Ye Olde Rocket Forum - PRESS RELEASE - Semroc purchases Estes-Cox

PRESS RELEASE - Semroc Astronautics Corp - Knightdale, NC

Semroc purchases Estes-Cox

Amidst numerous phone calls and emails over the past few weeks regarding the imminent purchase of Estes-Cox Corporation (Penrose, CO) by Semroc Astronautics Corporation (Knightdale, NC), we have tried with much difficulty to dispel the rumors, but they have been very persistent, particularly among the model rocket "hobbyist" market. We had been aware for several weeks that the Estes-Cox Corporation was up for sale, but had no interest in acquiring the company. Our Board of Directors began almost daily discussions about an Estes-Cox purchase, but had to keep the deal a closely held secret. Fearing a possible backlash and increase in the final purchase price, our legal team had advised us not to release any details until after the deal was complete. We had to consummate this as an outright cash purchase, since a merger did not seem feasible or beneficial for either party.

Marketing Vice President Bruce McLawhorn set up a visit to Wal-Mart (Bentonville, AR) to talk with their sales team about the potential purchase since we were unsure how this would impact the future relationship between our three companies. In the current economic times, it is important to ensure all supplier relationships would continue in case of a severe downturn. Some of our best customers have long-term relationships with both Wal-Mart and Estes-Cox and we did not want to cause any adverse impact on them. A Semroc purchase would have to have absolutely no impact on our customers or we would not have considered it. After assuring ourselves that the purchase would have a negligible impact on all the other parties, the Directors gave their go-ahead for the deal, but only if it would make sound economic sense for Semroc.

We began a careful and methodical study of our product line to see if there was a potential fit for Estes-Cox in our line. We dismissed most of our products as potential candidates since alternatives are currently available from Quest Aerospace Inc. (Pagosa Springs, CO) and Aerotech Consumer Aerospace Division (Cedar City, UT). We decided to concentrate on the Astro-Jr (Catalog # KA-4 List Price $11.50). This kit was created by Semroc as a downscale of the very popular Astro-1 that was designed by Centuri Engineering Company (Phoenix, AZ) in the late 1960's. Unlike most of our product line, it requires a 13mm engine for power. Since this particular engine line is only available now from Estes-Cox, we had very few options left. Our ThunderBee (Catalog # KA-1 List Price $7.00) was a second candidate, so the deal had to be made if we were going to get either off the ground. Future products using the 13mm technology would be a good marriage between Semroc Astronautics products and Estes-Cox products, so the decision was made to make the purchase as soon as possible, before it leaked to the public.

Bruce made the historic phone call to Customer Service/Production/Print Shop/Shipping Vice President Sheryl McLawhorn yesterday from Wal-Mart. When he said that his contact at Wal-Mart, Store Associate Alice, confirmed that they had two packs of the A3-4T engines left for $4.97 each, Sheryl said, "Buy them! And stop by Bojangle’s on the way back to Corporate Headquarters and pick up some of that Dirty Rice that Bill Eichelberger was talking about last year." So after years of using up our old stock of the Estes Industries, Inc. engines, Semroc finally took the leap and purchased some of the newer Estes-Cox engines and are pleased to announce that early test results have been very favorable. We are also considering purchasing a few of those Estes-Cox shiny rockets that are already put together, since we are so busy releasing new kits that we don't have much time to build rockets anymore.

For further information about this purchase, we will attempt to answer your questions on Ye Olde Rocket Forum or The Rocketry Forum during a live Q&A session until midnight April 1, 2009.

For immediate release

Carl McLawhorn
President
Semroc Astronautics Corp.

March 31, 2009