form42506898004_12272007.htm
Filed
by
Western Sizzlin Corporation
Pursuant
to Rule 425 under the Securities Act of 1933
Subject
Company: ITEX Corporation
Registration
No. 333-148349
On
December 27, 2007, Western Sizzlin Corporation issued the following press
release:
WESTERN
SIZZLIN CORPORATION COMMENCES EXCHANGE OFFER FOR ITEX
CORPORATION
Offer
Currently Valued at $1.19 Per ITEX Share
Offer
Represents a 24% Premium
ROANOKE,
Va., Dec. 27 /PRNewswire-First Call/ – Western Sizzlin Corporation (OTC Bulletin
Board: WSZL) today announced that it has commenced an exchange offer for all
outstanding shares of ITEX Corporation (OTC Bulletin Board:
ITEX). The exchange ratio for the offer is .06623 shares of Western
common stock for each outstanding share of ITEX common
stock. Following completion of the exchange offer, Western intends to
consummate a second-step merger in which each remaining share of ITEX common
stock would be converted into the right to receive the same number of Western
shares as paid in the exchange offer.
On
December 26, 2007, the closing price of a share of Western common stock was
$18.00, whereas the closing price of a share of ITEX common stock was
$0.96. Based on these closing prices and the exchange ratio in the
offer, the Western offer has a value of $1.19 per ITEX share and a total
transaction value of over $21 million. This figure represents a 24%
premium over ITEX’s closing share price on December 26, 2007, a 38% premium over
ITEX’s six-month average closing share price through December 26, 2007 and a 48%
premium over ITEX’s one-year average closing share price through December 26,
2007. Western has applied to have its common stock listed on the
Nasdaq Capital Market.
Western
seeks to acquire ITEX because it believes all stockholders will benefit for
the
following reasons:
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1)
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Intrinsic
Value and Capital Allocation. Western’s holding company structure
would allow surplus cash generated by its subsidiaries, including
ITEX, to
be channeled to the parent for reallocation in pursuit of attaining
high
risk-adjusted returns. Furthermore, as ITEX’s parent, Western could
provide financing, on an opportunistic basis, which could be applied
toward acquiring other barter businesses. Western’s objective is to
maximize its intrinsic business value per share over the long
term.
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2)
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Cost
Savings. The elimination of redundant public company costs,
Western believes, would eventuate into material savings in expenses.
Western believes the reduction of expenses would increase cash flows,
representing, in turn, a discernible basis for a higher valuation
for the
combined company.
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3)
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Opportunities.
Western believes there are significant possibilities to increase
ITEX’s
bartering transactions through Western’s other subsidiaries as well as
through the businesses Western may purchase in the
future.
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In
addition to these three main reasons, Western also believes that its acquiring
ITEX would result in a larger combined market capitalization, which along with
the anticipated listing on the Nasdaq Capital Market would enhance liquidity
and
reduce transaction costs for stockholders wishing to enter or exit the
stock. ITEX is currently quoted on the OTC Bulletin
Board. Pro forma for the transaction, Western would have had a
market capitalization today of approximately $70 million.
Most
importantly, Western is proposing to issue its common stock to ITEX stockholders
in the offer to allow them to participate in the growth and opportunities of
the
combined company. Western believes that joining the companies would improve
the
diversity of operations, earning power, and reinvestment of cash flows for
growth. Accordingly, Western believes that the combination of Western and ITEX
would have significant long-term benefits because two entities would increase
intrinsic business value per share for stockholders at a higher rate than they
could separately.
Western
believes the holding company structure, such as the one at Western, is ideal
for
businesses like ITEX’s because capital allocation responsibility is separated
from the authority to make operating decisions. Thus, management of a subsidiary
can focus on overseeing day-to-day operations, whereas management of Western
can
focus on allocating capital. Western intends to operate ITEX’s business,
including its broker network and member businesses, in the manner in which
it is
currently conducted following the consummation of the
transaction. Western believes its business model and financial
resources would construct an optimal platform to create value for long-term
stockholders.
About
The Exchange Offer
The
exchange offer is conditioned upon, among other things, the registration
statement for the issuance of Western shares in the exchange offer being
declared effective by the Securities and Exchange Commission; 60% of ITEX’s
shares being validly tendered in the exchange offer and not withdrawn; Western
being satisfied in its reasonable discretion that the Nevada anti-takeover
statutes will not be applicable; the expiration or termination of any waiting
periods under applicable antitrust laws; the receipt of all required consents
under the terms of ITEX’s debt agreements; the listing of Western’s common stock
on Nasdaq or another national securities exchange; and, to the extent required
by the rules of any such exchange, stockholder approval of the issuance of
Western shares in the offer, which the executive officers and directors of
Western have the voting power to approve. The complete terms and
conditions of the exchange offer are set forth in the registration statement
and
the other offering documents filed today by Western with the Securities and
Exchange Commission.
The
exchange offer is scheduled to expire at 5:00 p.m., New York City time, on
Thursday, January 31, 2008, unless extended.
Morrow
& Co., LLC is acting as Information Agent for the exchange
offer.
This
press release is for informational purposes only and is neither an offer to
sell
nor a solicitation of an offer to buy any securities. Any exchange
offer will be made only through a registration statement and related
materials. In connection with the exchange offer, Western has filed a
registration statement on Form S-4 (containing a prospectus) with the Securities
and Exchange Commission. Investors and stockholders of ITEX are
advised to read these disclosure materials (including other disclosure materials
when they become available) carefully because they contain (and will contain)
important information. Investors and stockholders may obtain a free
copy of the disclosure materials and other documents filed by Western with
the
Securities and Exchange Commission at the SEC’s website at
www.sec.gov. A free copy of the disclosure materials and other
documents of Western may also be obtained from Western upon request by directing
such request to the Information Agent, Morrow & Co., LLC, 470 West Avenue,
Stamford, CT 06902, E-mail: offer.info@morrowco.com. Banks
and brokerage firms please call: (203) 658-9400. Stockholders call
toll free: (800) 607-0088.
About
Western Sizzlin Corporation
Western
Sizzlin Corporation is a holding company which owns a number of subsidiaries.
Its most important business activity is conducted through Western Sizzlin
Franchise Corporation, which franchises and operates 123 restaurants in 19
states. Financial decisions are centralized at the holding company level, and
management of operating businesses is decentralized at the business unit level.
Western’s prime objective is to maximize its intrinsic business value per share
over the long term. In fulfilling this objective, Western will engage
in a number of diverse business activities to achieve above-average returns
on
capital in pursuit of maximizing the eventual net worth of its
stockholders.
Forward-Looking
Statements
This
release contains forward-looking statements relating to Western Sizzlin
Corporation’s exchange offer for all of the outstanding shares of ITEX
Corporation common stock and Western’s expectations with regard to the proposed
transaction. These forward-looking statements are based on Western’s
current intent, expectations, estimates and projections and are not guarantees
of future performance. These statements involve risks, uncertainties,
assumptions and other factors that are difficult to predict and that could
cause
actual results to vary materially from those expressed in or indicated by
them. In addition, some factors are beyond Western’s
control. Factors that could cause actual results to differ materially
from the statements made in this release include, among others: (i) the
willingness of ITEX stockholders to tender their shares in the exchange offer
and the number and timing of shares tendered; (ii) the satisfaction, or waiver
by Western to the extent legally permissible, of all conditions to the exchange
offer; (iii) Western’s and ITEX’s ability to receive any and all necessary
approvals, including any necessary governmental or regulatory approvals; and
(iv) other factors as described in filings with the Securities and Exchange
Commission, including the factors discussed under the heading “Risk Factors” in
Western’s prospectus included in its registration statement on Form S-4 as filed
with the Securities and Exchange Commission on December 27, 2007.
Contact:
Robyn
B.
Mabe, Chief Financial Officer
Western
Sizzlin Corporation
(540)
345-3195