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UTStarcom Strips Off Division
July 2, 2008 |
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| Category: Wireless
UTStarcom (UTSI) will sell its personal communications division to a firm controlled by AIG Vantage Capital, a part of AIG Investments.
"With the divestiture of our PCD unit, our management team and employees will focus on pursuing the growth opportunities related to our core product suite of IPTV, NGN and Broadband offerings," stated Peter Blackmore, UTStarcom's chief executive officer and president. "The streamlined business model will provide better transparency into our operations and improved liquidity as we execute our strategic plan."
The divestiture of PCD is consistent with UTStarcom's strategic focus announced in late 2007, which is aimed at maximizing UTStarcom's opportunities in its core IP-based product offerings in rapidly growing economies around the world. The PCD business, which primarily distributes handsets and related accessories in North America, was identified as a divestiture opportunity at that time. This transaction, combined with the recently announced divestiture of the Mobile Solutions Business Unit, will complete two milestones in simplifying the operations of UTStarcom.
The expected proceeds of approximately USD240 million will be based primarily on the net working capital levels, subject to certain adjustments. In addition to the cash consideration, UTStarcom could also receive up to USD50 million based on a three-year earn out provision. The transaction, which is expected to be completed within two business days, has been unanimously approved by UTStarcom's board of directors and is subject to customary closing conditions including debt financing. Completion of the transaction is not subject to UTStarcom shareholder approval and the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act has expired.
Subsequent to the transaction, the privately held company will be called Personal Communications Devices, LLC and will be led by PCD's current management team who will be part-owners of the company with AIG Vantage Capital and other investors.
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