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Gemini Top Exec O'Neal Offers Recoton Purchase Details

4/18/2003 09:00:00 AM Eastern

Clifton, N.J. - Amid swirling rumors about which consumer electronics company might step up to make a bid for all or part of bankrupt Recoton, Gemini Industries has become the first - and possibly the only - player to answer this call.

Following the announcement Thursday that it had reached an agreement to acquire the accessories portion of Recoton's business, Gemini president/CEO Michael O'Neal elaborated on his strategy for combining the best of the two company's into a single entity.

'We plan to preserve [Recoton's] businesses - it's customer relations - as it exists today. We are going to leverage the strengths of the two companies, so we become a much better supplier to all our customers.'

As part of the deal, Recoton and Gemini have entered into a transition agreement which, among other things, will provide Recoton's customer base with a continuity of timely delivery of products and essential services. Recoton had filed for Chapter 11 protection earlier this month.

'We plan to consolidate Recoton's operations here in [Clifton] New Jersey, but we will maintain a sales and marketing office in Florida,' O'Neal told TWICE. 'We expect a limited number of folks from Recoton's operating side to join us here, while some operations will stay down there.' Recoton is based in Lake Mary, Fla.

O'Neal, who has put out the welcome mat for Recoton's marketing and sales people, as well as the operations staff, said Gemini would consider all of the sales and marketing employees who would join his company. 'We do have interest in these people, to fit them in here,' he said. When asked if he could be more specific in naming personnel who might join Gemini, O'Neal said he could not elaborate at this time.

Gemini's proposed transaction with Recoton includes the bankrupt company's Jensen, Acoustic Research, Advent, Discwasher and Ambico branded accessories. It does not take in the Jensen, Acoustic Research and Advent audio products.

'But, we have not ruled out the audio side,' said O'Neal about the possibility of acquiring these products in addition to Recoton's accessories lineup. 'But, as of today, nothing is on the table,' he emphasized.

'Recoton's brands will not disappear,' said O'Neal. The idea is to have 'a combination of the best of the two businesses.

'Gemini plans to improve on [Recoton's] operations. We're doing this because we know it will be good for our customers, and for Recoton's.'

Asked what price the privately held Gemini has bid for Recoton's accessory business, O'Neal did not yet want to divulge this information.

Gemini's planned acquisition is subject to the bankruptcy court's approval. 'The court has to approve our bid,' said O'Neal. 'Following this, there will be an auction. Someone else could come in and top us.' But a determined O'Neal said Gemini should not be counted out if another bidder entered the acquisition process.

Full-line supplier Gemini, which acquired Zenith's accessories business in July of 2001, plans to create what it calls one of the largest manufacturers and distributors of consumer electronics accessories in the world, by adding to Recoton's brands its own Philips, Zenith, Magnavox, Southwestern Bell and For Dummies brands.

Gemini sells over 1,800 products comprising a full assortment of CE accessories, including headphones, antennas, A/V cables, surge protectors, telephone accessories and CD media products.

Recoton's bankruptcy proceedings include debtor-in-possession (DIP) financing, the terms of which require Recoton to auction off its business and all related assets. The company must apply proceeds from such sales to reduce $235 million on long-term debt.