Eight and a half hours after it began, at 10:30 pm on Sunday, the bidding on Leadcom Integrated Solutions Ltd. (TASE:LEAD) ended. Lightbridge Communications Corporation (LCC), Yuval Cohen’s private equity firm Fortissimo Capital, and a company jointly owned by Levi Kushnir and Ituran Location and Control Ltd.'s (Nasdaq:ITRN); TASE:ITRN) Sheratzky family competed in the bidding.
LCC won the bidding for the acquisition of mobile communications infrastructure provider Leadcom’s business and assets, with its bid of $32.3 million plus an option of a small future premium.
Leadcom’s receiver, Adv. Ofer Shapira, submitted a request for approval to the court to sell the company today. The price achieved was 40% higher than the previous offer, which Shapira submitted to the court a few weeks ago, when Fortissimo Capital made an offer to buy Leadcom for $23 million cash.
Despite the significantly improved price, it is still unclear whether the bondholders, who are unsecured creditors, will see any return on the company’s $30 million debt to them.
With the completion of the sale of Leadcom, $6.2 million will be added to the receiver’s funds, which are currently in Leadcom’s account. Together with the funds from the sale, the creditors will receive $38-9 million (some of which will be received at a later date).
According to a previous report submitted by Shapira to the court, at the time when Leadcom entered receivership and liquidation at the end of 2009, the company’s debts to the banks, which are secured creditors, totaled $38 million. In addition, $1.7 billion in bank guarantees for the company’s operations were forfeited by parties with which Leadcom worked.
During the years that passed since the company entered receivership, it paid the banks $16.7 million from its regular operations, and released $4.1 million in guarantees. According to the same report, as of the end of January 2014, the balance on Leadcom’s debt to the banks was $36.5 million, virtually unchanged. The numbers indicate that the banks charged Leadcom an average interest rate of 9.5% (it should be noted that the fluctuating shekel-dollar exchange rate during recent years has raised the dollar value of shekel-denominated loans).
LCC was founded in the US in 1984 and provides consulting, design, integration, optimization, and other services and solutions to communications operators and equipment manufacturers. LCC, which was in the past a publicly-held company, has 3,500 employees in more than 30 states. The company’s sales volume was more than $300 million last year, and its EBITDA (earnings before interest, taxes, depreciation, and amortization) was $23 million.
According to the terms of LCC’s offer, the company will transfer $22.4 million cash to the receiver when the deal is finalized, and the remaining balance of $9.9 million will be paid in 24 equal monthly payments of $414,000. If LCC goes public in the next three years, the receivers will receive an additional, $300,000 payment. All of LCC’s future payments will carry 1.5% interest above LIBOR from the completion of the deal.
Shapira told “Globes,” “The bidder is serious and professional, and submitted his offer after checking many things, and so we believe he is motivated to complete the deal, which gives us confidence that this deal will not only be on paper, but will happen.”
Published by Globes [online], Israel business news - www.globes-online.com - on March 26, 2014
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