Former ServiceMaster Executives Join Sunair to Form New Pest Control Division

FORT LAUDERDALE, Fla. – There’s a new player on the horizon of the pest control industry. In an announcement that caught many in the industry by surprise, it was revealed last week that a group of former ServiceMaster executives are working with a Florida-based investment firm to form a new pest control company.

Sunair Electronics recently announced that it has entered into an agreement with Royal Palm Capital Partners to invest $15 million in Sunair in exchange for millions of newly issued common shares. If the investment group exercises all of its warrants, its total investment, including the initial investment in Sunair, would be $54 million. In addition, the investment group will have an option to invest up to an additional $10 million in Sunair.
 
Proceeds from the investment will be used to form the Pest Control Services Division, expanding Sunair's operations outside of its existing lines of business.

The newly formed division will be operated by a management group led by Donald Karnes, David Slott and John Hayes, who have served as senior executives with The ServiceMaster Co., Memphis, Tenn., parent company of TruGreen Chemlawn and Terminix International. ServiceMaster is a leading provider of home services, providing termite and pest control services through its wide-ranging Terminix operations, and lawn care and landscape maintenance services through TruGreen ChemLawn.

Prior to last week’s surprising announcement, Karnes served as president of TruGreen Group (2001-2004), president of Terminix and TruGreen Group (1996-2000), and president and chief operating officer of TruGreen ChemLawn (1991-96), and has held various other executive roles since 1979. David Slott served as president and chief operating officer of TruGreen ChemLawn (1996-2004), and has held other executive roles since 1981. John Hayes served as executive vice president of TruGreen Cos. (2000-04), and has held various other executive roles since 1975. Hayes will join the company as chief executive officer of Sunair, and Slott and Karnes will join the company as president and chief operating officer, respectively, of the newly formed Pest Control Services Division.

 “Don and Dave were valuable members of the ServiceMaster team for many years and we wish them well and the best of luck in their new endeavor,” said Steve Good, vice president and chief marketing officer, Terminix International. In the wake of the announcement, ServiceMaster has named Dennis Sutton interim president and COO of the organization. “Dennis is a very capable leader who is well respected within the TruGreen organization,” Good said. “We expect great things out of Dennis.”

The equity investment in Sunair will be used to finance acquisitions of pest control services businesses in the United States. The company intends to seek opportunities to expand the new division through acquisitions and internal growth, and finance the expansion by accessing the equity and debt capital markets. The transaction, subject to shareholder approval, provides for an increase in the size of the board of directors from five to seven members and is expected to be completed in early 2005.

As part of the transaction, the Board approved the appointment of two members to its board of directors, Richard Rochon and Mario Ferrari, in addition to two additional directors to be named at a later date. Rochon is currently chairman and chief executive officer of Royal Palm Capital Partners, a private investment and management firm based in Boca Raton, Fla

Previously, he served 14 years (1988-2002) as president of Huizenga Holdings, a management and holding company owned by H. Wayne Huizenga. Huizenga is familiar with the pest control industry through his former association with Waste Management, which was a prominent player in the pest control acquisitions market in the late 1980s.
 
Sunair Electronics is a Florida corporation engaged in the design, manufacture and sale of high-frequency radio equipment. Since 1956, Sunair has maintained an established presence in domestic and international government and military markets, including the NATO community.