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CUI Global sells electromechanical components business ?3
15:54 01-Oct-19
It has also been announced
that Jim O'Neil is taking the reins as CEO, and the company is
adding an oil & gas veteran to the board. The CEO transition
was originally supposed to take place with the Nikola transaction,
but there is no mention of that. The next conference call in
mid-November should be particularly interesting.
CUI Global has sold its electromechanical components business for $10M plus a $5M guaranteed five-year earnout receivable note. This has no effect on earnings from the ICE products or the 20% equity stake in Virtual Power Systems, and apparently we should expect more divestitures from the power segment, per the CEO:
The sale of our electromechanical business puts us on a path to divesting other, non-core business within the P&EM segment, strengthens our balance sheet, and will contribute to the buildout of a diversified energy services platform," stated William Clough, president and CEO of CUI Global. "We remain committed to utilizing CUI Global as the public company platform through which to aggregate energy and telecommunications infrastructure operators to create a new market entrant in the North American energy services industry.This transaction provides some much needed balance sheet relief, giving the company another quarter or two to operate, and it does so without dilution. That much is worth cheering, with a non-indicative 200 share pre-market trade +17% at 99 cents. However, the sale price, even we fail to appropriately discount the earn-out, is only about half a year worth of sales, which is atrocious. Hopefully the end result will be worth it. At terms like these, we'll know pretty soon.