2014

ALJ Regional Holdings Announces Entry Into Definitive Agreement To Acquire Las Vegas Based Carpets N' More

LAS VEGAS, April 8, 2014 /PRNewswire/ -- ALJ Regional Holdings, Inc. (OTC Markets: ALJJ) ("ALJ") announced that it has entered into a Purchase and Sale Agreement to acquire all of the outstanding equity securities of Floors-N-More, LLC, dba, Carpets N' More ("Carpets").  Carpets is the largest floor cover retailer in Las Vegas and a provider of countertops, cabinets, window coverings and garage and closet organizers, with five retail locations.  The acquisition is conditioned upon the re-issuance by the Nevada State Contractors Board of certain licenses to Carpets, which are expected to occur in the near future.   

The aggregate consideration for the acquisition of all of Carpets was $5.47 million, including expenses of the transaction, payable by ALJ in cash to the seller.  Concurrently with the closing, Carpets will be recapitalized in a transaction resulting in ALJ owning 87.94% (basic) or 82.63% (fully diluted) and Mr. Chesin, the Chief Executive Officer of Carpets, owning 12.06% (basic) or 17.37% (fully diluted) of Carpets. 

ALJ is funding the acquisition through existing cash, the sale of 1.4 million shares of its common stock in two separate private placements at a price of $1.60 per share, and the incurrence of $2.0 million in debt from Libra Securities Holdings, LLC, a related party.  The Promissory Note, which was approved by the disinterested directors on the Board of Directors of ALJ, carries a 5-year maturity with a balloon payment due April 2019 and a 10% annual interest rate.  The note may be pre-paid at any time without penalty.  Interest is payable quarterly but may be capitalized by ALJ at its election.

Carpets will continue under the leadership of Mr. Chesin and the remainder of its management team.  "We are really excited to add Carpets N' More to our portfolio of companies at ALJ.  They fit the mold of our target acquisitions, with an experienced management team and growing EBITDA.  We are also excited to retain Steve as Carpets' CEO, and partner with him through his direct investment in Carpets," said Jess Ravich, ALJ's Executive Chairman.  Steve Chesin added, "This is a great fit for Carpets.  We are experiencing a rebound in the housing market in Las Vegas and are looking forward to working with ALJ in the future."

ALJ was advised by Shearman & Sterling LLP in these transactions. 

Forward-Looking Statements

This announcement contains forward-looking statements.  Generally, the words "believe," "anticipate," "expect," "may," "should," "could," and other future-oriented terms identify forward-looking statements.  Forward-looking statements include, but are not limited to, statements relating to the expected closing of Carpets and the benefits that Carpets may provide to ALJ and its stockholders and the continued success of Carpets' business.  These forward-looking statements are based upon the current beliefs and expectations of the management of ALJ and involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond ALJ's ability to control or estimate precisely and include, without limitation, the general business risks faced by Carpets as well as the general business risks faced by ALJ (some of which will be described in ALJ's Current Report published on the Pink Sheets website announcing the transaction), including its success in continuing to settle its outstanding obligations from its prior business activities, results of tax audits, its ability to retain and attract key employees, acts of war or global terrorism, and unexpected natural disasters and other risks and uncertainties, including those detailed from time to time in its periodic reports (whether under the caption Risk Factors or Forward Looking Statements or elsewhere). ALJ cannot give any assurance that such forward-looking statements will prove to have been correct. The reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this announcement.  Neither ALJ nor any other person undertakes any obligation to update or revise publicly any of the forward-looking statements set out herein, whether as a result of new information, future events or otherwise.

SOURCE ALJ Regional Holdings, Inc.



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