Item 1.01 Entry into a Material Definitive Agreement.
On August 6, 2018, American Electric Technologies, Inc. (the Company) entered into an Asset Purchase Agreement (the
Purchase Agreement) with its wholly-owned subsidiary, M&I Electric Industries, Inc. (the Seller), M&I Electric, LLC (the Buyer) and Myers Power Products, Inc. (the Buyers Parent).
Pursuant to the terms and subject to the conditions set forth in the Purchase Agreement, the Seller will sell to the Buyer the U.S. based
assets of the Seller. The cash purchase price for the 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.
Upon the closing of the Agreement 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.
The Company will continue to operate its Brazilian subsidiary and will retain its interest in its BOMAY Joint Venture with China National
Petroleum Company (CNPC). The Buyer 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 Companys Brazilian subsidiary in Brazil for up
to five years post-closing.
The Purchase Agreement contains the customary conditions to closing of transactions of this type. It also
contains a condition to closing which requires that 50% of the Sellers employees agree to work for the Buyer.
The parties to the Purchase
Agreement have each made customary representations and warranties. The Purchase Agreement requires a Representation and Warranty insurance policy which will the exclusive source of the Companys and the Sellers indemnification obligation
for breach of any representation or warranty of Seller in the agreement, other than for fraud.
The Purchase Agreement contains specified
termination rights for the Buyer and the Seller, including a mutual termination right in the event that the purchase transaction is not consummated by September 30, 2018.
The foregoing description of the Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is qualified
in its entirety by reference to the Purchase Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.