Black Box Announces the Closing of the Sale of Its Federal Business

Black Box (NASDAQ:BBOX) announced that it has closed its previously announced agreement to sell its Federal Government IT Services Business to Arlington Capital Partners for a cash purchase price of US$75 million.

The company said that Arlington Partners, a leading prove equity firm purchased 100 percent of equity interests on debt free, cash free basis.

As quoted in the press release:

“This was a critical step to give the company options moving forward and reduces the debt to more manageable levels,” said Joel Trammell, CEO of Black Box.

The net cash proceeds from the sale of the Federal Business, after purchase price adjustments of $5.6 million, transaction fees and expenses of $3.2 million as well as $3.0 million of funds deposited into escrow for the finalization of certain closing items as well as certain indemnifications, were used to pay Bank fees, interest on bank debt and indebtedness. After fees and interest, the new $10 million LIFO senior revolving credit facility was paid first and the Term Loan was paid in full, with the remaining funds reducing the original Revolving Credit Line. The LIFO line is available for future borrowings (subject to continued compliance with the Credit Agreement).

While the completion of the sale of the Federal Business is a significant milestone for Black Box, the Company continues to focus 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 other assets. 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 its next initiative, there can be no assurances that the Company will be able to consummate any other strategic alternatives.

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