Chatsworth, Calif.—Pentacon, Inc. was de-listed from the New York Stock Exchange and began trading on the OTC Bulletin Board as of November 1. The company revealed a restructuring plan projected to reduce annual operating costs by approximately $4.8 million.

Central to the plan is the closing of five distribution facilities across the country and a further 14 percent reduction in workforce, in addition to the 175 positions eliminated over the last 15 months.

Pentacon also made efforts to reduce costs through consolidation and restructuring last year. The company is realizing the benefits of those efforts, said CEO Rob Ruck.

However, Pentacon cited an overall drop in sales during 2001, leading to lower profits over this period last year. The industrial sales suffered mainly due to the slow sales in the heavy truck, telecommunications and office furniture industries, said Ruck.

"There is little question that the aerospace division, and the entire industry, was impacted heavily by the events of September 11," he added. "We have had to take these measures to react to these extreme circumstances."

The company is looking to re-capitalize in order meet listing requirements to return to trading on a national securities exchange, said Ruck.

Pentacon also announced that it reached an agreement with its senior lenders and is looking to refinance its senior credit facility. Ruck indicated that several senior lenders are investigating providing a replacement senior credit facility.

"These agreements will allow us the time to negotiate with our existing bondholders and seek an additional $25 million in financing," said Ruck.

As a result of these restructuring, cost reduction and financial efforts, the company expects to return a higher 2002 Earnings Before Interest, Taxes, Depreciation and Amortization than the 2001 EBITDA, excluding restructuring charges and other non-recurring expenses.

"Despite restructuring and staff reduction, we will continue to maintain our high level of customer service," said Ruck. "We intend to transform these current adverse circumstances into opportunities in the coming year."