Avatech set to merge with PlanetCAD Inc.

Resulting operation will retain name of Owings Mills company

May 03, 2002|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Avatech Solutions Inc., an Owings Mills-based software company, said yesterday that it has agreed to merge with a Colorado company in a deal that will allow it to keep its name, its headquarters and its chief executive.

The company will get a new chairman, W. James Hindman, founder of Jiffy Lube and Youth Services International Inc. Hindman is also a co-founder of Avatech and a member of its board of directors.

Once the deal is complete, Avatech will become a wholly owned subsidiary of publicly held PlanetCAD Inc. of Boulder, Colo., which will change its name to Avatech Solutions.

"We will be a significant public company here in Maryland," said Henry Felton, Avatech's chairman and chief executive, who will be CEO of the new company. "It's exciting for us, and I think it's going to be exciting for Maryland."

Avatech makes software for industries such as architecture, engineering and manufacturing. PlanetCAD makes software for the manufacturing industry.

Financial terms of the deal were not disclosed, but the merger requires PlanetCAD to issue registered shares of its stock in exchange for all of Avatech's outstanding common stock. Avatech is a privately held company that offers shares mostly to employees and to some outside investors.

Once the deal is complete, PlanetCAD shareholders will own 25 percent and Avatech shareholders will own 75 percent of the new company's stock, according to a statement from the companies.

PlanetCAD has 12.4 million shares outstanding. The shares closed yesterday at 42 cents, up 25 cents.

"I think it's a tremendous combination," Hindman said. "And the reason I think that is that the proprietary products that PlanetCAD owns have great, great applicable value to manufacturers around the world, and Avatech has the sales force to put that into play."

The deal is expected to be completed by August.

"It's true product extension and true matching-up of each other's strengths," said PlanetCAD's Chief Financial Officer, Joy Godesiabois

PlanetCAD has 25 employees in Boulder. About 10 of them will be laid off before the merger is complete because of overlap in executive and administrative jobs, Godesiabois said. The Boulder facility will be the new company's product-development center.

Avatech has 170 employees nationwide, about 35 of them in Owings Mills at the company's headquarters and another building in the same office park. None of the Avatech employees will be affected by the deal, the company said.

Felton, also a co-founder of Avatech, said the merger will help Avatech gain an international presence because PlanetCAD has customers in Europe.

It will also allow Avatech to sell PlanetCAD's products to its customers and develop products for its customers using PlanetCAD's software developers, he said.

"Without a doubt," Felton said, "this is the most exciting event that we've had."

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