Israeli company RIT Technologies Ltd. (Nasdaq: RITT), which got into financial difficulties and is in provisional receivership, has been thrown a lifeline in the shape of a Chinese investor that will buy its business, assets and rights for a few million shekels. Yesterday, the court approved the sale to Chinese optic fiber giant YOFC, after the official receiver gave his approval.
For the purposes of the acquisition, YOFC will set up a company in Israel to which the assets, business and rights of RiT will be transferred. RiT VP Sales Assaf Skolnik will become CEO of the new company. Skolnik led the sale to YOFC. This is YOFC's first investment in Israel, and it sees it as part of a broader strategy of entering the Israeli market. YOFC plans investment in Rit's current activity as well as development of new technologies.
The headquarters of the new company, the name of which has not yet been released, will be located in Israel and will include research and development, sales, marketing and operations. The company will operate as an Israeli company and will employ the existing twenty workers in Israel and ten overseas. At its peak, RiT had 70 employees in Israel.
YOFC is the world's largest producer of raw materials for manufacturing optic fibers. It is also the largest manufacturer of optic fibers and optic cable.
RiT Technologies develops and monitors advanced physical communications infrastructure for enterprise computer installations. It was founded in 1989, and made its Nasdaq IPO in 1997. Until eight years ago, the company was part of Yehuda and Zohar Zisapel's Rad Group, which sold control of it to Russian company Stins Coman, itself controlled by Sergey Anisimov, who had been RiT's distributor. Stins Coman currently owns 77% of RiT.
Only a few years ago, RiT was traded at a market cap of $50 million and more. Today, its market cap is a sad $800,000. After 27 years of activity, RiT got into financial difficulties and in 2016 a provisional receiver was appointed to the company. The problem arose from difficulties in the Russian controlling shareholder, which had been injecting cash into the company. RiT has debts of $5 million to suppliers, about NIS 1 million to employees, and $3 million in owner's loans. About six months ago the company was shaken by cash flow difficulties, employee layoffs, warnings from Nasdaq that it did not meet listing criteria, and the resignation of its CEO Yossi Ben-Harosh.
Published by Globes [online], Israel business news - www.globes-online.com - on December 29, 2016
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