Black Box Announces Definitive Agreement for the Sale of Its Federal Government IT Services Business

Black Box (NASDAQ:BBOX) announced that it has entered into a definitive agreement to sell its Federal Government IT Services Business to a private equity firm for a cash purchase price of US$75 million.

Black Box, a leading digital solutions provider said that the buyer has agreed to purchase 100 percent of equity interests of the federal business on a debt-free and cash free basis.

As quoted in the press release:

Consummation of the transaction is subject to customary closing conditions and the parties anticipate a closing on or before August 31, 2018.  Raymond James & Associates and Jones Day are representing Black Box in this transaction.

As previously disclosed, the Second Amendment dated June 29, 2018 to Black Box’s Credit Agreement dated May 9, 2016, as amended (the “Credit Agreement”), requires that Black Box satisfy certain milestones related to the sale of the Federal Business, including the execution of this definitive agreement and the consummation of the sale by August 31, 2018 (subject to extension by the Agent under the Credit Facility).  The net proceeds of the sale of the Federal Business, after fees, costs, expenses and accrued interest under the Credit Facility, will be used to pay down all outstanding indebtedness under the new $10 million LIFO senior revolving credit facility, which will then remain available for future borrowings (subject to continued compliance with the Credit Agreement).  The remainder of the net proceeds will be used to pay down other indebtedness under the Credit Agreement.

While the entry into a definitive agreement for the sale of the Federal Business is a significant milestone for Black Box, the Company also remains focused on exploring all other strategic alternatives with the assistance of Raymond James and Jones Day to address its liquidity needs including, among others, refinancing, restructuring and the sale of some or all of the remaining businesses of the Company.  This process reflects the continued commitment of the Board of Directors of the Company to act in the best interests of the Company and to maximize value for the Company’s stockholders.

While the Company is working expeditiously to consummate the sale of the Federal Business and on other strategic alternatives, there can be no assurances that the sale of the Federal Business will be consummated or that the Company will be able to consummate any other strategic alternatives.

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