2nd Jul 2007 07:00
Telit Communications PLC02 July 2007 Press Release 2 July 2007 Telit Communications plc ("Telit" or "the Company") TELIT TO SELL ITS WIRELESS PRODUCTS DIVISION FOR APPROXIMATELY €6.5 MILLION Entered into a binding term sheet with a group of Israeli investors Telit Communications plc (AIM: TCM), the global wireless communicationsdeveloper and distributor, announces that it has concluded negotiations and hasexecuted a binding term sheet for the sale of its Wireless Products division ("TWP"). subject to the execution of a final agreement as customary intransactions of this type and receipt of the necessary third-party approvals.TWP customizes, distributes and supports cellular devices from third partymanufacturers. For the year ended 31 December 2006 the division reported anoperating loss of €1.5 million. Through this transaction, Telit is delivering on its strategy to focus its fullattention on the rapidly expanding m2m division, which is Telit's main business.The Wireless Solutions division, as outlined in the Preliminary Resultsannounced on 14 March 2007, has shown considerable growth, and Telit's decisionto move resources to this area demonstrates the commitment to realize in fullthe potential of this business. Telit will sell 80.1% of TWP to a group of Israeli investors led by Mr. YosiFait and Mr. Amit Biel, who have taken an active role in the Israeli cellularand financial markets over the past years. The consideration to Telit iscalculated according to TWP's equity as at 30 June 2007, which is expected to beno more than €500 thousand. In conjunction with the sale of TWP, Telit and TWPwill enter into a license agreement for the use of the Telit brand by TWP incellular products. Under the license agreement, royalties up to a maximum of €6million will be paid to Telit over a period of 5.5 years. Telit will retain19.9% of TWP, with no seats on its board of directors. As a consequence of thesale, Telit will cease consolidating TWP's results in its financials andtherefore, €3 million of long term debt - Telit's only long term debt, which isattributed to TWP - will be removed from Telit's balance sheet. Oozi Cats, CEO of Telit, said: "This transaction marks a further step inTelit's strategy to focus on the m2m business, as we have seen exceptionalgrowth in this area. The Company will now be fully focused on this division, butwill retain a small stake in TWP allowing us to enjoy a future. We are lookingforward to announcing the completion of this deal, which will enable us toconcentrate our resources exclusively on the m2m business, while substantiallyimproving our net cash position as all of our long term debt will be removedfrom our balance sheet". About Telit Telit is a leading global wireless communications technology company. Telitdevelops, produces and sells GSM/GPRS, UMTS/HSDPA and CDMA/EVDO modules formachine-to-machine communication (M2M). Telit sells its modules worldwide viasales offices in Israel, Germany, Great Britain, Denmark, Spain, Italy, France,Taiwan, Korea and the USA. Telit's key target group is system integrators whoare developing various vertical M2M applications and require the communicationmodules needed to do this. Telit Communications plc is listed on the AIM(ticker: TCM). For more information about the company, please visitwww.telit.com. - Ends - For further information: Telit Communications plcOozi Cats, Chief ExecutiveMaya Lustig, Vice President, Investor Relations Tel: 00 972 3 791 40 [email protected] www.telit.com Seymour PierceStuart Lane, Corporate Finance Tel: +44 (0) 20 7107 8000 www.seymourpierce.com Media enquiries:AbchurchChris Lane / Joanne Shears Tel: +44 (0) 20 7398 [email protected] www.abchurch-group.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
TCM.L