognized quality and proven ability to combine high technology with labor-intensive manufacturing processes in world- class facilities. As a value added provider, Elamex's key business objectives include superior customer satisfaction, long term supplier relationships and employee growth and development, with the ultimate goal of continuously building shareholder value. Press releases by Elamex may include forward-looking statements that involve risks and uncertainties, including, but not limited to, risks associated with the Company's future growth and development. Information contained herein should be read in conjunction with the Company's periodic filings with the Securities and Exchange Commission, including its Form 10-Q filing with the Securities and Exchange Commission for the period ended October 3, 2003. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially. There is a risk that the bankruptcy filing by Precision may have an adverse effect on the Company and its business. The Company has not guaranteed nor is it otherwise liable for the indebtedness of Precision. However, the Company's other customers, suppliers and creditors may be concerned that the bankruptcy filing by Precision will make the Company a less creditworthy consolidated entity with whom to conduct business and may discontinue business with the Company or may restrict the extension of credit. If this occurs, the Company's business and its financial condition could be adversely affected. For Further Information: Sam Henry, Chief Financial Officer of Elamex, +1-915-298-3071, ; or Tom Hudson, President of Precision, +1-502-479-0861, ; or General Information, Kristen McNally of Financial Relations Board, +1-310-663-8007, , for Elamex. DATASOURCE: Elamex S.A. de C.V. CONTACT: Sam Henry, Chief Financial Officer of Elamex, +1-915-298-3071, ; or Tom Hudson, President of Precision, +1-502-479-0861, ; or General Information, Kristen McNally of Financial Relations Board, +1-310-663-8007, , for Elamex Web site: http://www.elamex.com/

Copyright