American Electric Technologies (AETI) has agreed to sell the US assets of its M&I Electric Industries subsidiary to Myers Power Products.
The purchase price for the assets will be $17.3 million resulting in cash proceeds at closing of approximately $13.9 million after working capital and other closing adjustments. The buyer is also assuming approximately $12.8 million of liabilities related to the assets being sold.
The Company will pay off its long term debt of $6.5 million and certain other expenses in connection with the sale resulting in additional working capital of approximately $5.2 million upon completion of the transaction.
AETI will continue to operate its Brazilian subsidiary and will retain its interest in its BOMAY Joint Venture with China National Petroleum Company (CNPC).
The BOMAY Joint Venture was recently renewed for another 10 years. Myers has agreed to continue to provide certain technical support to BOMAY post-closing and not to engage in the business being conducted by BOMAY in China and by the company’s Brazilian subsidiary in Brazil for up to five years post-closing.
AETI CEO Charles Dauber said: “Over the past 4 years, the Company successfully managed through the drilling market downturn and diversified into new markets and products, but experienced significant strain on our balance sheet.
“This transaction de-levers our balance sheet and solidly positions the Company to take advantage of the rebound of the global drilling market. Our BOMAY Joint Venture in China and our operations in Brazil are both seeing strong opportunities for growth in 2018 and beyond.”
Myers Power Products CEO Diana Grootunk said: “The combination of M&I’s US business with Myers Power creates a formidable player in the US switchgear markets with a strong balance sheet. With the addition of M&I, Myers will have manufacturing in California, the Midwest and now in the Gulf Coast to cover the all key US industrial segments and will bring M&I’s award-winning IntelliSafe, automation and services solutions to Myers customers and markets.
“We look forward to working with the M&I team, customers and suppliers to continue to delivery high quality products and services to M&I’s oil and gas and power generation markets.”
The transaction is structured as a sale of less than 50% of the Company’s net assets and is expected to result in a gain. The Company expects to incur minimal tax liability based on its ability to utilize accumulated Tax Net Operating Losses (NOLs) and should result in no tax impact on shareholders.
The sale is expected to close in the third quarter, but is subject to customary closing conditions and investors are advised that there can be no assurance that the sale will be completed.
The description of the transaction and sale agreement set forth above is qualified in its entirety by reference to the full text of the sale agreement which will be included in the Company’s Form 8-K filing with the Securities and Exchange Commission in connection with the signing of the sale agreement.
Source: Company Press Release