NHC Announces Sale of U.K. Subsidiary - Proceeds Will Be Used to Accelerate Growth of
Switching Business
MONTREAL, Oct. 27 /CNW/ - NHC Communications Inc. announced today the
sale of its United Kingdom-based subsidiary, NHC Communications Limited
(formerly, The Fiber Company Limited), for a total consideration of Cdn$6.5
million to a group comprising the management of this subsidiary and two
venture capital firms. The transaction will be recorded effective July 31,
1998.
''This is a very significant transaction for NHC, allowing our Company to
meet two critical objectives,'' said Sylvain Abitbol, President and Chief
Executive Officer. ''First of all, it enables us to focus entirely on our
switching line of business which has the highest growth potential. Secondly,
this transaction greatly strengthens our financial position and provides a
solid foundation for undertaking the marketing and product development
required to achieve commercial success in this promising line of business.''
Mr. Abitbol recalled that NHC entered the fiber optics field through the
acquisition of The Fiber Company in September 1996, primarily to achieve a
breakthrough with telecommunications companies. ''Since it was difficult for
NHC to support the growth of both the switching and fiber optics lines of
business, we have seized the opportunity to sell our U.K. subsidiary at an
attractive price to our shareholders.''
The disposition of the Company's U.K. subsidiary, which accounted for a
large portion of operating losses during the 1998 fiscal year, will have a
material positive impact on NHC's results and financial position. NHC will
record an after-tax gain on the transaction of approximately $3.5 million, or
$0.22 per share, fully diluted, which will be recorded in the fourth quarter
of fiscal 1998. The Company's book value will increase to approximately $0.66
per share.
Under the terms accepted by NHC and the purchasers, NHC received 80% of
the selling price in cash on closing, with the balance to be paid over the
subsequent year based on NHC Communications Limited's sales and customer
orders.
NHC Communications Inc. (TSE: NHC) specializes in developing products
that increase the competitive edge of its customers by applying innovative
technology to the delivery of high-speed mixed media networks. NHC is
committed to its customers by delivering superior solutions for physical layer
network infrastructures. NHC sells through leading resellers supported by
sales locations in Atlanta, Boston, Chicago, Dallas, New York, Stockton (CA),
Paris (France) and Montreal (Canada).
NHC may be contacted through its web site: www.nhc.com
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For further information: Sylvain Abitbol, President, C.E.O., NHC
Communications Inc., 1-800-361-1965, Internet: pr@nhc.com, Web site:
www.nhc.com or Sylvain Brossard, CA, V.P. Finance and Corporate Controller,
NHC Communications Inc., 1-800-361-1965, Internet: s.brossard@nhc.com or
Alex Radmanovich, Communications Dufour Radmanovich, (514) 845-2949 |
