CONROE, Texas, October 16, 2008 – PRNewswire Shumate Industries Inc. (OTC Bulletin Board: SHMT News), or Shumate, announced today that its whollyowned subsidiary, Hemiwedge Valve Corporation ("HVC"), has closed an exclusive worldwide licensing agreement with Tejas Research & Engineering ("Tejas") and its affiliates in exchange for a onetime, upfront cash consideration of $3.5 million to HVC at closing. The Agreement grants Tejas the exclusive use of HVC’s Hemiwedge® technology worldwide in the defined markets of Subsea and Offshore, Drilling and Workover, above 5,000 PSI, Surface Safety valves and all Downhole applications, all together known as the Combined Fields of Use.
In connection with this Agreement, HVC keeps its exclusivity on all of HVC’s currently targeted markets for its Hemiwedge® Cartridge valve product line, defined by HVC’s ANSI class and API 6D certified products in markets such as process, petrochemical, chemical and onshore oil and gas applications. Tejas will take over responsibility for itself and its clients the development of the Hemiwedge® technology in the Combined Fields of Use, while HVC will maintain a strategic alliance with Tejas for potential future technology development activities and engineering support.
Tejas Research & Engineering L.P., (www.tejasre.com) is a portfolio company of Intervale Capital, a private equity firm investing in the upstream energy sector, with a particular focus on middlemarket manufacturing and service businesses. Tejas will move quickly to develop and commercialize the Hemiwedge® technology for its Combined Fields of Use for its customers. Tejas enjoys a 9year reputation developing and commercializing various cuttingedge oilfield technologies including 5,000 and 10,000 psi safety valves, InjectSafe™ artificial lift solutions, multiple ball launch subs for fracturing jobs, among other oilfield completion technologies.
Intervale Capital (www.intervalecapital.com) based in Houston, Texas and Boston, Massachusetts, manages a $280 million private equity fund dedicated to investing in oilfield service and manufacturing companies.
In addition to the license discussed above, Shumate Industries issued Tejas and Intervale Capital a 5 year common stock purchase warrant to acquire 9.99% of its currently outstanding shares of its common stock in connection with the Agreement.
Mr. Ken Chickering, CEO of Shumate Industries added, "We are pleased to announce this Hemiwedge® technology transfer deal with Tejas and their affiliated companies. HVC also benefits from this deal as the capital received from this transaction will enable our Company to focus growing our Hemiwedge® Cartridge valve product line, without giving up any of the target markets that HVC has selected to focus in."
Mr. Chickering also added, "This transaction along with the closing of the recent sale of our Shumate Machine Works assets announced last week, has allowed us to significantly reduce our overall debt, and we now believe we are better positioned to further develop our sales and marketing strategies and accelerate growth for HVC’s Hemiwedge® Cartridge valve products.
Mr. Curtis Huff, a Managing Partner with Intervale Capital, added, "This License Agreement gives Tejas and other businesses in which Intervale and its partners have relationships exclusive use of the Hemiwedge® valve technology for markets we serve. Having this technology is expected to create sustained advantages for those businesses and ultimately value for their end customers."
The Chief Executive Officer of Tejas Research & Engineering, Mr. Thomas Hill said, "The acquisition of the Hemiwedge® technologies gives Tejas a competitive advantage and allows us to introduce cuttingedge capabilities to the growing flow control market. With Tejas’ engineering and distribution capabilities, and Hemiwedge®’s patent portfolio, our company is well positioned to take a larger position in that market."
About Shumate Industries, Inc.
Shumate is a publiclytraded holding company that operates as a global supplier of engineered valve products through its Hemiwedge Valve Corporation subsidiary. In its 60,000 square foot ISO 9001 and API Q1 approved facility in Conroe, Texas, the Company manufactures and markets worldwide a patented proprietary new valve technology known as the Hemiwedge® Cartridge valve product line. The Hemiwedge® Cartridge valve is an innovative design that incorporates the positive features of ball, gate, plug and high performance valves resulting in a mechanically sealing, tight shutoff valve with a simple operation that provides outstanding longevity and performance in a broad range of applications with virtually no maintenance.
About Tejas Research & Engineering
Tejas provides design, engineering and testing services to the completions segment of the oilfield services market, as well as being a direct OEM of the Merla® choke valves. Tejas is also considered a bestinclass completions technology and product development company with a long list of highly visible oil producing companies as their primary clientele.
About Intervale Capital
Intervale Capital is a private equity firm, based in Houston and Boston, focusing exclusively on investments in middlemarket oilfield services companies and related technologies. Intervale, together with its predecessor entities, manages eight platform investments, and is currently investing out of its $280 million fund.
Forward-Looking Statements
This document contains discussion of items that may constitute forwardlooking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in such forwardlooking statements are based on reasonable assumptions, it can give no assurances that its
expectations will be achieved. Factors that could cause actual results to differ from expectations include, but are not limited to, customer concentration risk, difficulties in refinancing its debt, difficulties in consolidating the operations of the Company's operating subsidiaries, difficulties in accelerating internal sales growth, volatility of the energy business and its effects on the Company's business, difficulties in new technology acceptance within the energy and process industries, restrictive covenants in our existing credit facilities, fluctuations in metals prices, political and economic global supply chain risk, general economic conditions in markets in which we do business, extensive environmental and workplace regulation by federal and state agencies and other general risks related to its common stock, and other uncertainties and business issues that are detailed in its filings with the Securities and Exchange Commission. All information provided in this release and in the attachments is as of October 16, 2008 and the Company undertakes no duty to update this information.
Contact:
North Coast Advisors, Investor Relations for the Company:
Craig Stewart, Principal, at 5852187371, or,
Don Michlin, Principal, at 9362712423
The Company:
Shumate Industries, Inc., Conroe, Texas
Matthew Flemming, CFO 9365395770
Tejas Research & Engineering:
Mr. Thomas Hill, CEO, (281) 4668707
Intervale Capital, LLC:
Mr. Tuan Tran, Vice President, (617) 4018405