KVH Industries, Inc., (Nasdaq: KVHI), today announced that it has
sold its maritime training business, the Videotel group of
companies, to an affiliate of Oakley Capital for a base purchase
price of $90 million, on a cash-free, debt-free basis, subject to
working capital adjustments. The sale was completed
immediately upon execution of definitive agreements.
“As part of our long-term strategic roadmap, we are focusing on
the large and growing markets of our core mobile connectivity and
inertial navigation businesses,” says Martin Kits van Heyningen,
chief executive officer of KVH. “We intend to use the net
proceeds of the sale to invest in three key growth initiatives that
we expect will drive significant value creation, as well as to
reduce our debt. Specifically, we plan to invest in the
development and commercialization of our photonic integrated chip
technology for use in autonomous vehicles and other commercial and
military platforms, to support the further acceleration of our
AgilePlans (Connectivity as a Service) program, and also to
finalize the development and launch of our IoT connectivity
solution. Videotel helped us to penetrate the commercial
maritime markets initially, but our strategic approach has evolved
to focus on faster growing markets that we believe will produce
greater long-term shareholder value.” To maintain continuity
for KVH’s AgilePlans customers, KVH has retained certain rights to
continue including the Videotel training content with the
AgilePlans program.
Management expects to issue revised financial guidance for the
second quarter and full fiscal year of 2019 reflecting the sale of
Videotel, along with select pro forma disclosures, on or about May
15, followed by an investor conference call. In light of the
anticipated financial impact of the transaction, investors should
no longer rely on the guidance previously issued by KVH, which
included anticipated revenues and expenses of the Videotel
business.
The base purchase price was $90 million, subject to adjustment
for Videotel’s cash, indebtedness, and working capital. KVH
expects to receive payment of the purchase price within 30 business
days, subject to subsequent adjustment for working capital.
Payment of the purchase price is secured by a charge (a type
of foreign security interest) over the shares of Super Dragon
Limited and Videotel Marine Asia Limited, and is further backed by
an equity commitment letter from Oakley Capital IV Master SCSp,
Oakley Capital’s fourth and newest fund that has recently raised in
excess of €1 billion of capital commitments.
KVH expects to use a portion of the net proceeds of the sale to
repay the full balance of its outstanding term loans and a
substantial portion of outstanding borrowings under its revolving
credit facility.
The definitive share purchase agreement contains various
warranties regarding the Videotel business given by KVH Media Group
Limited (“KMG”), the direct seller of the Videotel companies, and
KMG also agreed to provide the direct purchaser with a tax
indemnity. The purchase agreement provides a cap on KMG’s
liability for breach of commercial warranties equal to 20% of the
purchase price and, for breach of the title and capacity warranties
and the tax indemnity, a cap equal to the purchase price.
For the last 12 months ending March 31, 2019 Videotel’s revenue
was $17.0 million and its operating income was $3.1 million.
Depreciation and amortization for this period was $4.8 million, and
equity compensation was $0.1 million. KVH is analyzing
whether the Videotel business will be reported as a discontinued
operation in its future financial statements.
The Videotel group of companies includes Super Dragon Ltd.,
Videotel Marine International Ltd., Videotel Training Services
Ltd., Videotel Consultants and Rentals Ltd., Videotel Marine Asia
Ltd., and Videotel Pte Ltd.
About KVH Industries, Inc.KVH Industries, Inc.,
is a global leader in mobile connectivity and inertial navigation
systems, innovating to enable a mobile world. A market leader
in maritime VSAT, KVH designs, manufactures, and provides
connectivity and content services globally. KVH is also a
premier manufacturer of high-performance sensors and integrated
inertial systems for defense and commercial applications.
Founded in 1982, the company is based in Middletown, RI, with
research, development, and manufacturing operations in Middletown,
RI, and Tinley Park, IL, and more than a dozen offices around the
globe.
About Oakley Capital
Oakley Capital Private Equity L.P. and its
successor funds, Oakley Capital Private Equity II, Oakley Capital
Private Equity III and Oakley Capital IV, are unlisted, Western
Europe focused mid-market private equity funds with the aim of
providing investors with significant long-term capital
appreciation. The investment strategy of the funds is to
focus on buy-out opportunities in industries with the potential for
growth, consolidation and performance improvement.
This press release
contains forward-looking statements that involve risks and
uncertainties. For example, forward-looking statements include
statements regarding the future finalization of the purchase price
for Videotel, our strategic roadmap, the anticipated growth of our
markets, the intended use of proceeds, our research and development
priorities, the ability to achieve stated goals with available
funds, the impact of our efforts on shareholder value, the
anticipated receipt and timing of payment of the purchase price,
future financial reporting, the availability of net proceeds as a
source of liquidity, and the timing of announcement of financial
guidance. Actual results could differ materially from the
forward-looking statements made in this press release. Factors that
might cause these differences include, but are not limited to:
changes in market needs or structure, changes in strategic
priorities, the impact of broader economic trends, unanticipated
demands for liquidity in other areas, unanticipated technical
challenges or obstacles, the potential need to acquire or license
intellectual property, unanticipated expenses, potential delays in
anticipated events or actions, the impact of competition, potential
claims by the purchaser or other parties, including potential
warranty claims that may reduce our net proceeds, the potential
failure of counterparties to comply with their payment and other
obligations, the potential need to pursue litigation, the risks,
uncertainties and expenses of litigation, the potential inadequacy
of litigation recoveries or settlements to offset all damages, the
potential unavailability of capital resources and the impact of
reduced cash flow from operations. These and other factors are or
may be discussed in more detail in KVH’s Form 10-K filed with the
SEC on March 1, 2019. Copies are available through its Investor
Relations department and website, http://investors.kvh.com. KVH
does not assume any obligation to update our forward-looking
statements to reflect new information and developments.
KVH Industries, Inc.
has used, registered, or applied to register its trademarks in the
U.S.A. and other countries around the world, including but not
limited to the following marks: KVH, TracPhone, mini-VSAT
Broadband, CommBox, IP-MobileCast, AgilePlans, TracVision,
NEWSlink, and SPORTSlink. All other trademarks are the property of
their respective companies.
Contact:
KVH Industries, Inc.Brent
Bruun401-845-8194bbruun@kvh.com |
FTI ConsultingChristine
Mohrmann212-850-5600 |
KVH Industries (NASDAQ:KVHI)
Historical Stock Chart
From Jul 2024 to Aug 2024
KVH Industries (NASDAQ:KVHI)
Historical Stock Chart
From Aug 2023 to Aug 2024