ADDvantage Technologies to Divest Cable TV Segment Operations
December 27 2018 - 4:10PM
ADDvantage Technologies Group, Inc. (NASDAQ:
AEY), today announced it has entered into an agreement to
sell the Cable TV segment business for $10.3 million to Leveling 8
Inc, a company controlled by David Chymiak, the Company’s Chief
Technology Officer, director and a substantial shareholder. The
purchase price will consist of $3.9 million of cash and a $6.4
million promissory note to be paid in semi-annual installments over
five years with an interest rate of 6.0%. The transaction was
negotiated and approved by a committee of independent directors and
is subject to shareholder approval, including approval by the
holders of a majority of the shares which are unaffiliated with the
buyer, and is anticipated to occur in the third fiscal quarter of
2019.
Although the Company is prohibited from
soliciting other offers for its Cable TV segment, the agreement
does permit its board of directors to consider and approve a
superior unsolicited acquisition proposal.
In November 2018, the Company completed the sale
of the Cable TV segment’s Broken Arrow, Oklahoma facility for $5.0
million.
The Cable TV segment sells new, surplus and
refurbished cable television equipment to cable television
operators or other resellers that sell to customers throughout
North America, Central America, South America and, to a lesser
extent, other international regions that utilize the same
technology. In addition, this segment repairs cable television
equipment for various companies. The Cable TV segment has
experienced top-line revenue declines since 2008 as the
consolidation of cable television operators and original equipment
manufacturers and an overall decrease in equipment upgrades by the
cable television operators led to a reduction in the size of the
market.
Divesting the Cable TV segment is in line with
the Company’s long term strategy to drive growth through organic
growth and acquisitions within the telecommunications industry.
Transitioning out of the Cable TV segment will allow the Company to
direct additional cash into the wireless and wireline Telecom
segment, where there is a significantly larger growth
opportunity.
Joe Hart, Chief Executive Officer, said,
“Pursuing the sale of the Cable TV segment is a milestone event for
us as it has been the foundation of the company for more than 30
years. For some time now, the Cable TV market has been shrinking
and, despite our best efforts, we have not been able to achieve
sustainable topline growth in this segment. The sale of the Cable
TV segment, combined with the recent sale of the Broken Arrow,
Oklahoma facility, will inject over $15 million into our business.
This will enable our leadership team to focus all our time and
resources on building out our Telco segment operations, where we
have several exciting growth initiatives in place with our Nave and
Triton subsidiaries, as well as our recently announced plans to
offer wireless infrastructure services. We are excited to enter
this new chapter in our development and look forward to improving
the long term growth prospects of ADDvantage Technologies.”
Mr. Chymiak is the original founder of Tulsat,
one of the major subsidiaries within the Cable TV segment. We
believe that this sale will allow Mr. Chymiak the flexibility to
rejuvenate the Cable TV business as he sees fit and provide a fresh
start for the dedicated employees within the Cable TV business.
Although Mr. Chymiak will no longer be an employee of our Company
as he focuses exclusively on the Cable TV business, he will remain
on the Board of the Company.
About ADDvantage Technologies Group,
Inc.
ADDvantage Technologies Group, Inc.
(NASDAQ: AEY) supplies the cable television (Cable TV) and
telecommunications industries with a comprehensive line of new and
used system-critical network equipment and hardware from a broad
range of leading manufacturers. The equipment and hardware
ADDvantage distributes is used to acquire, distribute, and protect
the communications signals carried on fiber optic, coaxial cable
and wireless distribution systems, including television
programming, high-speed data (Internet) and telephony. The Company
is also launching a services business to provide turn-key wireless
infrastructure services, such as the installation and
decommissioning of equipment on cell towers, for wireless carriers,
contractors supporting the wireless carriers, and equipment
manufacturers. In addition, ADDvantage operates a national
network of technical repair centers focused primarily on Cable TV
equipment and recycles surplus and obsolete Cable TV and
telecommunications equipment.
ADDvantage operates through its subsidiaries,
Tulsat, Tulsat-Atlanta, Tulsat-Texas, NCS Industries, ComTech
Services, Nave Communications and Triton Datacom. For more
information, please visit the corporate web site
at www.addvantagetechnologies.com.
The information in this announcement may include
forward-looking statements. All statements, other than
statements of historical facts, which address activities, events or
developments that the Company expects or anticipates will or may
occur in the future, are forward-looking statements. These
statements are subject to risks and uncertainties, which could
cause actual results and developments to differ materially from
these statements. A complete discussion of these risks and
uncertainties is contained in the Company’s reports and documents
filed from time to time with the Securities and Exchange
Commission.
For further informationCompany Contact:Scott Francis (918)
251-9121
KCSA Strategic CommunicationsElizabeth Barker(212)
896-1203ebarker@kcsa.com
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