Catalina Lighting, Inc. Signs Agreements For Capital Infusion

MIAMI, April 6 /PRNewswire/ -- Catalina Lighting, Inc. (NYSE: LTG), a leading international designer, manufacturer and distributor of residential and office lighting products, announced today that it has entered into definitive agreements with Sun Catalina Holdings LLC (SCH), an affiliate of Sun Capital Partners, Inc., which contemplate a capital infusion for Catalina of $20.5 million. These agreements provide that Catalina will receive a cash investment of $13 million from SCH in return for 6 million shares of common stock, a secured senior subordinated promissory note in the principal amount of $10 million, and the issuance of a warrant to purchase additional shares of common stock. Assuming exercise of the warrant immediately after closing, SCH would own (including the 6 million shares) 52.5% of the Company's common stock. SCH will also have the right under the agreements to appoint two-thirds of the Company's Directors at closing. The closing of the transaction is subject to completion of due diligence by SCH, the Company obtaining an additional $7.5 million in senior subordinated debt financing (currently being negotiated with another lender), the restructuring of the Company's existing $75 million credit facility and the satisfaction of other conditions. The Company anticipates closing will occur in May 2001.

Michael Kalb, Vice President of Sun Capital, stated, "Catalina is a leading provider of high quality consumer lighting products with an enviable customer base that includes well-known and established mass merchandisers, home centers and office superstores. Along with our capital investment, we will work with Catalina management, as we have with our other portfolio companies, to seek to identify and implement operational efficiencies, spear-head growth into new or expanded market and product opportunities and assist in key strategic decisions, with the objective of broadening Catalina's product lines and customer base while at the same time enhancing shareholder value."

According to Robert Hersh, Catalina's Chairman and C.E.O., "We are excited about this transaction. Sun Capital represents not just an investor, but a strategic partner capable of enabling Catalina to expand its business and capitalize on numerous opportunities. This capital infusion will provide necessary financial flexibility as we continue to address the reduction in sales volume resulting from the weakened U.S. economy. As evidenced by recent press releases from a variety of retailers, we believe this reduced volume is industry-wide, rather than Company specific, and we believe that Catalina has maintained its market share during these difficult times. In addition, based upon recent major improvement in our orders backlog, business appears to be improving and we are optimistic that operating results will improve in the last half of the fiscal year".

Catalina reported that it also has obtained an amendment to its current credit facility extending from March 31, 2001 to May 31, 2001 the requirement that the Company obtain certain statutory declarations and an auditors' report related to the Company's acquisition of Ring PLC. The Company also reported that, based on the results of operations for the two months ended February 28, 2001 and estimated sales for the month of March 2001, the Company expects to report a net loss for its second quarter ending March 31, 2001 significantly greater than the $1.9 million net loss reported for its first quarter. Sun Capital Partners, Inc. is a leading merchant banking firm, based in Boca Raton, Florida and focused on leveraged buyouts and venture capital investments. Sun Capital invests in unique and niche oriented companies with market leadership positions such as Catalina. Sun Capital has invested in more than thirty companies during the past several years with combined sales in excess of $1 billion. Investments have included companies in the following industries: paper and packaging, filmed entertainment, automotive after-market parts, financial services, healthcare, media and communications, outdoor advertising, building products, wireless communication, industrial and decorative mirrors, computer and workstation peripherals, and internet and technology. Please visit its website at www.suncappart.com for additional information on SunCapital Partners, Inc. This press release, particularly the statements made by Messrs. Hersh and Kalb, includes "forward-looking" statements, usually containing the words "believes", "anticipates", "estimates", "is optimistic", "expects" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, general domestic and international economic conditions which may affect consumer spending; reliance on key customers who may delay, cancel or fail to place orders; continued acceptance of the Company's products in the market place; new products and technological changes; pressures on product prices and pricing inventories; increases in the costs of labor and raw material; dependence upon third-party vendors and imports from China, which may limit the Company's margins or affect the timing of revenue and sales recognition; competitive developments; changes in manufacturing and transportation costs; the availability of capital; the ability to satisfy the terms and covenants of credit and loan agreements, and the agreements discussed in this release and the impact of increases in borrowing costs, each of which affect the Company's short-term and long-term liquidity and ability to operate as a going concern; foreign currency exchange rates; changes in the Company's effective tax rate; and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release. SOURCE Catalina Lighting, Inc.

CONTACT:
Robert Hersh, Chairman, President and CEO, or David Sasnett, Senior Vice President and CFO, both of Catalina Lighting, 305-558-4777