HDTV Innovators Brillian And Syntax Announce Definitive Agreement To Merge

15-Jul-05

Brillian Corp. and privately held Syntax Groups Corp. announced that the companies have entered into a definitive agreement to merge. Pending stockholder and regulatory approval, Brillian will acquire all outstanding shares of Syntax in a tax-free, stock-for-stock transaction. As approved by the boards of directors of each company, the merger calls for each share of Syntax to be exchanged at an initial exchange rate of 1.6195 shares of Brillian. The exchange rate will be adjusted at the closing for subsequently issued shares and convertible securities such that the shareholders of Syntax will own approximately 70% of the fully diluted shares of the combined company and the shareholders of Brillian will own approximately 30% of the combined company.Brillian is an innovator of Gen II liquid-crystal-on-silicon (LCoSô) technology and 720p and 1080p Gen II LCoS HDTVs and components. Syntax Groups manufactures the Olevia family of widescreen HDTV-ready LCD TVs. Syntax is one of the fastest growing LCD TV brands in North America with a position in the ""Top 5"" North American LCD TV brands and approximately 7% market share. Worldwide, Syntax is ranked in the ""Top 10"" LCD TV brands.The combined company, Syntax-Brillian, will be uniquely positioned to deliver high-end and mass-market HDTV solutions supporting the two technologies: TFT-LCD and LCoS.By merging with Syntax, Brillian will expand its product scope, channel strength, global supply chain capabilities and services organization to create an entity with significantly greater financial scale and scope. The combined company will adopt Syntax's fiscal year end of June 30. For the year ended June 30, 2005, Syntax had revenue of approximately $90 million, approximately three times the revenue from the previous fiscal year. According to Display Search, Syntax is now the third largest provider of TFT-LCD TVs in North America with a 7% market share.Vincent F. Sollitto Jr., president and chief executive officer (CEO) of Brillian, will serve as chairman and CEO of Syntax-Brillian. James Li, Syntax's current CEO, will be the president and chief operating officer of Syntax-Brillian. Wayne Pratt, Brillian's chief financial officer (CFO), will be the CFO of Syntax-Brillian, and Thomas Chow, Syntax's CFO, will be the chief procurement officer of Syntax-Brillian. Robert Melcher, Brillian's chief technical officer, will be the chief technical officer of Syntax-Brillian. The board of directors of the combined company will include four members of Brillian and Syntax management. Five members will be independent directors pursuant to Nasdaq and SEC regulations for a total of nine members.""We've built an outstanding HDTV research and development organization and a stellar family of 720p and 1080p LCoS-based HDTVs, light engines and components,"" said Sollitto. ""The proposed merger with Syntax Groups will strengthen our offering substantially by marrying our technology strength with Syntax Groups' outstanding channel strength and global supply chain infrastructure. Together, we offer both our partners and customers an even more compelling solution for HDTV and digital consumer electronics products. We believe TFT-LCD will dominate the sub-50-inch screen size arena and LCoS will dominate the 50-inch-plus, rear-projection TV arena.""""We have a very clear and focused strategy to not only become a Tier One digital TV manufacturer, but also to play a leading role in the global HDTV market,"" said Li. ""The merger with Brillian is mutually beneficial, complementary, and additive in virtually every sense. It will make for a stronger and strategically more competitive global company.""The combination will create significant benefits for the customers and partners of both companies, including: ï Breadth - The combined company will offer a compelling line-up of LCD and LCoS(TM)-based HDTV and digital entertainment products for the mass market and high-end specialty markets; ï Depth - Leading-edge technology combined with expertise to architect, design, and manage the development of next-generation light engines, components and TVs; and ï Global Reach - Established channels, supply chain and support organization for North America and Asia to reach a large and fast-growing global market.The transaction is expected to close in the fourth calendar quarter of 2005 and is subject to customary closing conditions, including approval by the shareholders of both companies and regulatory approvals.Additionally, Syntax has agreed to purchase $3.0 million of Secured Debentures from Brillian over a three-month period beginning in July. These notes will bear interest at 7% and will be secured by a junior lien on Brillian's assets.C. E. Unterberg Towbin acted as exclusive financial advisor to Brillian. Greenberg Traurig served as legal counsel to Brillian. Dorsey & Whitney served as legal counsel to Syntax.

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