BluePoint Energy ANNOUNCES PLANNED ELIMINATION OF ALL CONVERTIBLE DEBT
-- BluePoint Provides Guidance for Anticipated Record Revenue and Earnings in 2007 --
-- $10 Million in Debt to be Converted --
El DORADO HILLS, CA, December 14, 2006 -- Chapeau, Inc. d/b/a BluePoint Energy (OTC BB: CPEU) today announced it plans to eliminate its long-term convertible senior debt of approximately $10 million over the next 30 days. With a significantly stronger balance sheet and many new customer relationships, BluePoint anticipates a record year for revenues and earnings in 2007.
For the quarter ended September 30, 2006, the Company reported long-term debt, net of unamortized discount, of $9.4 million and interest expense of nearly $307,000, or more than $0.11 per outstanding share. As a result of the 100% convertible debt conversion to equity, BluePoint's long-term debt is reduced to $272,000, carrying a 0% interest rate as a consequence of its asset acquisition reported earlier this year, making the Company nearly long-term debt-free with no related interest expenses to dilute earnings.
As guidance for the current fiscal year ending June 30, 2007, BluePoint anticipates having signed discount energy purchase agreement contracts (power projects) with customers representing revenue to BluePoint of $60 million, with significant upside potential based upon indications from our customers in connection with their concerns relative to the access, cost and reliability of electrical grids in territories in which they operate. This compares with similar contracts in the amount of less than $4 million signed during the previous fiscal year of 2006. In the current quarter alone, BluePoint anticipates in excess of $15 million in customer contracts. As a result of current signed contracts this fiscal quarter ending December 31, 2006 together with the long-term debt elimination, the Company is now in a position of positive cash flow going forward, thus allowing additional contracts to be accretive to net earnings.
It is generally assumed in the business model of BluePoint that project contract revenue shall convert to revenue recognition by the Company generally within six to nine months after a project contract is signed. BluePoint expects gross margins targets to exceed 40% on the stated contract revenues, with EBITDA to be in the range of 18-22%.
Patrick W. Imeson, Managing Director and Chief Executive Officer of Calim Private Equity, LLC, BluePoint's largest debt holder, stated, "Calim's decision to exercise its conversion rights to remove this debt from the Company's balance sheet is based on BluePoint's tremendous progress in its EnviroGen™ Energy Module product development, its execution of master discount energy purchase agreements with prestigious companies that are dominant in their industry groups, the critical strategic alliances it has forged with key vendors and a very visible and robust order pipeline carrying into 2007. Cumulatively, these important new developments give Calim the comfort and assurance that being an equity owner best suits the goals of our funds in assisting BluePoint to move its business to the next level on a virtually debt-free basis."
Guy A. Archbold, Chief Executive Officer of BluePoint Energy Inc., said, "We are tremendously pleased by this sign of confidence exhibited by our largest investors in their willingness to prematurely convert their senior debt positions into equity of our Company. This conversion dramatically improves our balance sheet and, if managed properly, allows further contracts and revenues to the Company to be accretive to net earnings without the burden of long-term debt and high interest payments. Based upon recently initiated and announced master contracts with Starwood Vacation Ownership, Inc., Macy's East Division of Federated Retail Holdings, Inc. and Starwood® Hotels and Resorts Worldwide, Inc., along with additional master contracts currently under discussion in the hospitality and healthcare industries, we do anticipate a robust calendar 2007 in both revenues and positive earnings. Both our current and prospective shareholders should be encouraged by the elimination of debt and the Company's management team being committed to increasing shareholder value through revenues and earnings growth."
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