Following a major financial reporting setback due to an internal review of stock-options granting practices in mid-March, Wireless Facilities Inc. announced it has agreed to sell its wireless engineering business to LCC International for $46 million.
The San Diego-based infrastructure vendor expects the deal, which includes the sale of all of its domestic wireless engineering business, to close within a week. The transaction calls for $17 million to be paid in cash at closing, $7 million in retained accounts and the remaining $22 million to be paid with a subordinated promissory note with a 36-month maturity. WFI said the note includes an interest rate escalation, which is intended to encourage early payment by LCC.
This comes on the heels of a significant internal review that sent investors fleeing in droves about two months ago. The company’s stock plummeted almost 20% to $1.68 following the news in March and has failed to regain any momentum since. The company’s stock was up more than 7% on today’s news, but still sits at only $1.60 per share.
WFI is one of a large and growing number of companies forced to review their financial due to improperly recorded stock-option grants. The company said the review is ongoing and it will continue to delay the filing of financial statements for 2006 and the first quarter of 2007 until the review is completed.
“This action is a further step in the execution of a transformational business strategy which we believe allows WFI to significantly improve profitability, cash flow and liquidity, reduce debt, and allows the company to place an even greater focus on existing operations that can deliver value to our shareholders in a more predictable manner,” President and CEO Eric DeMarco said.
The sale will transfer at least 350 WFI employees to LCC.
WFI works in the design and deployment of wireless networks.
LCC snares WFI’s engineering biz for $46M
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