Stoneridge Completes Sale of Wiring Business for $71.4M
WARREN, Ohio -- Stoneridge Inc. has completed the sale of its wiring business assets to Motherson Sumi Systems Ltd. as agreed in the contract dated May 26. Cash proceeds were $71.4 million.
Included in the transaction are six manufacturing plants in Portland, Ind.; Chihuahua, Saltillo, and Monclova, Mexico; and an engineering and administrative center here. The wiring business designs and manufactures wiring harness products for sale principally to the commercial, agricultural and off-highway vehicle markets. It also assembles entire instrument panels configured specifically to an original equipment manufacturer customer's specifications in the commercial vehicle market.
"Closing the transaction to sell the wiring business marks a significant milestone in our journey to transform Stoneridge," said John C. Corey, president and CEO. "With the sale completed, we will focus our resources on our other business segments, which are technology-driven with global applications and offer greater opportunities to provide higher value to our shareholders."
The company also announced it intends to promptly cause the notes trustee to issue a notice of redemption to redeem 10% of its senior secured 9.5% notes, or $17.5 million of notes, to redeem 103% of the principal. Under the notes indenture, 10% are redeemable before Oct. 15 at 103% of the principal amount plus accrued and unpaid interest.
The company said it expects cash interest savings generated over the rest of the year to approximate $540,000 compared with 2013. Stoneridge also expects a benefit of $300,000, or one cent per share, after considering the write-off of deferred financing fees and note discount for the balance of the year compared to 2013.
"Calling 10% of our notes is a first step in recapitalizing Stoneridge by lowering our debt balance and reducing our interest costs," Corey said. "We hope to announce another step in the near future which should lower Stoneridge's debt balance and interest expenses significantly by adding flexibility to our capital structure, which will allow us to better utilize our cash balances to reduce interest expense while simultaneously allowing us the ability to borrow for acquisitions if needed. Repayment of debt will be our first priority upon receipt of the proceeds from the wiring business sale."
Stoneridge Inc. is an independent designer and manufacturer of highly engineered electrical and electronic components, modules and systems principally for the automotive, commercial vehicle, motorcycle and off-highway vehicle markets.
SOURCE: Stoneridge Inc.
Published by The Business Journal, Youngstown, Ohio.
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