INDIANAPOLIS, IN (PRIME NEWSWIRE) -- Bell Industries, Inc. (AMEX:BI) announced it has entered into a definitive agreement to sell its SkyTel division to Velocita Wireless LLC for a total consideration of $8.0 million, comprised of $3.0 million in cash at closing and deferred payments totaling $5.0 million to be paid over a period of two years. The SkyTel business comprises its wireless data and messaging services, including email, interactive two-way messaging, wireless telemetry services, and traditional text and numeric paging operations. The proceeds from the sale will be used to pay down any outstanding balances on Bell's revolving credit facility and provide working capital for the company's continuing operations.
Velocita Wireless LLC, a provider of custom wireless machine-to-machine data delivery solutions for businesses and government, will continue to provide paging and telemetry services to SkyTel's customers through SkyTel's existing wireless network from SkyTel's headquarters in Clinton, Mississippi. The closing of the sale, which is expected to occur in 60 to 90 days, is conditioned upon certain customary closing conditions, including receiving regulatory approval for the transfer of SkyTel's wireless licenses and receiving consents from Bell's lenders and tower lease landlords.
Following the completion of the SkyTel sale, Bell will have completely divested the assets of the SkyTel business that Bell acquired from Verizon Communications in January 2007. In January 2008, Bell sold SkyTel's automated vehicle location business for $7.0 million, and in September 2007 Bell sold certain stock ownership interests in entities that owned wireless licenses for $13.5 million (approximately $1 million of which was deferred until April 2009). The aggregate impact of these three divestitures will result in a book loss of approximately $4 million. Following the SkyTel sale, Bell will have a total of approximately $6 million in deferred consideration, which will be received over the next two years, and anticipated net debt of approximately $13 million to $15 million, including $11 million in long-term secured convertible debt.
"The sale of the remainder of the SkyTel division is another important step in Bell's process of solidifying its balance sheet and improving cash flows," said Kevin J. Thimjon, president and chief financial officer of Bell. "This will also allow Bell to focus all of its attention on continuing to reduce costs and improve the cash flows of its two remaining businesses."
About Bell Industries
After completion of the sale of the SkyTel division, Bell Industries will be comprised of two operating units, Bell's Technology Solutions business and its Recreational Products Group. The company's Technology Solutions business offers a comprehensive portfolio of customizable and scalable technology solutions ranging from managed technology services to reverse logistics and mobile/wireless solutions. The Recreational Products Group is a wholesale distributor of aftermarket parts and accessories for the recreational vehicles and other leisure-related vehicle markets, including marine, snowmobile, cycle and ATV.