SAN DIEGO—Wireless Facilities Inc. announced that it will sell much of its Mexican holdings for $18 million in cash. The company also said it postponed the release of its fourth-quarter 2005 earnings report from Feb. 21 to March 14.
The transfer of WFI’s Mexican holdings took effect Feb. 17 and the sale is expected to close before March 10, the company said.
WFI said the sale will improve its free cash flow, improve overall liquidity and allow the company to focus more of its resources on its domestic operations, including investing in the growth of its government businesses.
The decision was prompted by what WFI described as the changing business climate in Mexico. The company said its customers in Mexico recently raised their rates. Furthermore, WFI explained that its largest Mexican customers cancelled plans to build cell sites that were already under construction in Mexico and South America, leaving the company to write off about $5 to $6 million in unrecoverable expenses for the fourth-quarter of 2005.
Hence, WFI also said it plans to exit “certain other businesses” in South America.
The buyer, Sakoki L.L.C. is a newly-formed entity controlled by Massih Tayebi, who has around 10 percent of the total voting power of WFI’s capital stock and is the brother of Masood Tayebi, WFI’s chairman of the board. WFI noted that although Massih Tayebi has no current role with the WFI, he was a co-founder of the company and served as chief executive from the company’s inception in 1994 through September 2000, continuing as a director through April 2002. WFI stated that Masood Tayebi has no personal financial interest in the transaction and will have no role with Sakoki.
In late January, WFI warned investors that its sales were likely to fall flat during its fourth quarter because of operational problems in Latin America and hurricane-related problems in the Gulf region, where the company does much if its domestic business of building and managing Wi-Fi networks.
WFI posted a strong third quarter however. The company reported net income of $5.8 million, or 8 cents per share, after posting a $14.9 million net loss, or 22 cents per share, during the same period a year ago.
News of the sale sent the company’s stock down 45 cents to $5.03 in morning trading on the Nasdaq.
