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Management-Led Buyout Of Fortune Industries, Inc. Announced

INDIANAPOLIS, March 26, 2012 /PRNewswire/ -- The board of directors of Fortune Industries, Inc. (NYSE Amex: FFI) today announced that it had entered into a management buyout transaction with CEP, Inc., a holding company owned by a management-led group including Fortune Industries' Chief Executive Officer Tena Mayberry and Chief Financial Officer Randy Butler. Under the management of Mayberry and Butler for the past three years, Fortune Industries has successfully shifted its focus from a diversified holding company to a pure-play, market-leading professional employer organization (PEO) with $30 million in assets and clients located in 47 states. 

The post-merger company will continue to be known as Fortune Industries, Inc., and all of its subsidiaries and divisions across the United States will continue their regular business before and after the transaction.

"While this merger may represent a change in ownership, it does not represent any change in our mission," said Mayberry. "As a management-owned company, we expect to continue building on the entrepreneurial spirit of our people and delivering exceptional human resource services by leveraging our strategic expertise and operational skills. For our clients, this means an increasingly focused company with a senior management team whose interests are directly tied to the success of our customers. For our company, it also means greater control of our own destiny, all of which supports our mission to provide expert human resource services on an outsourced basis."

Under the terms of the transaction approved by the board, the majority shareholder and chairman of Fortune Industries, Carter M. Fortune, will sell to CEP all of his Series C Preferred shares, which will be converted to common stock and contributed to CEP immediately prior to the merger. Upon completion of this conversion, total outstanding common stock of the company is expected to exceed 50,000,000 shares.

Shareholders of Fortune Industries who own 501 or more shares (including CEP) will receive an equivalent number of shares in the post-merger company. Shareholders who own 500 shares or less will receive $0.61 per share when the merger closes, which represents a 22 percent premium over the 200-day moving average share price as of March 20, 2012. Senior management will become the majority shareholder of Fortune Industries, and Mr. Fortune will retain a 20 percent minority stake of CEP. The terms and conditions of the merger transaction and related details are more fully described on the Form 8-K filed today.

Additional merger benefits include:
  • Elimination of the perpetual mandatory dividend associated with the Series C Preferred shares now owned by Mr. Fortune.
  • All common shares held by shareholders of the post-merger company will rank equally because there will be no preferred class of stock.
  • Post-merger, the company will no longer be at risk for an involuntary change of control.
  • Greater operational flexibility and ability to focus on long-term strategic growth without undue emphasis on short-term fluctuations in the market.

"When a company's greatest strategic asset is its people, putting ownership and control in the hands of this proven senior management team is clearly a smart move for everyone," said Dave Berry, chair of the board's independent committee that recommended approval of the merger to the full board. "Majority ownership binds senior management together with all of our stakeholders in a shared enterprise and fosters a continuing commitment to produce results."

The merger transaction will be put to a vote of all Fortune Industries shareholders after all regulatory conditions are satisfied, including any comments from the Securities and Exchange Commission. Mr. Fortune has entered into a voting agreement in which he will vote his majority stake of the company in favor of the transaction.

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