SOUTHAMPTON, Pa., June 20, 2022 (GLOBE NEWSWIRE) -- Environmental Tectonics Corporation's (OTC Pink: ETCC) ("ETC" or the "Company") today announced that on June 15, 2022, the Company closed a transaction to sell and lease back our property located in Southampton, Pennsylvania. This property sold consists of our corporate headquarters, main production plant, and the NASTAR Center. Under the terms of the sale agreement, the land, buildings, and improvements, with a net book value of $2,250,000, were sold for pre-tax net proceeds of $4,700,000, resulting in a net gain on the sale of approximately $2,400,000. Existing training equipment in the NASTAR Center affixed to the building was not included in the sale. In connection with the sale, the Company entered into an Agreement of Lease ("Lease") with VV100 LLC as to an undivided 82.53% interest and The Irrevocable Agreement of Trust of Jerry D. Kratz for the Benefit of Descendants dated December 19, 2011, as to an undivided 17.47% interest, as tenants in common (collectively, "Lessor") for Lessor to lease back to the Company all the property sold. The property has been leased back for an initial term of seven (7) years ("Initial Term"), and the Lease includes specified renewal options for up to seven (7) additional years ("Renewal Term"). Net rent expense for the first year of the Lease is $420,000 annually, and increases 2.5% for each additional year of the Initial Term. At the outset of the Renewal Term, rent will reset to fair market value and will increase 3.0% for each additional year of the Renewal Term. The property sold had depreciation expense of approximately $165,000 annually. Net proceeds from the sale are being used initially to reduce outstanding borrowings under our credit facility with PNC Bank.
About ETC:
ETC designs, manufactures, and sells software driven products and services used to recreate and monitor the physiological effects of motion on humans, and equipment to control, modify, simulate and measure environmental conditions. Our products include aircrew training systems.
Forward-looking Statements
This news release contains forward-looking statements, which are based on management's expectations and are subject to uncertainties and changes in circumstances. Words and expressions reflecting something other than historical fact are intended to identify forward-looking statements, and these statements may include words such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "future", "predict", "potential", "intend", or "continue", and similar expressions. We base our forward-looking statements on our current expectations and projections about future events or future financial performance. Our forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about ETC and its subsidiaries that may cause actual results to be materially different from any future results implied by these forward-looking statements. We caution you not to place undue reliance on these forward-looking statements.
| Contact: | Joseph F. Verbitski, Jr., Chief Financial Officer |
| Phone: | (215) 355-9100 x1531 |
| E-mail: | jverbitski@etcusa.com (mailto:jverbitski@etcusa.com) |
