Thursday, June 19, 1997

Auto-Gas being acquired by Irving firm for $20 million

By BOB BRUCE and DOUG WILLIAMSON / Abilene Reporter-News

Auto-Gas Systems Inc., an Abilene technology company, is being acquired by an Irving firm for nearly $20 million.

Canmax Inc. made the announcement Wednesday, saying it had signed an agreement to merge with privately held Auto-Gas.

Canmax CEO Roger Bryant said Auto-Gas shareholders will receive approximately 5.2 million shares. Another 1.5 million shares will be reserved for Auto-Gas shareholders who will exercise existing options and warrants.

The merger is scheduled for completion by Oct. 31, Canmax's fiscal year end. Both boards of directors must approve the transaction. Canmax will be the surviving entity, Bryant said.

Randy Nicholson, 60, Auto-Gas president, said, "We think by bringing the companies together we will become more efficient and more dominant within the industry. We feel we're in a position to move and become one of the leaders."

Details of the transaction remain to be finalized, but it is proposed that Nicholson remain with the new company for a minimum of two years.

"We're evaluating the board seats and so forth," Nicholson said. "I think it brings together good opportunities for employees and shareholder value for our shareholders."

Canmax has another Abilene connection.

For the last month and a half, the Dodge Jones Foundation has owned 15 percent of the company.

Joe Ed Canon, vice president of the foundation, said Auto-Gas officials approached the foundation, suggesting that it purchase 1 million shares of Canmax from EDS. EDS had acquired the stock after joint marketing and other business agreements with Canmax were terminated April 29.

Canon said Canmax needed EDS out of the way to complete the merger with Auto-Gas.

He said he felt good about the investment because some Canmax employees formerly worked for Auto-Gas and the two companies appear well-suited for each other. The foundation has held stock in Auto-Gas for some time, Canon said.

"It looks like a good investment," Canon said.

The stock closed at 2 -1/2, up 1/16 Wednesday.

Auto-Gas introduced the pay-at-the-pump concept in 1981. Now it is poised to introduce that technology to mainland China within the next 30 to 60 days with a major oil company, Nicholson said. It employs 115 people, most of whom are in Abilene and New Braunfels.

Originally, Auto-Gas was part of E-Z Serve Inc. It was spun off when E-Z Serve was sold to Harkin Oil & Gas in December 1986, according to Nicholson.

Canmax provides information and automation for the retail petroleum and convenience store industry. Customers include Southland Corp. (7-Eleven), ARCO (Atlantic Richfield) and the Army-Air Force Exchange Service. Canmax has approximately 5,900 installed sites.

Contracts with NCR Corp. and The Southland Corp. today account for 94 percent of the company's revenue, up from 72 percent a year ago. Those contracts expire at the end of 1998.

Revenues grew from $9.0 million in 1995 to $12.2 million in 1996, while Canmax turned a $3.3 million net loss into $142,000 in net income in 1996. That was its first profit in at least four years.

For the six months ended April 30, Canmax posted record revenues of $7.7 million, an increase of $2.5 million over the comparable period in 1996. Net income jumped to $659,266, or 10 cents per share, from a net loss of $554,148 and 11 cents a year ago.