UPDATE - AETI Announces Agreement to Sell M&I Electric US Operations to Myers Power Products
August 06 2018 - 1:48PM
American Electric Technologies, Inc. (NASDAQ:AETI) (the “Company”)
announces that it has entered into an agreement to sell the U.S.
assets of its M&I Electric Industries, Inc. subsidiary to Myers
Power Products, Inc. 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.
“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,”
said Charles Dauber, CEO of AETI. "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.”
“The acquisition of M&I with its facilities in the Houston
area fills out Myers’ North American presence geographically, and
will allow the Myers Group access to new market segments in
addition to broadening the Myers product offering by adding
M&I’s award winning Arc-Resistant Switchgear "Intellisafe™",
automation systems and service solutions,” said Diana Grootonk,
CEO, Myers Power Products. “We are very excited by this acquisition
and look forward to working with the M&I team to continue to
deliver high quality products and services to M&I’s Oil, Gas
and Power Generation markets while further broadening our market
penetration.”
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.
Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements include, but are not limited to,
statements regarding the Company’s expectations regarding the
closing of the sale agreement, the timing of the closing, and the
consideration to be received from the sale transaction.
Forward-looking statements can be identified by the use of the
words “subject to”, “estimated”, “expects” and other words of
similar meaning. These forward-looking statements express
management’s current expectations or forecasts of future events
concerning the sale transaction, and, by their nature, are subject
to risks and uncertainties. There are a number of factors that
could cause actual results to differ materially from those in such
statements. Factors that might cause such a difference include, but
are not limited to: timing of the closing of the sale transaction,
failure to close the sale transaction, adjustments of the closing
proceeds and amount of the assumed liabilities. The Company is also
subject to other risk factors identified in the Company’s Annual
Report on Form 10-K and other periodic filings with the SEC. These
forward-looking statements are made only as of the date of this
press release, and the Company does not undertake an obligation to
release revisions to these forward-looking statements to reflect
events or conditions after the date of this release.
Contact:Bill BrodChief Financial Officer713-644-8182
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