Black Box announces sale agreement of Federal Government IT Services Business
Black Box announced that it has entered into a definitive agreement to sell its Federal Government IT Services Business to a private equity firm for a cash purchase price of $75M. The buyer has agreed to purchase 100% of the equity interests of the Federal Business on a debt-free, cash-free basis. Consummation of the transaction is subject to customary closing conditions and the parties anticipate a closing on or before August 31, 2018. As previously disclosed, the Second Amendment dated June 29, 2018 to Black Box's Credit Agreement dated May 9, 2016, as amended, requires that Black Box satisfy certain milestones related to the sale of the Federal Business, including the execution of this definitive agreement and the consummation of the sale by August 31, 2018. The net proceeds of the sale of the Federal Business, after fees, costs, expenses and accrued interest under the Credit Facility, will be used to pay down all outstanding indebtedness under the new $10M LIFO senior revolving credit facility, which will then remain available for future borrowings. The remainder of the net proceeds will be used to pay down other indebtedness under the Credit Agreement. While the entry into a definitive agreement for the sale of the Federal Business is a significant milestone for Black Box, the company also remains focused 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 some or all of the remaining businesses of the company.